Have Russian oil and gas exports continued to flow since the start of its invasion of Ukraine?
Russian oil exports have so far proved resilient to sanctions, import embargoes and buyer boycotts. In October, total oil exports were 7.7 mb/d, only 400 kb/d lower than pre-war levels.
Russian crude oil exports in October were largely unchanged compared with pre-war levels, at 4.97 mb/d. Crude oil exports to the EU member states have been reduced by 1 mb/d to 1.5 mb/d. The decline in shipments to the EU has been offset by increases to India, China and Türkiye. By October, crude oil exports to India had increased by 965 kb/d, to 1.1 mb/d; China by 225 kb/d to 1.9 mb/d; and Turkey by 320 kb/d to 540 kb/d. Shipments to unknown or yet to be identified destination have also risen, due to increased use of “dark” tankers and higher volumes of oil on water.
While Russia has been able to redirect all its crude oil exports so far, it has not found new buyers for its product exports. Total product exports in October were 2.8 mb/d, down 360 kb/d since the start of the year.
Russia has sharply reduced its piped natural gas supplies to the European Union since its unprovoked invasion of Ukraine. Flows via the YAMAL-Europe pipeline system were completely cut in May 2022 and deliveries via the Nord Stream pipeline were gradually reduced were fully shut by the beginning of September 2022. Pipeline deliveries completely stopped to Estonia, Finland, Latvia and Lithuania and were significantly reduced via Ukraine. In October 2022, Russian pipeline deliveries were 80% lower compared to their last year’s levels.
On 10 May, Ukraine’s gas transmission systems operator declared force majeure at a key compressor station, following illegal actions and unauthorised gas offtakes by occupying forces. According to Ukraine’s Gas TSO, flows could be temporarily rerouted, although Gazprom refused to accommodate this option. Transit gas volumes via Ukraine to the European Union have dropped by 60% since then. Domestic gas supplies in Ukraine have been disrupted in several regions due to pipeline damage caused by military operations.
How much oil does Russia export?
Russia plays an outsized role in world oil markets. It is the third largest producer of oil behind the United States and Saudi Arabia, the world’s second largest exporter of crude oil behind Saudi Arabia, and the largest overall exporter once products are included. In October it exported about 5 million barrels a day (mb/d) of crude, and around 2.8 mb/d of products.
Who are the main customers for Russian oil?
In 2021, more than half of Russia’s oil exports went to Europe, which received about one- third of its oil imports from Russia. Germany was the largest European buyer of Russian oil, followed by the Netherlands and Poland.
China was the single largest buyer of Russian oil, taking 1.6 mb/d of crude on average in 2021, or about 20% of Russia’s exports, equally divided between pipeline and seaborne routes. Japan and Korea combined imported a total of 420 000 barrels a day (kb/d) from Russia last year, about 5% of their total imports, split between crude and products. The United States imported 710 kb/d, or 8% of its total imports, from Russia. But after the invasion, it banned imports of Russian oil, natural gas and coal. Russia was the third largest source of US oil imports prior to that. Canada, Australia and the United Kingdom also banned imports of Russian oil.
By October, a major reorientation of trade had taken place. Exports to the EU had been reduced by 1.5 mb/d to 3.95 mb/d. Total Russian oil exports to China had increased by 225 kb/d to 1.9 mb/d, to India by 965 kb/d to 1.1 mb/d, and to Turkey by 320 kb/d to 540 kb/d.
EU embargoes on Russian crude oil and refined petroleum products that come into effect on 5 December and 5 February 2023, respectively, will lead to a further reallocation of trade. An additional 1.1 mb/d of crude oil and 1 mb/d of oil products currently going to EU countries will have to find new homes. As this will be accompanied by a ban on EU/UK maritime services, export losses and production shut-ins are expected to increase. By early 2023, an additional 1.4 mb/d of Russian oil production is expected to be shut in, for a total of 1.9 mb/d compared with pre-war levels.
