Putin has destroyed the market that Russia built 50 years ago

While Russia has found alternative markets for its oilPrimarily in India, the transition to selling petroleum products and natural gas will take years and involve significant costs, if any, as the world shifts away from fossil fuels.

When Russian forces invaded Ukraine on February 24, 2022, European consumers of Russian energy were horrified, according to Bloomberg. The market, which used to consume nearly 2.5 million barrels of oil per day, another million barrels of petroleum products and 155 billion cubic meters of natural gas per year, has practically disappeared.

Oil flows from Russia to European countries began to decline steadily. Until December 5th, when the European ban on Russian oil imports by sea took effect, Bulgaria was the only remaining market for Moscow, which negotiated a temporary exemption from the sanctions with the European Commission.

gas from Russia. The war changed everything. But is this forever?

According to Bloomberg, Russia has also lost out on the European gas market. A vast network of gas fields and pipelines, built at a cost of hundreds of billions of dollars since the first Russian gas crossed the Austrian border in 1968, has been abandoned.

In 2017, it was estimated that US$100 billion had already been invested in the development of gas deposits on Russia’s Yamal Peninsula, much of which is connected to Europe by pipelines, including pipelines running along the bottom of the Baltic Sea and connected to the Mediterranean Sea. Russia with Germany. Before the war, it was hoped that this amount would double by 2025. Now, most of these investments appear redundant.

While Russia may be able to salvage some energy relations with Europe after the war inevitably ends, it is unlikely that EU countries will become as dependent on Russian gas as they were before the invasion of Ukraine.

Reduced Russian oil

Thanks in large part to the appetite of Indian refiners for cheap oil, Russian oil companies have been able to divert oil supplies that traditional European buyers have stopped importing. However, which cost Russia and its oil industry dearly. Significant discounts were required to enter the Indian market, as low as $35 per barrel, equivalent to a 40 percent price cut.

By the end of last year, Russian barrels accounted for about a quarter of India’s oil imports, displacing traditional suppliers from the Middle East such as Saudi Arabia, Iraq, the United Arab Emirates and Kuwait.

Read also:
Cheap oil from Russia. Putin has found a new buyer

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