How dependent is Europe on Russian oil and gas?

Europe's dependence on Russian oil

Russia is the world's third-largest oil producer after the United States and Saudi Arabia, pumping about 10 million barrels a day, about half of which is exported to Europe.

Overall, the Netherlands, Germany and Poland are the biggest buyers of Russian oil in Europe. In 2020, the Netherlands will import an average of nearly 550,000 BPD from Russia, Germany 520,000 BPD and Poland 330,000 BPD. Finland, Slovakia, Italy and Lithuania all import more than 100,000 barrels of Russian oil per day.

Averaging across countries, the EU currently consumes 29 percent of its oil from Russia. This may not seem like a high number, but if we focus on individual countries, there are some European countries whose dependence on Russian oil cannot be eliminated in the short term. Slovakia and Hungary are the best examples - 96% and 58% of their oil in 2020 will come from Russia. That is why the European Union announced that Slovakia and Hungary would be exempted from the oil embargo for a limited period.

However, researcher Ben McWilliams said it should be easier for Europe to find alternative suppliers of oil than gas because "there are a lot of sources from other places as well." As for the EU, in addition to about 29 percent of its oil imports from Russia, the EU also imports 9 percent from the United States, 8 percent from Norway, 7 percent from Saudi Arabia and the United Kingdom, and 6 percent from Kazakhstan and Nigeria.

Although Europe is relatively poor in fossil fuel resources, it also has a certain amount of oil, especially Norway and the United Kingdom (although not a member of the European Union), in the world's national oil reserves ranking 18th and 26th. In addition, the United States and other countries have announced the release of large amounts of oil from national reserves, which now total about 120 million barrels, the largest reserve release in history. This has eased high oil prices.

So European countries still have some wiggle room in oil, though not much.

Europe's dependence on Russian gas

The real trouble for Europe is gas. Despite the European Union's vow in March to cut Russian gas imports by two-thirds this year, reports suggest that Russian gas exports to Europe actually increased by 20% in the first two months of the war, while oil and coal exports fell.

Currently, Europe gets about 36 percent of its gas from Russia, while the European Union gets about 43 percent of its gas from Russia. In 2021, the EU imported 155 billion cubic meters of Russian gas, including 142 billion cubic meters of pipeline gas and 14 billion cubic meters of liquefied natural gas. In addition to Russia, the EU imports 21% of its gas from Norway, 8% from Algeria and 5% from Qatar.

For Europe, which upholds the concept of "green", natural gas is not a renewable energy source, but it is also a much more environmentally friendly energy product than coal and oil, and much more affordable and convenient than new energy. As a result, European countries are particularly fond of natural gas, which accounts for about 25% of European energy consumption. But with its own gas capacity depleted and only 1% of the world's proven reserves, Europe is particularly dependent on external imports. This makes Russia, which accounts for 43% of EU gas consumption, a natural lifeline for the bloc.

Among EU countries, Germany is particularly dependent on Russian gas. Germany now gets more than half of its gas from Russia, and a third of Russia's gas exports to Europe go to Germany. This is why Germany spared no effort to promote the construction of Nord Stream 2 before the outbreak of the war between Russia and Ukraine, and has been hesitant to ban the import of Russian gas after the war. German-russian gas trade has a very long history, beginning in the 1960s, when West Germany and the Soviet Union did not even formally establish diplomatic relations, which is enough to demonstrate the importance of energy trade in German-Russian relations.

It would be very difficult for the EU to completely abandon Russian gas in a short period of time. The trend away from coal and oil, the current shortage of renewable energy, and increasingly cold winters in Europe have led to a slow increase in European gas demand in recent years, while Europe's own production has been declining year by year, which has caused the import gap to rise year by year. Since 2016, Europe's net imports of natural gas have increased by more than 80 billion cubic meters.

The European Union has also sought to diversify its sources of gas. In recent years, Europe has increased its imports of LNG from other countries, such as the United States and Qatar (although there is also a lot of Russian LNG). But liquefied natural gas is expensive and has to go through the regasification process, so it is far less affordable and convenient than pipeline natural gas. Natural gas from traditional energy trading partners such as Algeria and Qatar has declined rather than rising, and the process of seeking natural gas imports from Azerbaijan and Central Asian countries has stalled, which has led to the EU ultimately choosing Russian gas.

After the outbreak of war between Russia and Ukraine, the European Union was eager to expand its sources of gas. At present, the United States has agreed to ship 15 billion cubic meters of liquefied natural gas to Europe by the end of the year, but this 15 billion can be said to be a drop in the bucket. And finding more gas from other countries in the short term is not so easy, because these countries have limited capacity and tend to prioritize buyers who already have contracts with them. Not to mention the cost and distance disadvantage of these countries compared to Russia.

After announcing in March that it would reduce Russian gas imports as much as possible, the European Commission calculated what would replace the two-thirds of Russian gas imports (about 100bn cubic metres) : 50bn cubic metres of ultra-cooled LNG and liquefied natural gas from other sources, and 10bn cubic metres of pipeline gas; This is followed by 20 BCM of reduced demand from new solar and wind projects coming online this year; Finally, 14 billion cubic meters of demand is reduced through efficiency gains.

But anyone with a discernable eye can see that this plan is far too ideal, and that Europe is simply not ready to replace Russian gas. In the immediate aftermath of the war, European gas prices hit a record high, and although they have since fallen quickly, they remain high. A growing number of people are also complaining about high energy prices, and few believe Europe can survive the next winter without Russian gas. This is especially true after Russia stopped supplying gas to Poland and Bulgaria. The impact of the embargo on the European economy is self-evident. It is estimated that a total embargo on Russian energy would reduce Germany's GDP by 2-6% this year.

Eu gas prices

At present, the EU is facing a dilemma in terms of energy: on the one hand, if it continues to import energy from Russia, then the EU will have to pay Russia 1 billion euros a day just to buy fossil fuels (coal, oil, natural gas), and this 1 billion euros can be turned into a bullet to Ukraine; On the other hand, a ban on Russian energy will undoubtedly cause the European economy to plummeet, make the lives of ordinary people more difficult, and then affect social and political stability.

It is sad that the energy that once created a "win-win" situation has now become a weapon of mutual threat. Hope for world peace.