Russia’s energy war against Ukraine and the EU

 By Dr. Hriday Sarma
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Putin’s all-encompassing (war) strategy

On January 5, 2023, Russian President Vladimir Putin declared a 36-hour-long cease-fire “along the entire line of contact between the parties in Ukraine” for the Orthodox Christmas holiday.[i] He added, “Based on the fact that a large number of citizens professing orthodoxy live in the combat areas, we call on the Ukrainian side to declare a cease-fire”[ii]

The Kremlin announced that the (unilateral) ceasefire came just hours after the head of Russia’s Orthodox Church made a similar request. Putin’s act suggests that he pays obeisance to the Orthodox Church, which has an estimated membership of more than 90 million in Russia and 200 million in Euro-Asia, most of them in Eastern Europe, Greece and the Caucasus. His act has enabled him to gain a moral high ground among the hardliner followers of the Church within Russia and across Europe. This was a masterstroke to bestow (political)-significance to the Orthodox Church vis-à-vis the growing sway of Islamism under Erdogan right at the vicinity of Russia, and reposition Russia as a leader that will shape the future geo-political scenario in Eurasia.

Dissecting Russia’s ‘Energy great game

On 26 January 2023, Russia’s launched 55 cruise missiles, including at least two hypersonic weapons, against Ukraine that reportedly killed at least 11 people according to emergency services.[iii] This wave of attack on a single day caused several of Ukraine’s regions to implement emergency power cuts in Kyiv, Odesa, and Dnipropetrovsk as critical energy infrastructure facilities in southern Odesa were destroyed.

Now this is not an uncommon event that has happened in course of the ensuing Russia-Ukraine war. Such unprecedented escalation in the level of attack whenever Russian military seems to be on the back-foot has put Ukraine in a deep systemic crisis and it now faces a major energy crisis that it cannot come out in the foreseeable future even with generous IMF loans or Western support.

A big question here is whether this ‘black-hole’ that now exists in Ukraine will remain restrained within its national boundaries or will this steadfastly grow and cause a spillover effect, thus bringing in darkness across the EU?

Already the energy crisis in Ukraine has now turned into a humanitarian crisis for Europe. As per latest UNHCR report, 8 million Ukrainians have left for European countries after the beginning of Russia’s full-scale invasion on 23rd February 2022,[iv] whilst almost 5 million out of them have registered for temporary protection in EU member countries that it issued as an emergency scheme in March 2022. Not all EU countries and groups of people there are happy with the mass influx, such as Hungary and Slovakia. Neither are Ukrainians having an easy time adapting to the new realities in the EU as they strive for basic survival resources and energy, especially at a time when countries in EU are experiencing an unusually long period of severe cold.[v]

Russia has traditionally remained the primary supplier of energy to the EU. In 2021, Russia supplied EU with 26% of its crude oil import (2.2 million barrels per day), which comprised more than half of its global oil exports.[vi] In the same year, Russia supplied EU with almost 45% of its natural gas import (155 billion cubic meters), with Germany the largest importer, followed by Italy and the Netherlands. Little less than half of the solid fossil fuels (mostly coal) imported by EU in 2021 came from Russia.[vii] The number speaks volumes about EU’s overwhelming dependence on Russian energy, thereby enabling Russia to influence, in its favour, different policies formulated at the regional and sub-regional (country) level.

Regardless of the imbalance in the energy trade relationship, EU leaders in March 2021 rolled out the ambitious REPowerEU strategy that aims to achieve EU complete independence from Russian fossil fuels “well before” 2030.[viii] This was mainly in light of the Russian invasion of Ukraine and mounting popular concerns over the security of the energy supply.

A question remains whether this agreement of the EU has translated to any practical measure to stop the import of Russian energy ?

The EU so far has excluded the energy sector from its sanctions targeting Russia. On the other hand, Russia is lately limiting the flow of gas to the European market, which could be a part of its grand (war)-strategy or simply a tactical move to fully repair Nord Stream I (Russia’s largest gas pipeline to Europe) that is suffering from leakage issues.[ix] It is clear that EU cannot afford to disassociate itself from Russian energy right at this point in time.

The EU aims to steadily phase out its fossil import dependence from Russia, as well as from the politically volatile Middle East, but for now that looks more like a rhetoric more than an urgent action-plan. Considering Russia’s deep historic ties, close cultural linkages, people-to-people contacts and downstream presence in critical energy infrastructures in Europe,[x] it can be convincingly argued that Russia will continue to remain one of the major energy supplier to the EU even ahead.

