Wednesday, October 5, 2022
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EU Still Divided Over Stepping Away From Russian Energy

The European Union nations are divided on how quickly they should reduce their reliance on Russian energy supply.

Despite the imposition of sanctions in other areas of commerce, the EU continues to rely substantially on Russian oil and gas.

Germany’s economic minister stated that the nation will be ready to withstand a Russian oil embargo by the end of 2022, implying that he supports stronger sanctions.

Hungary, on the other hand, has stated that it opposes such a move, stressing that it would not support moves that may jeopardize supply.

Under increasing pressure to limit the funding stream backing President Vladimir Putin’s conflict in Ukraine, EU ministers gathered on Monday to debate how to handle the issue.

Members states confront two major challenges: how to pay for Russian energy without violating or undermining EU sanctions, and how to seek and develop alternative supply to move away from dependency on Russia.

The EU’s energy policy leader, Kadri Simson, told a news conference on Monday that Russia’s decision to cut off gas supplies to Poland and Bulgaria had bolstered the bloc’s resolve to become independent of Russian fossil fuels.

The EU, on the other hand, has imported around £37 billion worth of fossil fuels since the conflict began, according to the Centre for Research on Energy and Clean Air (CREA). Germany and Italy were the world’s two largest importers.

Last week, Russian energy giant Gazprom halted gas deliveries to Poland and Bulgaria after those nations failed to comply with Russian requests to switch to rouble payment, and many other EU member countries are expected to face the same problem by mid-May.

Poland and Bulgaria had intended to cease using Russian gas this year and believe they would be able to adapt, but the move has sparked worries that other EU members, especially Germany, Europe’s gas-dependent economic powerhouse, could follow suit.

Ms Simson reiterated on Monday the European Commission’s position that paying for gas in roubles would be a “violation” of sanctions and “cannot be tolerated.”

She stated that member nations were stockpiling gas storage supplies in preparation for the winter.

According to Nathan Piper, head of oil and gas research at Investec, the EU’s desire to “pivot away” from Russian oil and gas was “quite evident,” but the lack of unanimity was due to the “capacity to really make that happen.”

Russia supplies nearly 40% of Europe’s natural gas and is also the bloc’s largest oil supplier. However, certain nations are more reliant on Russian fossil fuels than others, so supply disruptions might have a significant economic impact.

According to the International Energy Agency, Germany presently imports around 25% of its oil and 40% of its gas from Russia, while Slovakia and Hungary imported 96 percent and 58 percent of their oil respectively from Russia last year.

Robert Habeck, Germany’s economic minister, claimed his nation had “managed to achieve a scenario where Germany can withstand an oil embargo” and was “on track to do the same for gas.”

“Other nations will take a little longer,” he continued.

According to diplomatic sources, concessions to a total bloc ban are being considered, particularly for countries like Hungary and Slovakia.

Bob Carlson
Bob Carlson
Bob Carlson is a business journalist, with over a decade of experience in the trenches of reporting up-to-date business news for publications all over the world. With a wealth of knowledge at his back, Bob strives to bring the most important insights into the business world for TheOptic daily.
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