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Aftermath of the Crisis! The EU Cannot Ban Russian Natural Gas

TraderKnows
TraderKnows
05-09

Following the outbreak of the energy crisis in Europe, consumers are highly concerned about the soaring energy prices and energy supply issues, preventing the European Union from banning Russian natural gas.

Spain's Energy Minister Teresa Ribera stated that due to concerns over soaring energy prices and the potential recurrence of an energy crisis, the European Union has no plans to ban Russian liquefied natural gas (LNG) in the short term.

Since the conflict between Russia and Ukraine, a series of sanctions imposed by Western countries on Russia have led to a decline in Russia's energy revenue. However, liquefied natural gas still generates billions of dollars in revenue for Russia.

Ribera noted that after the outbreak of the energy crisis in Europe, the EU cannot ban Russian gas due to consumer concerns over soaring energy prices and supply issues. Spain will hold the presidency of the EU until the end of December and can prioritize legislative decisions.

Since last year, affected by Western sanctions following the outbreak of the Russia-Ukraine conflict, the explosion of the Nord Stream underwater pipeline, and Russia cutting off gas supplies to Europe, the total amount of natural gas imported by the EU from Russia has declined.

Although the EU has already banned the maritime import of Russian crude oil and diesel and other petroleum products, and plans to cease using Russian fossil fuels by 2027, the import of liquefied natural gas from Russia to Europe increased by 40% from January to July this year, indicating Europe's difficulty in reducing its reliance on Russian gas in the short term.

Ribera stated that if the conflict between Russia and Ukraine persists, the EU's ban on Russian gas will eventually be implemented. However, for the time being, following last year's energy crisis, the European Commission and member states do not wish to experience another energy crisis to avoid causing more social unrest.

Last year, led by natural gas, energy costs soared rapidly, forcing European industry and manufacturing to reduce production, exacerbating the already high inflation situation following the pandemic.

Natural Gas and Inflation

According to data from Russia's Ministry of Finance, Russia's oil and gas revenue fell by 38.1% in the first eight months of this year compared to the same period last year. However, the Brussels-based consulting firm Bruegel stated that despite sanctions on Russia's oil and oil products, natural gas has generated billions of dollars in revenue for Russia. Bruegel estimates that from March 2022 to February this year, Europe bought 12 billion euros ($12.85 billion) worth of natural gas from Russia.

Currently, Spain has become the second-largest buyer of Russian gas. Ribera said that although the Spanish government is exploring how to stop importing Russian natural gas, the country cannot implement a ban without the support of the EU.

Risk Warning and Disclaimer

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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