Russia-EU changing energy relationship: (potential) impact on India

India will not remain immune to Russia’s changing political and energy relationship with the EU, mainly with the continuation of the war into 2023 that greatly contributed to EU’s gas imports from Russia falling to 20.1% in the period August-November 2022. Russia will now dedicatedly try to tap into India’s energy deficit market. On 9 December 2022, at a meeting between Deputy Prime Minister Alexander Novak and India’s Ambassador to Russia Pavan Kapoor, Russia offered cooperation on the lease and construction of heavy-tonnage vessels to India for oil shipments.[xi] Sources point that India is deliberating to accept this bilateral partnership deal.[xii]

The second largest oil and gas exporter in the world- Russia – still needs more global markets to hold on to this position and not to lose ground as the most prominent geopolitical power in Eurasia. There could be no better national energy market for Russia than India. However, Russia of today under Putin 2.0 is distinctively different from Russia under Medvedev or Putin 1.0 and its predecessor state Soviet Union.[xiii] Russia has now emerged as a realist actor at the world stage, which is ready to serve its national interests by engaging with any new actors depending on a situational need. On 3 February 2023, Pakistani Minister of State for Petroleum Dr Musadik Malik speaking at the Senate confirmed that an under-discussion oil deal with Russia has been finalized and Russian oil to Pakistan could arrive by April 2023.[xiv]

Here a takeaway lesson for India would be to ramp up its collaboration with Russia on all matters of fossil energy, including striking crude oil and gas futures contracts at a price in its favour, fostering acquisition of Russian oil fields by Indian oil companies (both public and private) and building interoperability in the energy sector of the two countries. In this process, India needs to ensure that it does not disadvantage its geopolitical interests and friendly political-economic ties with the EU, UK and the US.

References

[i] “Указания Президента Российской Федерации Вооружённым Силам Российской Федерации,” President of Russia, January 5, 2023, URL: http://www.kremlin.ru/events/president/news/70330

[ii] Id

[iii] RFE/RL’s Ukrainian Service “Wave Of Russian Air Strikes Kills At Least 11 In Ukraine, Causes Power Cuts,” Radio Free Europe/Radio Liberty. January 26, 2023, URL:  https://www.rferl.org/a/ukraine-missile-attacks-soledar/32240306.html

[iv] UNHCR, Operational Data Portal, “Ukraine Refugee Situation,” UNHRC, URL: https://data.unhcr.org/en/situations/ukraine

Also see : European Commission, Migration and Home Affairs, “Temporary Protection,” European Commission, URL: https://home-affairs.ec.europa.eu/policies/migration-and-asylum/common-european-asylum-system/temporary-protection_en

[v] “European weather: Winter heat records smashed all over continent,” BBC, January 3, 2023, URL: https://www.bbc.com/news/world-europe-64158283

[vi] Bolton, Paul. “Imports of fossil fuels from Russia,” February 14, 2023. UK Parliament, House of Commons Library, URL: https://commonslibrary.parliament.uk/research-briefings/cbp-9523/

[vii] International Energy Agency, “A 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas,” International Energy Agency, March 2022, URL: https://www.iea.org/reports/a-10-point-plan-to-reduce-the-european-unions-reliance-on-russian-natural-gas

[viii]  European Commission, “REPowerEU: A plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition,” European Commission,  May 18, 2022, URL: https://ec.europa.eu/commission/presscorner/detail/en/ip_22_3131

[ix] “Russia indefinitely suspends Europe’s gas flow,” Deutsche Welle, February 2, 2022, URL: https://www.dw.com/en/nord-stream-1-russias-gazprom-announces-indefinite-shutdown-of-pipeline/a-63006660

[x] Zähringer, Fabian. The Expansion of Gazprom Into the European Downstream Market: An Interdisciplinary Analysis of Corporate Strategy and Consumer Preferences. GRIN Verlag, 2018.

[xi] “Russia offers India cooperation on lease and construction of heavy-tonnage vessels” December 9, 2022, TASS, URL: https://tass.com/economy/1548737

[xii] Bhardwaj, Naina “India’s Position on Russian Oil: No to Price Cap, Cooperation in Leasing and Construction of Large Crude Carriers,” Denzan Shira & Associates, December 12, 2022, URL: https://www.india-briefing.com/news/indias-position-on-russian-oil-no-to-price-cap-cooperation-in-leasing-and-construction-of-large-crude-carriers-26657.html/

[xiii] Stent, Angela “Putin 2.0?.” March 27, 2012, Brookings, URL: https://www.brookings.edu/opinions/putin-2-0/

[xiv] “Russian oil starts arriving Pakistan by April 2023,” February 3, 2023, Pakistan Revenue, URL: https://pkrevenue.com/russian-oil-starts-arriving-pakistan-by-april-2023/

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