Ukraine war: how much the world is dependent on Russia's gas and oil

Posted on 29th Mar 2022 by rohit kumar

The US and the European Union have agreed on an agreement to supply liquefied natural gas.

 

Under this, the US will now supply LNG to Europe to reduce Europe's dependence on Russia's energy.

 

The deal was ratified after Russia imposed sanctions on oil and gas imports following the attack on Ukraine in February.

 

What sanctions were imposed on Russia?

 

The US has announced a complete ban on the import of oil, gas, and coal from Russia.

 

After this, Britain has to stop the supply of oil from Russia by the end of this year.

 

At the same time, the European Union is now going to reduce the import of gas coming from Russia by two-thirds.

 

The UK government says this will give it enough time to find alternative supplies.

 

Russian Deputy Prime Minister Alexander Novak has said that not buying Russia's oil would have a "disastrous effect on the world market".

 

It is known that the prices of oil and gas have already increased rapidly. In such a situation, if Russian exports are banned, then the prices will increase further.

 

How much oil does Russia export?

 

Russia is the third-largest producer of crude oil in the world after the US and Saudi Arabia.

 

It exports about 50 lakh barrels of crude oil per day.

 

More than half of this oil goes to Europe. Oil imports from Russia account for 8% of Britain's total oil needs.

 

America's dependence on Russian oil is low. In 2020, about 3% of America's oil was coming from Russia.

 

How will the oil shortage be met?

 

Energy policy researcher Ben McWilliams says it is easier to find an oil supply option than gas, as little oil comes from Russia, "the rest comes from other places."

 

On the other hand, America is asking Saudi Arabia to increase its oil production. However, Saudi Arabia has previously rejected a US request to increase production to reduce oil prices.

 

Saudi Arabia is the largest producer of oil in OPEC, the Organization of the Supplying Countries. It is known that about 60% of the crude oil trade at the international level is done by OPEC. The role of OPEC is very important in setting oil prices. So far, no member of OPEC has agreed to any request to increase production.

 

Russia, however, is not a member of OPEC. But to improve the income of oil producers, he has been working with OPEC since 2017 under the name of 'OPEC Plus'.

 

The US is also considering easing oil export restrictions imposed on Venezuela. Venezuela used to be a major exporter of oil going to America, but now it is selling its oil on a large scale to China.

 

What if Russian gas stops going to Western Europe?

 

Fuel prices, which have already gone up, will then become even more expensive. Russia's share in natural gas going from various countries to the countries of the European Union is currently about 40%.

 

If this source closes, Italy and Germany will be in particular trouble.

 

After that Europe can turn to existing exporters of gas such as Qatar, Algeria, or Nigeria. However, there are many practical obstacles in the way of rapidly increasing production.

 

Russia currently supplies about 5% of the gas supply to the UK. At the same time, America does not order gas from Russia at all.

 

After the Ukraine war, sanctions and other problems caused gas prices in Europe, Britain, and to a lesser extent, the United States, to rise significantly. Although now they have decreased again.

 

Is there an alternative to Russia's gas?

 

The US has agreed to send an additional 15 billion cubic meters of liquefied natural gas (LNG) to Europe by the end of this year.

 

It aims to supply an additional 50 billion cubic meters of gas every year until at least 2030.

 

However, Ben McWilliams, who researches energy policy, says that finding an alternative to the gas exported from Russia is not easy.

 

McWilliams says, "It's hard to find a gas substitute because we have huge pipes leading Russian gas to Europe."

 

Europe can also accelerate the use of other sources of energy, but this may not happen immediately and easily.

 

Another research analyst, Simone Taglipietra, says, "It takes time to start producing renewable energy. So it is not possible to do this in a short time."

 

He says that in such a situation, there are plans to open coal-fired power plants in Italy and Germany to deal with the next winter. It will do a great job in an emergency."

 

The European Union has suggested a plan to rid Europe of Russia's fossil fuels before 2030.

 

This includes measures to diversify the gas supply and stop using gas for heating homes and electricity generation.

 

What will happen to fuel expenses?

Due to this war, consumers will have to face increased electricity and fuel bills. In the UK, fuel bills have been kept under control by curbing fuel prices.

 

However, when the cap on its price is increased in April, the fuel bill will increase from 700 pounds to about 2,000 pounds in April.

 

When prices are raised again in the coming autumn, the fuel bill will reach around £3,000.

 

Petrol and diesel prices have also increased in the UK. Now the government has announced a reduction in fuel duty, as drivers are struggling with record prices.

 

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