How dependent is Russia on oil and gas revenue?
Revenues from oil and gas-related taxes and export tariﬀs accounted for 45% of Russia’s federal budget in January 2022. Considering current market prices, the export value of Russian piped gas to the EU alone amounts to USD 400 million per day. Total export revenues for crude oil and refined products currently amount to around USD 560 million per day, down from about 690 million a day in the first two months of the year.
What alternative oil supplies are available to compensate for curtailed Russian exports?
Most of the world’s eﬀective spare capacity is concentrated in Saudi Arabia and the United Arab Emirates. Together they hold roughly 2 mb/d of spare capacity, but that is not all immediately available.
Outside of OPEC+, the United States looks set to add 1 mb/d this year and a further 1.1 mb/d in 2023, with smaller increases from Canada, Norway, Guyana and Brazil. We were already expecting robust growth from the US shale sector, as operators have increased their rig count and drilling rates in response to rising prices. However, a sharp draw down in drilled but uncompleted wells (DUCs) during 2021, labour shortages, supply chain issues and cost escalation could limit growth in the near term.
What was Russia’s position in global gas markets before its invasion of Ukraine?
Russia is the world’s second largest gas producer, after the United States, producing 761 billion cubic meters (bcm) in 2021, or 18% of the world’s gas output. Russia is the world’s largest gas exporter, with exports amounting to around 250 bcm in 2021, with 210 bcm exported through pipelines. In addition, Russia exported more than 40 bcm of liquefied natural gas (LNG), making it world’s fourth largest LNG exporter after Australia, Qatar and the United States.
In 2021, Russia supplied 32% of the total gas demand in the European Union and United Kingdom, up from 25% in 2009. However, Russia was already reducing gas exports to Europe in the months before its invasion of Ukraine.
Can the EU reduce its reliance on Russian natural gas in the short term?
On 3 March, 2022, the IEA Secretariat released a 10-Point Plan for how European countries could cut their gas imports from Russia by a third within a year. The key actions include not signing any new gas contracts with Russia; maximising gas supplies from other sources; accelerating the deployment of solar and wind; making the most of existing low emissions energy sources, including nuclear; and ramping up energy efficiency measures.
The IEA followed up on 18 March with a new 10-Point Plan to reduce oil consumption, and then on 21 April with Playing my part, a report on steps average citizens can take to reduce energy consumption, cut their fuel bills, and support Ukraine.
What is the position of the IEA Governing Board on the situation in Ukraine?
The IEA Governing Board, meeting at Ministerial level on 1 March 2022, expressed solidarity with the people of Ukraine and their democratically elected government in the face of Russia’s appalling and unprovoked violation of Ukraine’s sovereignty and territorial integrity.
Russia’s invasion came against a backdrop of already tight global oil markets, with heightened price volatility, commercial inventories that were at their lowest level since 2014, and a limited ability of producers to increase supply in the short term. For this reason, in their first collective action following the invasion, Ministers agreed on 1 March to release 62.7 million barrels of emergency stock to send a unified and strong message to global oil markets that there would be no shortfall in supplies as a result of Russia’s invasion of Ukraine. On 1 April, they committed to make a further 120 million barrels available, the largest stock release in IEA history. The vast majority of the oil pledged for release in both the March and April Collective Actions (182.7 mb) has effectively been made available to the market as of end-October 2022.
The IEA Governing Board also recognised Europe’s significant reliance on Russian natural gas and the need to reduce this by looking to other suppliers, including via LNG, and to continue to pursue a well-managed acceleration of clean energy transitions.
What actions did IEA member countries take in response to the energy market impacts of Russia’s invasion of Ukraine?
On March 1, 2022, the IEA’s 31 members agreed to release at least 60 million barrels from their emergency stocks to head oﬀ any potential shortfalls in energy supply, which soon rose to 62.7 million once countries announced their commitments. On 1 April, IEA members agreed to make a further 120 million barrels available, the largest collective action in the Agency’s history.
