Gas supplies are approaching a ban

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to Kommersant FM on the prospects for Russian oil and gas exports in terms of the expected EU embargo on them.

According to Reuters, Russia accounts for 12% of EU gas supplies. Before the outbreak of hostilities in Ukraine, the share reached almost half of all imports. Currently, Hungary, France and Belgium are still buying raw materials. Significant difficulties will arise with the transfer of oil and gas volumes to other markets, Alexey Belogoryev believes:

"In any case, this is a bad scenario for Russia. Oil supplies can be partially redirected by sea to Asian markets, although given the pressure on the shadow fleet, this is also a rather difficult task. But the volumes there are still not that big.

And with pipeline gas, the question is whether the European Union agrees to turn a blind eye to the fact that the fuel will be re-exported to Turkey. The most likely scenario is that Ankara will formally purchase gas for the domestic market, but actually re-export it via the existing route, that is, through Bulgaria, Serbia, again to the EU countries, Hungary and Slovakia.

If all “the ends are really cut off”, this will lead to a significant drop in the volume of Russian exports, because, again, there is nowhere to redirect them. The situation regarding LNG is even more complicated. If these volumes are redirected to Asia, the delivery time will increase by about three times, and the cost of transportation will increase by about the same amount. And, accordingly, much more gas carriers will be needed, despite the fact that there is a shortage now. Plus, it is not at all obvious that it will be possible to quickly find alternative sales markets, given the specifics of the LNG market itself."