Photo: Russian tanker Rudolf Samoylovich. G7 ministers agreed to set a price cap on Russian oil to limit Putin’s ability fund the Ukraine war. The plan would rely on refusing Russia access to the vital London insurance market, which covers 95 percent of the global oil shipping industry, if it does not respect the price cap Sept 2, 2022.
MOSCOW – Almost all of Russia’s oil exports this year have been shipped to China and India, Deputy Prime Minister Alexander Novak said on Wednesday, after Moscow responded to Western economic sanctions by quickly rerouting supplies away from Europe.
Russia has successfully circumvented sanctions on its oil and diverted flows from Europe to China and India, which together accounted for around 90% of its crude exports, Novak, who is in charge of the country’s energy sector, told Rossiya-24 state TV.
He said that Russia had already started to forge ties with Asia-Pacific countries before the West introduced sanctions against Moscow following the start of the conflict in Ukraine in February 2022.
“As for those restrictions and embargoes on supplies to Europe and the U.S. that were introduced… this only accelerated the process of reorienting our energy flows,” Novak said.
He said that Europe’s share of Russia’s crude exports has fallen to only about 4-5% from about 40-45%.
“The main partners in the current situation are China, whose share has grown to approximately 45-50%, and, of course, India…Earlier, there basically were no supplies to India; in two years, the total share of supplies to India has come to 40%,” Novak said.
Speaking about the OPEC+ group of leading oil producers, Novak said Russia was sticking to its obligations on supply cuts and it saw the Brent oil price at $80-$85 per barrel next year, broadly in line with current levels.
The United States last month also declared sanctions against Arctic LNG 2, a liquefied natural gas project led by Russian company Novatek (NVTK.MM).
Fearing a backlash from the sanctions, foreign shareholders suspended participation in the project, renouncing their responsibilities for financing and for offtake contracts for the plant, the daily Kommersant reported on Monday.
Sanctions also resulted in Novatek declaring force majeure over LNG supplies from the project, industry sources told Reuters last week.
Novak said the project’s first train has effectively already started producing LNG with the first supplies expected in the first quarter of 2024.
Industry sources said the train had produced the “first drops” of LNG, but it will be some time before it reaches its nameplate capacity of 6.6 million metric tons per year.
(Reuters)
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