These actions were the fourth and fifth collective responses in the IEA’s history, following previous ones in 2011, 2005 and 1991.
The vast majority of the oil pledged for release in both the March and April Collective Actions (182.7 mb) has effectively been made available to the market as of end-October 2022.
How does the IEA’s 1 March decision compare with previous IEA collective actions?
In 2011, the IEA’s members released 60 million barrels in response to disruptions caused by the Libyan Civil War, and in 2005 they released the same amount after Hurricane Katrina damaged facilities in the Gulf of Mexico.
On 17 January 1991, when Allied forces started their air campaign against Iraq, the IEA activated a pre-agreed plan to release 2.5 million barrels a day. That plan was extended on 28 January, but with greater flexibility for individual members to respond to supply-and- demand conditions.
What is the IEA oil stockholding requirement?
Each IEA country must ensure oil stock levels equivalent to no less than 90 days of net oil imports and to be ready to collectively respond to severe supply disruptions aﬀecting the global oil market, in accordance with the Agreement on an International Energy Programme (I.E.P.).
What is the role of the IEA in the event of a disruption to oil supply?
Since the IEA’s founding in 1974, a key aspect of its work has been to help coordinate collective responses to major oil supply disruptions, by providing additional oil to the global market on a short-term basis. Once the need for an IEA collective action has been agreed, each member country’s contribution is proportionate to its share of total oil consumption among IEA member countries.
The IEA emergency response system is designed to mitigate the negative economic impacts of a supply shock, and not as a tool to manage prices or long-term supply, both of which are more eﬀectively addressed through other measures.
Where does the additional oil supply come from?
Emergency oil stocks represent addition supply in that these volumes only become available to the market when governments decide to activate emergency measures, such as in the case of an IEA collective action.
Emergency oil stockholdings include government owned stocks and emergency stocks held and managed by a specialized stockholding agency. Some countries impose a minimum stockholding obligation on companies such as importers, refiners, and wholesalers, in some cases relying entirely on this to meet the IEA 90-day requirement. IEA Members’ stockholding structure and emergency policies are assessed every 5 years as part of a peer-to-peer review process.
- Government stocks: Australia, Czech Republic, New Zealand, United States
- Agency stocks: Belgium, Estonia, Germany, Hungary, Ireland, Slovak Republic
- Combination of government and obligated industry stocks: Japan, Korea, Poland
- Obligated industry stocks: Greece, Luxembourg, Mexico, Norway, Sweden, Switzerland, Turkey, United Kingdom
- Combination of agency and obligated industry stocks: Austria, Denmark, Finland, France, Italy, Lithuania, the Netherlands, Portugal, Spain
As net-exporters of oil, Canada, Mexico and Norway do not have a stockholding obligation under the International Energy Programme.
Does the IEA specify how the stocks should be held?
Member countries have substantial flexibility in how they meet their stockholding obligation.
This can include oil stocks held exclusively for emergencies, such as publicly held strategic reserves or stocks held by industry under government obligation, in addition to stocks held for commercial purposes. Stocks can be in the form of crude oil or as refined products. Countries are also able to arrange for emergency stocks to be held in other countries, under bilateral agreement. Each Member country is thus able to determine how to meet their IEA stockholding commitment in the manner most appropriate to their domestic circumstances.
Member countries can use their stocks to respond to domestic crises, though they do need to inform the IEA Secretariat of the details and circumstances. Many member countries maintain stock levels well above the IEA obligations, so drawing on emergency stocks does not necessarily mean they drop below the 90-day threshold.
How does the IEA collaborate with non-member countries?
Since the IEA was established in the 1970s, there have been significant shifts in the global energy landscape, with emerging economies becoming major oil consumers and importers. The IEA works closely with countries outside of its membership to find solutions to shared energy and environmental concerns.
The IEA consults with OPEC and its larger member countries during major oil supply disruptions to determine their ability and willingness to use any available spare production capacity to bring additional oil to the market.