UK proposes the ban on petro-products from Russia but it can not do it immediately as it will hurt UK's economy, says the UK government!
UK to phase out Russian oil imports
The UK will phase out imports of Russian oil in response to Vladimir Putin’s illegal invasion of Ukraine by the end of the year.
- UK to phase out the import of Russian oil during the course of the year in response to illegal invasion of Ukraine
- government establishes a new joint taskforce with industry to work together on an orderly transition
- move will increase the growing pressure on Russia’s economy by choking off a valuable source of income
The UK will phase out imports of Russian oil in response to Vladimir Putin’s illegal invasion of Ukraine
by the end of the year, the Business Secretary Kwasi Kwarteng has confirmed today (Tuesday 8 March).
The phasing out of imports will not be immediate, but instead allows the UK
more than enough
time to adjust supply chains, supporting industry and consumers. The government will work with companies through a new Taskforce on Oil to support them to make use of this period in finding alternative supplies.
The UK is working closely with the US, the EU and other partners to end our dependence on Russian hydrocarbons in response to Russian aggression in Ukraine, recognising the different circumstances and transition timelines.
The import of Russian oil makes up 44% of Russian exports and 17% of federal government revenue through taxation – this move steps up the international pressure on Russia’s economy.
In a competitive global market for oil and petroleum products, demand can be met by alternative suppliers. We will work closely with international partners to ensure alternative supplies of fuel products.
Russian imports account for 8% of total UK oil demand, but the UK is also a significant producer of both crude oil and petroleum products, in addition to imports from a diverse range of reliable suppliers beyond Russia including the Netherlands, Saudi Arabia, and USA.
Whilst this transition takes place, the
government recognises the need to continue to import Russia oil in the meantime as we work to this aim. This will help ensure continuity in our supply and protect consumers.
Prime Minister Boris Johnson said:
Business and Energy Secretary Kwasi Kwarteng said:
This significant move will increase the growing pressure on Russia’s economy by choking off a valuable source of income and hitting its ability to impose further misery on the Ukrainian people.
The elimination of oil imports is in addition to existing trade, financial and personal sanctions already imposed by the UK against Putin’s regime and those who support him in his war against Ukraine.
Russian oil is already being ostracised by the market, with nearly 70% of Russian oil currently struggling to find a buyer, and in a competitive global market demand will quickly be met by alternative suppliers.
On 1 March Russian ships were banned from UK ports and authorities were granted new powers to detain Russian vessels.
The UK is not dependent on Russian natural gas, making up less than 4% of our supply. Ministers are also exploring options to reduce this further. The Prime Minister confirmed that the government will set out an energy strategy to set out the UK’s long term plans for greater energy security, including both renewable and domestic oil and gas supplies.
Note to editors
1. The UK benefits from significant domestic production of oil and gas. More than two-thirds of our road fuel comes from domestic production.
2. Russian oil is already being ostracised by the market, with nearly 70% of Russian oil currently struggling to find a buyer, and in a competitive global market demand will quickly be met by alternative suppliers.
3. Russia produces only a fraction of the fuel products currently imported to the UK, with the vast majority coming from reliable suppliers like the USA, Netherlands, Sweden, Belgium and Saudi Arabia.
4. Russian oil imports as a percentage of total demand (DUKES 2020):
- Petrol, 0%
- Jet fuel, 5%
- Heating oil, 0%
- Diesel, 18%
- Gas oil (such as red diesel), 1%
- Fuel oil, 0%
- All oil imports, 8%
The UK will phase out imports of Russian oil in response to Vladimir Putin’s illegal invasion of Ukraine by the end of the year.
www.gov.uk
Ukraine war: How reliant is the world on Russia for oil and gas?
President Vladimir Putin has threatened to cut gas supplies to "unfriendly" countries if they don't start paying for gas imports in Russian roubles.
The US, EU, and UK placed restrictions on oil and gas imports from Russia after it invaded Ukraine in February.
What sanctions are there on Russian oil and gas?
The US has declared
a complete ban on Russian oil, gas and coal imports.
The UK is to phase out Russian oil by the end of the year, and
the EU is reducing its Russian gas imports by two-thirds.
