Thanks to the EU, Russia Will Earn More from Oil and Gas This Year than in 2021.

The Russian invasion of Ukraine enters its 100th day, and despite increased sanctions, Russia continues to earn around $800 million daily from oil and gas due to rising energy prices, according to Bloomberg Economics. The rise in oil prices, which have surged by about 50% this year and reached their highest level in the last 13 years, has bolstered the Russian treasury, leading Bloomberg to predict that Russia’s profits from oil and gas could reach $285 billion this year.

A large portion of these unexpected revenues can be attributed to the European Union, which swears by its sanctions and assures its citizens that the sanctions are intended to harm Russia and diminish its war capabilities. However, judging by the revenues expected by the Russians, the only damage from the sanctions will be borne by EU citizens, who are already paying higher prices for both oil and gas.

The Union receives about 40% of its natural gas from Russia, and some countries, such as Germany, the largest EU economy, heavily rely on energy from Russia. According to the U.S. Energy Information Administration (EIA), Europe is a key destination for Russian energy exports, and overall, Europe is the main buyer of Russian energy resources, accounting for about 50% of the country’s crude oil exports and 75% of its natural gas exports in 2021.

In the first two months of the war in Ukraine, which began on February 24, the EU spent €39 billion on Russian fossil fuels, which constitutes 70% of the country’s exports. This made the EU by far the largest buyer of Russian fossil fuels, according to a report by the Centre for Research on Energy and Clean Air (CREA).

During this period, Germany was the largest individual buyer, spending €8.3 billion on imports, the second-largest buyer in the EU was the Netherlands, which spent €6 billion, and Italy ranked third with €4.3 billion. As a result, the Centre for Research on Energy and Clean Air concludes that the sanctions have been ‘undermined by the continuous import of fossil fuels from Russia, particularly in the EU’ and that ‘the export of fossil fuels is a key factor in strengthening the Russian military.’

Although the EU now swears by renewable energy sources that should replace dependence on Russian energy resources, that story will not happen for quite some time. As we have already written in Lider, to achieve independence and reach net-zero emissions by 2050, EU countries would need to allocate about $3.5 billion annually, which currently falls under science fiction, just as it is science fiction that green energy will completely replace fossil fuels, as such a transition would require a fundamental transformation of the global economy, which is certainly not in sight.