Russia’s military action against Ukraine resulted in harsh sanctions by the USA and European countries. However, these sanctions did not stop Putin and therefore Russia.
During the military operation and at the point where many civilians lost their lives, the USA and European countries announced that they started to consider stopping oil imports, which was seen as the ‘final blow’ to Russia.
While US Secretary of State Antony Blinken stated that they were discussing with their European allies to stop oil imports from Russia, the countries therefore increased their pace in seeking alternatives.
With these speculations, the price of one thousand cubic meters of natural gas in Europe broke a record today, reaching the highest level of 3.300 Euros as of 17. Russian Security Council Vice-President and former President Dmitry Medvedev said “Welcome to the new world where Europeans will pay 2000 Euros for natural gas” regarding Germany’s Nord Stream 2 decision. With the latest data, Medvedev’s estimates were exceeded with these data.
On the other hand, while brent oil was tested at 139 dollars and US type crude oil was 130 dollars, coal prices increased by 35 percent with the same concern and rose to a new record level of 353.75 dollars per ton. According to the news of Bloomberg HT, coal finds buyers in Indonesia and Australia at prices close to 500 dollars per ton.
The world’s largest oil producers (daily/barrel):
According to the International Energy Agency, if oil exports from Russia stop completely, the amount at risk is around 5 million barrels per day.
41.1 percent of the EU’s natural gas imports come from Russia, 16.2 percent from Norway, 7.6 percent from Algeria and 5.2 percent from Qatar. On the other hand, 26.9 percent of crude oil and 46.7 percent of solid fuel are purchased from Russia.
So, what alternatives can countries turn to if oil imports from Russia, which Europe is said to be ‘dependent’, are stopped? Is there a possibility of agreement with the target countries?
Venezuela is one of the countries that the US has negotiated with in the alternative of leaving Russia.
However, in the 2020 parliamentary elections, the USA also stated that the elections were fraudulent, and that they did not recognize the new government, and that they saw Venezuelan opposition leader Juan Guaido as the “legitimate head of state” of the country. Although the EU stated that it did not recognize Maduro’s government, it took a step back in 2021. However, the USA continued to state that they recognized Guaido.
Recent US sanctions have included freezing the Venezuelan government’s entire US assets and banning business transactions. However, despite the strict sanctions, the Washington administration agreed to sit down with Venezuela.
According to the news of the New York Times (NYT), based on diplomatic sources, high-level officials from Washington went to the capital Caracas yesterday to meet with the government of Venezuelan President Nicolas Maduro.
Venezuela is seen as the right choice in the search for an alternative because it is the country with the richest oil reserves in the world, with over 302 billion barrels of oil registered. Venezuela’s crude oil production fell rapidly to historically low levels, according to data from the U.S. Energy Information Administration (EIA). Among the oil producing countries, Venezuela’s daily oil export is thought to be around 2.3 million tons.
The main export countries are the USA, India, China and the United Arab Emirates; The main importing countries are the USA, China, Mexico, Brazil and Argentina.
Despite all the embargoes, Iran is among the countries considered for an oil and gas ban against Russia.
Iran, which is among the alternatives, is known as the country with the 4th richest oil reserves in the world, with over 157 billion barrels of oil registered. According to the data of Iran’s official news agency IRNA and OPEC, although Iran ranked fifth with an average oil production of 2.4 million barrels per day in 2021, it used them for domestic consumption rather than export due to sanctions. Iran’s daily oil exports in 2021 are thought to be around 1.2 million barrels.
However, in the alternative phase against Russia, sanctions on Iranian oil are expected to be lifted and the re-marketing process is expected to be accelerated. In this way, it is also aimed to stabilize the prices.
According to the news shared by Iran’s semi-official Tasnim news agency yesterday, Iran Atomic Energy Agency Chairman Mohammad Islami and International Atomic Energy Agency President Rafael Grossi announced that the two names came together in the nuclear negotiations and that the negotiations for the return to the nuclear agreement in Vienna have entered the final stage. .
Today, Iran stated that Russia’s demands in the negotiations were not constructive. According to Reuters, Russia is trying to delay the date of Iran’s return to the oil market by delaying the nuclear deal and thus increasing its energy income. It is stated that Iran is the first country in the alternative against Russia by removing the restrictions and sanctions.
The problems of global energy supply and a possible realignment of world alliances came to the fore in the light of Russia’s invasion of Ukraine. According to sources, the US currently relies on Russia for 10% of its imports of crude oil and petroleum products.
Another country that is mentioned in the search for alternatives is Saudi Arabia. With over 266 billion barrels of oil registered, Saudi Arabia is the second country with the world’s richest oil reserves. It is thought that Saudi Arabia’s daily oil exports in 2021 will be around 12.4 million barrels.
However, speaking to Axios, a White House spokesman said a possible visit to Saudi Arabia was not on the agenda to help repair relations and persuade them to increase oil production. “We don’t have any international trips to announce at this time, and much of that is premature speculation,” the spokesperson told Axios.
Italy, which is 40 percent dependent on Russia in natural gas, met with liquefied natural gas (LNG) suppliers Algeria and Qatar, and these countries were also included in the list of alternatives. However, the possibility that this situation may disrupt relations between these countries and Russia, which is a member of the Gas Exporting Countries Forum (GECF), is also discussed.
Qatari Energy Minister Saad al-Kaabi stated that neither Qatar nor any other country can supply Europe with enough liquefied natural gas (LNG) instead of Russian gas. He stated that he did not have such capacity. There is no one who can supply gas in such a large volume. Saad al-Kaabi stated that “No country has the capacity to realize this with LNG” and stated that they cannot be an alternative.
With over 266 billion barrels of oil, Qatar ranks 14th in oil reserves. Qatar’s daily oil export is thought to be around 1.9 million barrels.
BACK TO COAL?
Speaking to the BBC, EU’s Green Deal President Frans Timmermans announced that in line with the developments, European governments cannot rely on Russia and European states may continue to burn coal.
Russia alone provides 42 percent of Europe’s coal needs. Indonesia and Australia are known as the world’s largest coal exporters, respectively, followed by Russia.