HomeMediaMedia PublicationsAnalytics"Europe will refuse Russian gas. This is inevitable"

"Europe will refuse Russian gas. This is inevitable"

30 June 2022

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department

Marcel Salikhov, President of the Institute for Energy and Finance, gave an interview to the Vector magazine on the situation in the oil and gas sector.

- It's no secret that the Russian economy is heavily dependent on the sale of energy resources - oil, gas and coal. But how strong is this dependence? How will a blow to this industry affect other sectors of the economy and ordinary citizens?

— I think it is necessary to separate different degrees of dependence. If we look formally, say, at the share of the extractive sector in the economy, in terms of the structure of GDP, then it is less than 10%. But if we look at the structure of exports, then oil and gas provide more than 60% of the value of exports. That is, most of the foreign exchange earnings that the country earns are still, to one degree or another, associated with raw materials.

Accordingly, there are different estimates: in terms of the structure of GDP, this is an underestimate, which does not quite correctly reflect the real importance of the oil and gas sector, but if we look at the share of oil and gas revenues in the structure of federal budget revenues, then it is somewhere around 35-40%. So in general, anyway, we understand that the Russian economy is based on raw materials.

In general, how has the oil and gas industry been affected (or will be affected in the future) by the restriction on the spare parts supply that it faced due to sanctions?

- Well, it's a serious problem and it's likely to get worse. Now it is rather a harbinger of future difficulties that will arise. Another problem now is that different Western countries are imposing different sanctions.

- How strong is Europe's dependence on Russian energy resources? Is it planned to completely phase out our gas, and is it possible in the foreseeable future?

- Several theses. First, yes, dependence on Russian gas is very high. Russian gas provided approximately 30-40% of the total natural gas consumption in Europe. Of the approximately 450-500 billion [cubic meters per year] of gas consumption, Russia supplied about 150 billion.

It's hard to refuse. But, it seems to me, we have some kind of official narrative about the fact that Europe will not stand it, either it will freeze, or it will collide with something else.

A more likely scenario, in my opinion, is that a divorce will occur. Relatively speaking, from next year or from 2024, Europe will refuse to supply Russian gas, and, accordingly, Gazprom will not supply the European market.

You will receive notifications about the release of new materials on the site. We do not share email addresses with third parties and do not spam.
Thank you!
Your application is accepted.