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Russia it has found new clients for its powerful oil and gas industry that are helping it to mitigate heavy economic sanctions imposed by the West.
After the invasion of Ukraine, Russia replaced Saudi Arabia as the main supplier of oil to China.
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According to reports, The Kremlin offered Beijing discounts on its oil and gas priceswhich allowed it to find a market for supplies that it could not sell in the wake of economic sanctions for the war initiated by Moscow.
He also went to India: Before the invasion, 1% of Russian oil exports were destined for the Asian giant, while in May, they increased to 18%.
This has meant that, despite the fact that Russia has seen a drop in its income from oil and gas exports, income from the energy sector is still sufficient to finance, among other things, the military effort that the invasion of Ukraine represents.
discounted oil
According to data from China’s General Administration of Customs, imports of Russian crude – including supplies coming through the East Siberian-Pacific Ocean pipeline – reached 8.42 million tonnes last month.
This represented an increase of 55% compared to last year, reaching record levels in the month of May.
Chinese state-owned companies such as Sinopec and Zhenhua Oil have increased their crude purchases in recent months.
The companies received deep discounts from Russia, as buyers in Europe and the US began to shun Russian oil and gas in the wake of the invasion.
This left Saudi Arabia in second place among the countries that supply oil to China, with 7.82 million tons.
But Russia is not the only country with sanctions from which China is buying oil: according to data published on Monday, Beijing bought 260,000 tons of crude from Iran last month, the third such purchase since December.
legal loopholes
According to a report published last week by the Center for Research on Energy and Clean Air (CREA), Russia has seen a sustained decline in its hydrocarbon sales since the beginning of the imposition of sanctions.
However, the report warns that Moscow has found legal loopholes to continue exporting.
One of them would be to export oil to third countries, such as India, to refine it, and then be able to send that refined product to European countries.
“The report notes that more and more Russian oil is being exported to India for refining and that much of that refined oil finds its way to European markets,” says BBC business correspondent Theo Legget.
“And as Moscow looks for new markets and Russian oil moves from pipelines to ships, most of them are owned by European companies.”
“For the pressure on Russia to be effective, issues like these must be addressed.”
The European dilemma
The European Union remains the main customer for Russian oil and gas.
It is estimated that $59 billion of the $97 billion Russia received in energy exports during the first 100 days of the war in Ukraine came from the EU.
But it has been impossible to reach an agreement to completely ban the purchase of hydrocarbons from Russia.
The EU plans to impose a ban on imports of Russian oil arriving by sea before the end of the year, cutting imports by more than 60%.
In addition, in March, the European community undertook to reduce Russian gas imports by at least two thirds in a one-year period.
For its part, the US decreed a total ban on purchases of oil, gas and coal from Russia, and the UK is expected to do the same before the end of 2022.
What can happen?
“With fuel prices skyrocketing,” says the BBC’s global business correspondent Dharshini David, “it’s not just drivers who line up when they see a discount.”
David explains that India and China have been able to take advantage of the current situation in Russia, but warns that, due to the entry into effect of European sanctions and the transition to other suppliers, the good Russian export moment will only last for a while.
“Russia’s oil profits have already started to fall, and this will intensify as other nations look for alternative sources of energy.”
Source: Elcomercio
I, Ronald Payne, am a journalist and author who dedicated his life to telling the stories that need to be said. I have over 7 years of experience as a reporter and editor, covering everything from politics to business to crime.
