An economist analyzes the possibilities that the European Union has of finding substitutes for the hydrocarbons that Moscow provided until recently.
Jacques Sapir, professor of economics at Moscow State University, expressed his opinion about the “serious geopolitical consequences”
that may lead to the conflict in Ukraine.
The expert points out that the sanctions introduced by the European Union against Russia caused significant damage to their bilateral relations in the energy sector. “The consequences of the energy drought, and not only for gas, but also for coal and oil, are especially significant”
considering Keep in mind “that there will be no quick alternatives”, reads the article, published this Tuesday in the journal Russia in Global Affairs.
Sapir emphasizes that, “to understand the scale of the problem, we must first understand the scope of the EU’s energy dependency on Russia”. “This situation did not arise suddenly or from scratch,” stresses the also professor at the School of Higher Studies in Social Sciences. According to Sapir, this is a calculation of savings, since the cheap energy provided by Russia was seen by certain European countries as “an opportunity and even a condition to increase their economic competitiveness in the world”.
However, the sanctions approved by European countries against Moscow for its military operation in the neighboring country soon caused “a global energy crisis” that affected above all the continent itself, says the expert. Sapir adds that it should not be forgotten that it was the rejection by member states of the solution proposed by Moscow that caused the interruption of the continuous flow of supplies. “It has also been forgotten that these sanctions have not changed Russia’s key role as a supplier of various types of raw materials,” he stresses.
Gas
Due to the cut in the supply of Russian hydrocarbons, the exploration of possible alternatives to replace them. One of them would be liquefied natural gas (LNG), but this would not have the capacity to cover the volume provided by Russian gas pipelines . In addition, regasification facilities are few and “replacing Russian gas with LNG would involve building three times the number of existing facilities, which would take between three and five years,” says the expert, specifying that a large number of carriers would also be needed. of LNG, which would mean “another costly and slow process”.
On the other hand, liquefied natural gas is more expensive and European countries will have to pay between 25 % and a 33 % more for its cost. “That will not improve economic competitiveness,” he stresses.
The oil
As far as oil is concerned, its dependence “is somewhat less pronounced and substitution is theoretically easier”, but so far “the will of the countries of the so-called group OPEC+ to significantly increase production,” says the professor, saying that the substitution of crude oil also requires “significant time” and entails high costs.
Charcoal
Russian coal could also be substituted, but keep in mind that mines in the United States, Poland and Australia are already operating at full capacity and their production volume cannot be compared with imports from Russia. Therefore, the increase in production necessary to cover this gap would take between a year and a half and two years, in addition to assuming a high cost.
“Boomerang effect”
“A quick assessment of the situation reveals that, yes, it is possible to replace the energy supplied by Russia with other sources, but the factors of time and cost are unknown and will surely be significant,” he says. the article, posing a very topical question: “What will happen this winter and during the next two winters”
while European countries seek the independence of Russian energy?
Sapir emphasized that European sanctions against Russia are generating “a great boomerang effect” and will affect Europe’s economy both this winter and in the future . “Therefore, it is at this time that crucial political questions will arise regarding the appropriateness of the EU countries’ policy towards Russia,” he concluded.
