New research by the Center for Research on Energy and Clean Air (CREA) released on April 28 shows that Russia has nearly doubled its revenues from sales of fossil fuels to the EU during the two months of war in Ukraine.
Soaring prices have more than compensated Russia for the loss in sales volume due to sanctions, the research shows.
Researchers at CREA also say new sanctions promise to drive up prices even more, nullifying efforts to prevent Russian President Vladimir Putin from using energy to pressure the EU and to finance the war against Ukraine.
Since the start of the war, Russia has sold 46 billion euros worth of energy resources to the European Union, and the figure continues to rise. This is about twice as much as the amount of sales in the same period in 2021, according to CREA.
Even though there was a decline in the volume of sales, the increase in the price of oil brought Moscow about 63 billion euros ($66 billion) on the energy exported on ships and through pipelines since the invasion was launched on February 24.
According to CREA, the volume of Russian oil imported by the EU fell by 20 percent and coal by 40 percent. However, gas imports grew, and Germany remains the main buyer. During the two months of the war, it imported energy products worth 9 billion euros.
Lauri Millivirta, lead analyst at CREA, said the continued export of energy "is a big hole in the sanctions" and all countries that buy fuel from Russia "become complicit in the monstrous violations of international law committed by the Russian military."
Comment: This seems like a bit of cosmic justice.
The only way to stop the war would be a quick and complete rejection of Russian energy carriers, she believes.
Comment: Unlikely, to understate the matter.
The European Parliament in March adopted a resolution calling for an embargo on Russian energy, but so far the European Union has only discussed such an embargo. The EU has imposed an embargo on Russian coal that will take effect from August.
The German government has ruled out a gas embargo because of the economic damage it would cause, but Chancellor Olaf Scholz said on April 28 that Germany must prepare for Russia to suspend gas deliveries.
"Whether and what decision the Russian government will make in this regard is speculation, but...one has to prepare for it," Scholz said during a visit to Tokyo. The German government already has started preparing for the possibility that Russia will cut off gas supplies, he added.
The CREA research was reported as Russian energy giant Gazprom announced a soaring net profit for last year, citing high energy prices as the main reason for the increase.
Gazprom said in a statement that its net profit hit 2.09 trillion rubles ($29 billion) in 2021, up from 135 billion rubles the year before when profits slumped due to the global pandemic and falling energy prices.
"The main factor that affected the financial result was an increase in gas and oil prices," the state-controlled company said in a statement.
Global energy prices have soared since last year as economies began emerging from COVID-19 pandemic lockdowns. Prices have risen further in the wake of Russia's military operation in Ukraine.
Gazprom also forecast a fall in gas output of about 4 percent this year in another sign of the impact of Western sanctions against Moscow.
Gazprom on April 27 announced the halt of gas supplies to EU members Poland and Bulgaria, saying they had violated Putin's order that payments for gas be made in rubles.
Putin made the demand in retaliation for the West's economic sanctions against Moscow over the Ukraine conflict.
Although the sanctions had led to an increased level of economic uncertainty in Russia, Gazprom said the situation did not "call into question the consistency" of its operations.
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