Russian dictator Vladimir Putin is raising the stakes to the maximum, as this winter will be the last when he has the leverage of energy blackmail.
Putin's urgent goal is to prevent an oil embargo, which is set to be applied and start working in December. At a stroke he will lose 50% of his profits from oil, which is a crazy amount of money.
And because of the restrictions Putin will not be able to redirect this oil anywhere else – no matter how much Putin now talks about sending oil to Asia, he won't be able to do it. That’s because secondary sanctions are already being discussed, as well as mechanisms for monitoring their implementation, both in the United States and in Europe. The reselling of oil is also being tracked. And when it comes to the fact that many people are currently avoiding sanctions, it should be understood that they are avoiding sanctions only on 8% of the sanctioned goods or activities – the remaining 92% are fully sanctioned.
I’ll now explain why this is the last winter season that Putin might be able to dictate his terms.
Europe has already abandoned Russian coal. Since Aug 10, a complete embargo on Russian coal has been in effect. As for oil – the oil embargo will come into effect starting December this year, and the embargo on oil products will come into effect starting February. This is a huge market that is closed forever for Russia. They understand this very well, and are therefore directing all efforts to ensure that it doesn’t happen. They, in fact, are trying to reduce the significance of sanctions and trying to moderate the general mood by saying that sanctions hit European societies more than Russia.
They’re doing this on purpose, in order for European society to become restive or go out to protest against sanctions against Russia. We can already hear from Hungary that sanctions should be lifted because they don’t work. Whose words are the Hungarians repeating? And why are they doing do it? Hungary understands that they are the last ones hooked on the Russian needle, and not only on oil, but also gas. And starting the next year, Europe will no longer be as dependent on Russian gas as it is at the moment.
Germany will open a first LNG terminal by the end of this year, and at the beginning of the next year it will open a second one. They plan to install six LNG terminals over the next year. Germany is already so used to the fact that it will never be able to return to the relations that it had with the Russians before Feb. 24 of this year that it doesn’t even expect Nord Stream 2 will ever work.
We are now going through a critical period of transition to a different way of life. We will no longer have the privilege of using electricity or gas in the volumes we are used to. This product will be expensive and we must limit ourselves. This applies not only to Ukraine, but to the whole world. Being economical and respectful in energy use is our future. Russia has greatly accelerated the transition to alternative energy sources.
Russia has always supplied 83% of its production to the European Union
It has already reduced gas production by 40%, and this is just the beginning.
Regarding Ukrainian gas production for domestic use – it is necessary to resolve significant current issues with private producers. Specifically, how will the state buy the gas they produce, and how to ensure that they don’t reduce production. We need to make a decision to reduce rent payments for private companies. That is, to secure for Ukraine this particular private supply, and not lose it. Because they will be able to provide us the necessary gas for this season, despite all the skeptics saying that we will need to buy it.