Despite Sanctions, Europe Continues to Bankroll Russia for Gas, Oil

Western nations are continuing to pay Russia hundreds of millions of dollars every day for gas and oil imports, despite the tough sanctions imposed on the country’s banking and aviation sectors following its invasion of Ukraine.

With around 40% of Europe’s oil and gas imported from Russia, governments are scrambling to find alternatives. European Union ministers met Monday in Brussels to discuss how to break the dependency.

Russia dependency

“Every day we spend 350 million euros, which we give to the Russian system, to be able for them to invest in arms, which are dropping on the city of Kyiv and elsewhere today. So yes, for climate reasons and for the security of our people, we need to reassess that dependency on fossil fuels,” Eamon Ryan, Ireland’s minister for the environment, climate and communications, told Reuters.

Russia supplies about a third of Europe’s gas, and the latest figures show imports have increased since its invasion of Ukraine. The soaring price makes trade even more profitable, and analysts say there are no quick alternatives.

“I think that the West is going to try to continue to hold back on sanctioning on the oil and gas sector,” said Douglas Rediker, a nonresident fellow at the Washington-based Brookings Institution.

Gas imports

Germany is among the EU states most dependent on Russian energy. Last week, it announced the cancellation of the $11 billion Nord Stream 2 gas pipeline from Russia.

Gas industry executives say the fossil fuel will remain vital for Germany’s economy.

“We have to think about the future,” Timm Kehler, managing director of the Zukunft Gas Association told Reuters. “Germany will need more gas because domestic production is declining, because we also need more gas-fired power plants, because we will also use more gas in other industrial sectors in order to achieve the climate targets. And we have to answer the question, ‘Where will gas come from in the future?’ Nord Stream 2 has played a very central role in this up till now.”

Energy U-turn

In recent days, Germany’s government has signaled a dramatic U-turn on energy policy. Addressing lawmakers Sunday, Chancellor Olaf Scholz announced plans to build two liquefied natural gas (LNG) terminals to diversify supply. Europe’s LNG imports hit a record high in January, with nearly half coming from the United States.

Germany had pledged to switch off its nuclear power stations by the end of this year and all coal-fired plants by 2030. Scholz said those decisions could be reversed following Russia’s invasion of Ukraine.

“The events of the past few days have shown us that responsible, forward-looking energy policy is decisive not only for our economy and the environment. It is also decisive for our security. … We must change course to overcome our dependence on imports from individual energy suppliers,” Scholz said at the emergency session of parliament on Sunday.

Renewables

German ministers are drafting laws to ensure renewable energy sources will account for 100% of Germany’s power supply by 2035. The continent must speed up the change, said former environment and energy secretary Rainer Baake, now managing director at the Berlin-based Climate Neutrality Foundation.

“Now we have to talk about even faster implementation of these plans. I think it is doable. It has to happen in all sectors. It has to happen in the power sector. It has to happen in the transport sector, in the heating sector, and of course also in the industrial sector,” Baake said.

“There should be a very clear message to Russia now: We don’t want your gas, and we don’t want your oil in the future. It’s going to be painful, because prices are probably going to be higher. But the only way to free ourselves from this dependency from fossil fuels is to put efficiency and renewables instead of the fossil energies,” Baake told VOA.

Cutting ties

Meanwhile, European energy giants have announced they are offloading their stakes in Russian oil firms worth billions of dollars. British Petroleum said it would sell its 20% share in Russian state-owned firm Rosneft, while Royal Dutch Shell said Monday it would end its joint ventures with Gazprom.

“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,” Shell’s chief executive, Ben van Beurden, told reporters.
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