Russia doubles fossil fuel revenues since Ukraine war

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From selling fossil fuels to the EU, Russia has nearly doubled its revenues during the two months of the war in Ukraine, benefitting from soaring prices even as volumes have been reduced. 

According to a Centre for Research on Energy and Clean Air examination of shipping movements and cargos, Russia has received around €62 billion from oil, gas, and coal exports in the two months since the operation began.

Imports into the EU totaled nearly €44 billion in the last two months, compared to about €140 billion for the entire year last year, or about €12 billion per month.

Even though Russia's exports have been restricted by the war and sanctions, the country's supremacy as a source of gas has meant cutting off supplies for refusing the Russian terms of payment, sending prices through the roof, which were already high due to tight supply as global economies recovered from the Covid-19 outbreak.

Oil shipments plummet 

According to CREA data, crude oil shipments from Russia to international ports plummeted by 30% in the first three weeks of April compared to rates in January and February prior to the operation.

However, the higher prices Russia can now command for its oil and gas mean that its profits, which flow practically straight to the Russian government through state-owned enterprises, have increased even as sanctions and export restrictions pinch.

Russia has essentially caught the EU in its own trap, in which additional limitations will boost prices even further, padding its income despite EU politicians' best efforts to choke the country with sanctions.

Russia, yesterday, cut off fossil fuel supplies to Poland and Bulgaria, causing an outcry.

Trade ongoing with Russia

According to CREA data, several fossil fuel companies, including BP, Shell, and ExxonMobil, continue to undertake significant trade with Russia.

Despite repeated official assurances that reducing reliance on Russian oil was a top priority, Germany was the largest importer in the last two months. During that time, the country spent almost €9 billion on imports.

Italy and the Netherlands were also significant importers, with approximately €6.8 billion and €5.6 billion, respectively, but because those countries have major ports that take in products for refining and use in the chemical industries, as well as for domestic consumption, many of those imports were likely used elsewhere.

"In collaboration with governments, we have stated our intention to depart our joint ventures with Gazprom and allied organizations, as well as phase-out of Russian hydrocarbons," according to a Shell representative.

We have ceased all spot purchases of Russian crude, liquefied natural gas, and cargos of refined products directly exported from Russia since announcing this intention.

Read next: Germany to pay for Russian gas per Russian conditions

Moreover, a spokesperson for Exxon said, “We support the internationally coordinated efforts to bring Russia’s unprovoked attack to an end, and we are complying with all sanctions. We have not made any new contracts for Russian products since the Russian operation, and there are no deliveries of Russian crude or refined products currently scheduled for the UK. We will not invest in new developments in Russia.”

“Two months after Putin invaded Ukraine, Germany is still funding the Russian war chest to the tune of €4.5bn a month. Berlin is the largest buyer of Russian fossil fuels,” Bernice Lee, a research director at the Chatham House thinktank, told the Guardian.

“The world is looking to Germany to demonstrate strength and determination towards Russia, but instead they’re bankrolling the war and blocking a European embargo on Russian oil.”