By Antonio Suárez-Bustamante and Javier Albisu
Brussels, Aug 24 (EFE).- Energy prices have skyrocketed to such an extent since Russia’s invasion of Ukraine that the European Union is now paying 89% more for Russian hydrocarbons compared to a year ago.
The EU is currently spending 13.9 billion euros a month in coal, oil and gas purchases from Russia compared to the 7.3 billion it spent on average last year at a time when prices were already on the rise in response to a hike in demand as pandemic recovery efforts set in.
The calculations are based on Eurostat data between March and June this year compared to the same period in 2021 and indicate an 89% increase in value despite a 15% drop in imports.
The average monthly expenditure of this comparison is similar to that offered by the Center for Research on Energy and Clean Air, which shows that the EU has paid Moscow 14.1 billion euros for coal, oil and gas since Russian troops invaded Ukraine on February 24, six months ago today.
According to the Helsinki-based institute, the EU has paid some 85 billion euros to Russia since the invasion began, close to the 102 billion forked out in all of 2021.
This source of income for the Kremlin, coupled with the drop in imports due to international sanctions, is behind Russia’s current account surplus, multiplying it by more than three between January and July of this year to hit a figure of $166.6 billion, according to data from the Central Bank of Russia.
In a bid to safeguard supplies over winter and protect itself in the eventuality that Russian leader Vladimir Putin cuts off gas altogether, the EU has filled its storage deposits up to 77.74% of capacity while pledging to reduce consumption by 15%.
The bloc is also substituting Russian supplies with liquified natural gas from Qatar, Egypt and the United States. US supplies to the EU rose from 34 billion cubic meters of gas in all of 2021 to 57bcm in the first half of 2022.
But LNG is expensive compared to pipeline gas. Added to this equation is the fact that the euro has dropped to a 20 year low against the dollar since the war began. In April 2008, one euro bought $1.59, today it buys $0.99.
The EU has published a raft of sanctions against Moscow. The European Commission, the bloc’s executive arm, insists that the effects of these measures will be seen over the long-term.
“We need strategic patience until Russia stops its aggression and Ukraine can recover its sovereignty in full,” the EU’s top diplomat Josep Borrell said in July, before planned energy sanctions had been put in place.
An EU ban on Russian coal imports, approved in April, only came into effect on August 11 while oil sanctions — drawn up with some caveats — are not due until January 2023.
Additionally, the drop in long-term gas purchases must be factored in.
At the end of June, the flow of gas had fallen by 30% compared to the average for the 2016-2021 period, according to data from the European Commission’s Joint Research Center.
This means, according to data recently shared by the head of European diplomacy, that Russian gas now represents 20% of total consumption in the EU, compared to 40% prior to the military aggression against Ukraine.EFE