Energy is a key area of the U.S.-Western game with Russia in the context of the Russia-Ukraine conflict. So far, the U.S. and the West have imposed several rounds of sanctions on Russia's energy sector, and new restrictive measures are in the pipeline. Under great pressure, Russia's energy exports have not been materially affected for the time being, but the future is uncertain. To cope with the current difficulties, Russia is actively adjusting its positioning and shifting its focus to the Asia-Pacific market.

　　Energy sanctions are increasing in layers

　　Since the Russia-Ukraine conflict, the U.S. and the West have targeted Russia's financial and energy lifelines with precise and severe strikes. However, due to Europe's high dependence on Russian energy, it is difficult to impose energy sanctions on Russia in one step, and can only adopt a step-by-step approach.

　　After the outbreak of the Russia-Ukraine conflict, the United States, Canada, Australia and the United Kingdom and other countries with demand for Russian oil first announced sanctions against Russia, implementing a series of measures such as the withdrawal of energy companies from the Russian market. in June, the EU member states launched the sixth round of sanctions after a long discussion, planning to impose an embargo on Russian oil. According to the sanctions, the EU will gradually abandon the import of Russian oil by sea, 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 and Japan to maximize the difficulty of transporting Russian oil.

　　Recently, the U.S. and its allies are discussing measures to limit Russian oil export revenues, 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 per barrel, and not allowing buyers to buy Russian oil at a price higher than the limit. The Japanese government is more active, saying it will discuss the details of a mechanism to limit Russian oil prices with the Group of Seven (G7) countries.

　　According to Russian National Security Council Deputy Chairman Dmitry Medvedev, the Japanese statement, "translated" into Russian, means, first, that oil will be significantly reduced on the international market and its price may reach the astronomical figure of $300 to $400; second, Japan will not have access to Russian oil and gas. Russian Deputy Prime Minister Novak said that the idea of G7 countries to limit the price of Russian oil is "another attempt by the West to interfere with the market mechanism" and that the decision "will only lead to market imbalances and energy shortages", which in turn will lead to higher prices on the world market, with European Consumers in Europe will be forced to buy energy at higher prices.

　　The negative effects are gradually appearing

　　Russian President Vladimir Putin said during a meeting with members of the Russian government that despite the unprecedented pressure of sanctions, the situation in the Russian fuel and energy sector remains quite stable and some key indicators have even increased. The data shows that compared with the severe sanctions, the negative impact on the Russian energy sector is not as serious as expected.

　　In terms of production capacity, in May, Russia's oil extraction rose by 1.1 percent from a year earlier and decreased by 2.7 percent year-on-year, while primary refining volumes have recovered to 2021 levels after a precipitous drop in March and April. Novak said Russian oil production has recovered from the decline in March and April, and production in June almost reached the level of February, with an average of 9.74 million barrels per day. In terms of exports, Russian oil exports fell by 250,000 barrels per day on average in June, down to 7.4 million barrels per day. According to Alexei Gromov, director of the Energy Department of the Russian Institute of Energy and Finance, no significant decline in Russian oil product exports to Europe will occur in the second half of 2022 until European sanctions against Russian oil products begin.

　　However, Russian experts believe that the Western energy sanctions against Russia are not "just an itch" and their negative impact on Russia will gradually appear over time. According to Gromov, nearly 60 percent of Russia's oil exports and 70 percent of its oil products exports are in the "risk zone" where sanctions have been imposed or will be imposed. According to his forecast, the impact of the decline in Russian oil production targets and the resulting drop in Russian budget revenues is expected to be felt in 2023, taking into account the EU embargo sanctions starting in December 2022 and February 2023.

　　Repositioning Energy Exports

　　Under the threat of sanctions, Russia's energy exports are looking for alternative markets, and Asian markets have become the focus of Russia's attention. The huge potential of Asian markets, including China and India, is attracting an accelerated shift of Russian oil and gas exports to the east, which has become a priority option for the Russian energy sector. Putin said that in order to meet the challenges of Western sanctions, the Russian energy sector must develop and implement long-term development plans, prioritize infrastructure development and diversify Russian energy exports to potential markets in the east and south.

　　However, the repositioning of energy markets will take time. Europe is the traditional direction of Russia's energy exports and has a relatively good energy transportation infrastructure, but in the context of sanctions, capacity is mostly idle. Asia Pacific, as a potential market, is facing the real difficulty of full capacity. In this regard, Russian Security Council Secretary Patrushev said that Russia needs to accelerate the development of energy infrastructure in the Far East to increase the eastern transport range and the throughput of border crossings.

　　Putin said that the Russian federal government is developing programs to supply oil to friendly countries through rail, sea and pipeline infrastructure, as well as to increase gas supplies to the eastern and Russian domestic markets through gas infrastructure.

Translated with www.DeepL.com/Translator (free version)