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Russian Oil Sector under Sanctions Pressure: Lessons of Survival

Russian Oil Sector under Sanctions Pressure: Lessons of Survival

The pressure of sanctions on the Russian oil industry is rising.

An embargo on seaborne oil supplies from Russia to the EU took effect on 5 December. Simultaneously into operation went the mechanism of a price cap invented by the US and supported by the G7 countries, the EU, Australia, Norway, and Switzerland.

Meanwhile, these are by no means the first sanctions introduced against the industry since the beginning of the special military operation. Suffice it to say that the price cap is part of what is already the eighth package of sanctions. The oil industry has faced not only export restrictions, but a ban on equipment supplies and withdrawal of Western partners from Russia.

The NESF report will enable summarising the first results of the oil industry’s response to the heavy sanctions and seeing how successful resistance to this pressure has been.

You will find the following subjects in the report:

Status of Russian oil production, including a regional breakdown

Dynamics of Russian oil exports broken down by:

  • Main ports and sales destinations
  • Supplies by pipeline as well as exports from Baltic, Arctic, Black Sea, and Pacific ports

New “safe havens” for Russian oil

  • Growth in sales to China and Turkey
  • Conquering the Indian market
  • Discounts: the other side of redirection

The price cap mechanism in the US, UK, and EU legislation

New sales logistics and infrastructure

  • Meeting Russian tanker requirements in the context of sanctions
  • Buying up old ships on the global market
  • Solution to the insurance problem
  • Techniques of “grey” sales: transshipment at sea and in “grey” ports

Russian oil refining during sanctions

  • How serious technological restrictions are for fuel production
  • Status of import substitution

Russian oilfield services industry since the introduction of sanctions

  • Role of Western companies in the Russian oilfield services market
  • Schemes of their withdrawal from Russia and actual implications

Future outlook

Contents of the report:

INTRODUCTION 3
RUSSIAN OIL PRODUCTION 5
DYNAMICS OF RUSSIAN SEABORNE OIL EXPORTS BROKEN DOWN BY MAIN PORTS AND DESTINATIONS 12
NEW ‘CENTRES OF ATTRACTION’ OF RUSSIAN OIL 20
Discounts as payment for new markets 20
China 25
India 32
Turkey 35
ANALYSIS OF US, UK, AND EU PROPOSALS FOR PRICE CAP ON RUSSIAN OIL EXPORTS 37
US 37
United Kingdom 38
EU 39
First Results of Price Cap Operation 40
MEETING RUSSIAN TANKER REQUIREMENTS IN CONTEXT OF SANCTIONS 43
RUSSIAN OIL REFINING DURING SANCTIONS 47
RUSSIAN OILFIELD SERVICES AFTER INTRODUCTION OF SANCTIONS 58
FUTURE OUTLOOK 64
Date of release: February 6, 2023

If you are interested to obtain please contact » Elena Kim

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Analytical series “The Fuel and Energy Complex of Russia”:

Outlook for Russian LNG Industry
Russian Energy and West One Year after Ukraine Conflict Began: Are There Connections Still?
Green Agenda in Russia during Bitter Conflict with West
After February 2022 the agenda was radically rewritten. Western companies began leaving Russia en masse, economic relations with the West were drastically reduced, and the Russian economy began to be pushed violently from the global economic space, hemmed in by sweeping sanctions. All that was, to put it mildly, not the best background for talking about ESG. Especially because tasks of survival and stability under unprecedented pressure became the priority in the economy. In late 2022, however, attempts to reanimate the ESG agenda already became obvious. The message is put across insistently that it is important to Russia regardless of the foreign policy situation. While earlier the “green pivot” was seen as an opportunity to attract Western investors and their technological solutions to Russia, now Keynesian reliance on domestic manufacture is discussed.
Oil and Gas Sector Regulation in 2022 and Prospects for 2023
Gazprom at the Forefront of Economic and Political Battles with Europe
Gazprom is being actively thrown out of the market. Its annual supplies to Europe have shrunk from the previous 150 billion to 65 billion cubic metres of gas. European officials assure that they have already learnt how to live without Russian gas, so they will bring its purchases down to but nominal values in 2023. Their main hope is liquefied natural gas. Today the EU must make a crucial decision: whether it has passed the point of no return in gas business with Russia and whether it is certain that its economy will endure without supplies of Russian pipeline gas. Or, on the contrary, Europe will realise after all that the gas balance will not be achieved and the payment for so headlong a rush for LNG will be disproportionate. Assessment of the potential volume of LNG that will appear on the market before the end of the current decade will be the most important factor for making the decision.

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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