Liz Truss discusses moving away from Russian oil and gas
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The European Commission has come under intense pressure to immediately stop importing all of Vladimir Putin’s hydrocarbons. The European Parliament voted overwhelmingly in favour of an instant ban on all Russian fossil fuels yesterday, with MEPs slamming Commission President von der Leyen for not being tough enough. The bloc has threatened that it will come down heavy on Russia after alleged war crimes in Bucha were exposed.
The fifth sanction package includes a ban on coal, and oil and gas bans are expected to follow next.
The EU, which gets 40 percent of its gas from Russia, has still nothing to damage Putin’s gas empire despite handing him €35billion (£29billion) for energy imports since the Ukraine war began.
But European Council President Charles Michel has said sanctions on oil and gas will have to be slapped down “sooner or later”.
This could be a worry for Slovakia, which makes €300million (£250million) a year through dividends and taxes on gas, according to a Finstat institution study.
Slovakia is a key transit country for Russia’s gas to reach Europe and has reportedly seen soaring profits that could be at risk as the EU eyes up more sanctions.
The study revealed that 40 to 70 billion cubic metres of Russian gas transits through Slovakia each year.
The Slovakian state also has a 51 percent stake in Eustream, the company that oversees the transportation of Russia’s gas to western Europe.
And that €300million (£250million) annual revenue loss would fall on Eustream.
The company’s dividends are around €100million (£83million) per year, while its income tax makes up another €125million (£104million).
The rest of the revenue comes from VAT paid by the company.
The Slovakian state’s total revenue from energy is between €400 (£333) and €600 (£500) million.
But if Russia’s gas was cut off due to sanctions, Eustream would be hit directly.
Slovakia’s dependency on both Russian gas and oil is one of the highest in Europe, with 87 percent of gas and two-thirds of its oil coming from Russia.
Despite this, the country is yet to come up with a game plan to cut ties with Russia, despite other heavily dependent countries doing so.
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Germany, which gets just under a third of its gas from Russia, has struck a deal with Qatar to receive deliveries of its liquified natural gas (LNG).
Lithuanian Minister of Foreign Affairs Gabrielius Landsbergis has said that oil is “quite easily replaceable” and urged that energy sanctions are “necessary”.
Slovakia’s biggest oil producer, Slovnaft, has said that it may be able to get oil from the south instead via the Adria pipeline.
The country’s Economy Minister Richard Sulík has said that Slovakia cannot afford to stop importing Russian natural gas and will pay for it in rubles if necessary.
And the country is not alone in the revolt.
Also not too keen on banning Russian imports are Hungary, Austria, Italy and the Netherlands, who all fear that the move would cause chaos to their economies and energy security.
Germany, while changing its tone in recent weeks, has raised the alarm over slashing ties with Putin as 40 percent of its gas comes from Russia.
Cutting off Russian oil would also deal a huge blow to Russia, as the bloc pays more for its oil compared to any other energy source.
Last year, the EU imported a staggering €48.5billion (£38billion) of crude oil in 2021, and €22.5billion (£19billion) of petroleum oils other than crude.
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