The
UK government says this allows enough time for it to find alternative supplies.
Deputy Russian Prime Minister Alexander Novak has said rejecting Russian oil would lead to
"catastrophic consequences for the global market".
Oil and gas prices have risen since the invasion of Ukraine, and if Russia were to halt exports they could rise further.
What would happen if Russian gas stopped flowing into Europe?
Heating prices - which are already high - would increase even more.
Russian gas accounts for about 40% of the EU's natural gas imports.
If this dried up, Italy and Germany would be especially vulnerable.
Europe could turn to existing gas exporters such Qatar, Algeria or Nigeria, but there are practical obstacles to quickly expanding production.
Russia only provides about 5% of the UK's gas supplies, and the US doesn't import any Russian gas.
Gas prices in Europe, the UK (and to a lesser extent, the US) jumped significantly after the invasion, due to worries about supply shortages, although they then fell back.
Could alternatives to Russian gas be found?
The US has agreed to ship an additional 15 billion cubic metres of liquified natural gas (LNG) to Europe by the end of this year.
The aim is to supply 50 billion cubic metres per year of additional gas until at least 2030.
But energy policy research analyst Ben McWilliams says it's not very easy to substitute the gas that flows from Russia.
"It's harder to substitute gas because we have these big pipes that are taking Russian gas to Europe," says Mr McWilliams.
Europe could also ramp up the use of other energy sources, but doing so is not quick or easy.
Image source, Getty Images
Image caption,
The EU hopes to massively boost its use of renewable energy, including wind power
"Renewables take time to roll out so in the short term this is not a solution," says research analyst Simone Tagliapietra.
"So for next winter - what can make a difference is fuel switching such as opening up coal-fired power plants, as Italy and Germany have plans to do in case of an emergency."
The EU has proposed a plan to make Europe independent from Russian fossil fuels before 2030 - including measures to diversify gas supplies and replace gas in heating and power generation.
How much oil does Russia export?
Russia is the third biggest producer of oil in the world, behind the US and Saudi Arabia.
Of about five million barrels of crude oil it exports each day, more than half of that goes to Europe.
Russian imports account for 8% of total UK oil demand.
The US is less reliant, with about
3% of its imported oil coming from Russia in 2020.
What about alternative oil supplies?
Mr McWilliams says it should be easier to find alternative suppliers for oil than for gas, because while some comes from Russia, "there's also a lot of shipments from elsewhere".
US President Joe Biden has
ordered a major release of oil from America's strategic reserves in an effort to bring down high fuel costs.
The US has been asking Saudi Arabia to increase its oil production, but it has rebuffed previous US requests to boost output in order to reduce oil prices.
Saudi Arabia is the biggest producer in
Opec, the oil cartel which accounts for about 60% of the crude oil traded internationally. Because of this Opec has a key role in influencing oil prices. So far, no Opec member has agreed to any requests to boost output.
Russia is not in Opec but has been working with it since 2017 to place limits on oil production, in order to maintain earnings for producers.
The US is also looking at relaxing Venezuela's oil sanctions. It used to be a key US oil supplier, but recently
Venezuela has largely been selling its oil to China.
What will happen to my heating and fuel bills?
Consumers will face rising energy and fuel bills as a result of this war.
In the UK, household energy bills have been kept in check by an energy price cap.
But
bills will rise by £700 to about £2,000 in April when the cap is increased. They are expected to reach about £3,000 when the cap is increased again this autumn.
UK petrol and diesel prices have also soared, and the government has now announced a cut in fuel duty as motorists struggle with record prices.
Image source, Getty Images
Image caption,
Heating bills are set to rise sharply this year in the UK
"I think if we're in a world where Russian oil and gas stop flowing to Europe then we're going to need rationing-style measures," says Mr McWilliams.
"Part of the conversation now is, can we tell households to turn their thermostats down one degree, which can save a significant chunk of gas."
Many countries are cutting back on Russian energy imports, but others are still buying.
www.bbc.com
Russian supplies to global energy markets - Analysis and key findings. A report by the International Energy Agency.
www.iea.org