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Energy is a key area of the game between the United States and the West and Russia in the context of the Russia-Ukraine conflict. Up to now, the United States and the West have imposed multiple rounds of sanctions on Russia's energy sector, and are considering new restrictions. Under tremendous pressure, Russia's energy exports have not been substantially affected, but the prospects are unclear. In response to the current predicament, Russia has actively adjusted its positioning and shifted its focus to the Asia-Pacific market.

Layer upon layer of energy sanctions

Since the conflict between Russia and Ukraine, the United States and the West have targeted Russia's financial lifeline and energy lifeline to carry out precise and severe strikes. However, due to the high dependence of Europe on Russia's energy, it is difficult to impose sanctions on Russia's energy in one step.

After the outbreak of the Russia-Ukraine conflict, countries in demand for Russian oil, such as the United States, Canada, Australia and the United Kingdom, immediately announced sanctions against Russia and implemented a series of measures such as the withdrawal of energy companies from the Russian market. In June, EU member states introduced a sixth round of sanctions after lengthy discussions, planning to impose an embargo on Russian oil. According to the sanctions, the EU will gradually give up the import of Russian seaborne oil, including crude oil and petroleum products, but will temporarily allow the import of Russian oil through the "Friendship" oil pipeline. In addition, the EU plans to coordinate actions with the United States, Britain, Canada, Japan and other countries to maximize the difficulty of Russian oil transportation.

Recently, the United States and its allies are discussing related measures to limit Russia's oil export revenue, including setting a limit on the price of Russian oil and studying the possibility of setting the limit at half the current price, about $40 to $60 a barrel. , buyers are not allowed to buy Russian oil above the limit price. Among them, the Japanese government is more active, saying that Japan will discuss with the G7 countries the details of the mechanism to restrict Russian oil prices.

Dmitry Medvedev, vice chairman of the Russian National Security Council, said that the "translation" of Japan's statement into Russian means that, first, oil in the international market will be significantly reduced, and its price may reach an astronomical figure of $300 to $400; second, Japan There will be no access to Russian oil and gas. Russian Deputy Prime Minister Novak said that the idea of G7 countries to limit Russian oil prices is "another attempt by Western countries to intervene in the market mechanism", and the decision "will only lead to market imbalances and energy shortages", which will lead to world market prices. European consumers will be forced to pay higher prices for energy.

Negative effects gradually appear

Russian President Vladimir Putin said in a meeting with members of the Russian government a few days ago that despite the unprecedented pressure of sanctions, the situation in Russia's fuel and energy industries is still quite stable, and some key indicators have even increased. Data show that, compared with severe sanctions, the negative impact on the Russian energy industry is not as severe as expected.

In terms of production capacity, in May, Russia's oil extraction volume increased by 1.1% month-on-month and decreased by 2.7% year-on-year. The primary oil refining volume has recovered to the level of 2021 after experiencing a cliff-like decline in March and April. Novak said that Russian oil production has recovered from the decline in March and April, and output in June almost reached the level of February, with an average output of 9.74 million barrels per day. In terms of exports, the average daily export volume of Russian oil in June fell by 250,000 barrels from the previous month to 7.4 million barrels. Alexei Gromov, director of the Energy Department of the Russian Institute of Energy and Finance, said that before the start of European sanctions on Russian oil products, Russia's exports of oil products to Europe will not decline significantly in the second half of 2022.

However, Russian experts believe that the West's energy sanctions against Russia are not "one-shot", and its negative impact on Russia will gradually appear over time. Gromov said that nearly 60% of Russia's oil exports and nearly 70% of its petroleum products exports are in the "risk zone" that has been sanctioned or will be sanctioned. According to its forecast, taking into account the EU embargo sanctions starting in December 2022 and February 2023, it is predicted that the impact of the decline in Russia's oil production indicators and the decline in Russia's budget revenue will appear in 2023.

Repositioning of energy exports

Under the threat of sanctions, Russia's energy exports are looking for alternative markets, and the Asian market has become Russia's focus. The huge potential of Asian markets, including China and India, is attracting Russian oil and gas exports to accelerate eastward, which has become a priority for the Russian energy industry. Putin said that in response to the challenge of Western sanctions, the Russian energy industry must formulate and implement a long-term development plan, take infrastructure construction as a priority, and realize the diversification of Russian energy exports to potential markets such as the east and south.

However, the repositioning of the energy market will take time. Europe is the traditional direction of Russia's energy exports. The energy transportation infrastructure is relatively complete, but the transportation capacity is mostly idle under the background of sanctions. As a potential market, Asia-Pacific is facing the practical difficulty of full capacity. In this regard, Patrushev, Secretary of the Russian Security Committee, said that Russia needs to speed up the development of energy infrastructure in the Far East to increase the scope of transportation in the east and the throughput of border ports.

Putin said that the Russian government is formulating relevant plans to supply oil to friendly countries through infrastructure such as railways, shipping and pipelines, and to increase the supply of natural gas to the eastern and Russian markets through natural gas infrastructure.