US, UK and EU sanction Russian energy imports
09 March 2022
Russia has threatened to cut off gas supplies to European countries after it was hit by a series of energy import restrictions by the United States, United Kingdom, and the European Union. On March 8, the US announced a complete ban on the import of Russian oil, liquefied natural gas, and coal in response to Russia’s invasion of Ukraine. The UK said it would phase out Russian oil imports while the EU said it would reduce gas imports by two-thirds.
Image: Nord Stream AG
Announcing the ban on Russian energy imports, US President Joe Biden said: "We're banning all imports of Russian oil and gas energy. That means Russian oil will no longer be acceptable in US ports and the American people will deal another powerful blow to Putin's war machine."
The Executive Order, which received bipartisan support from both Democrats and Republicans, will see a full ban on the importation of Russian crude oil and certain petroleum products, liquefied natural gas, and coal into the US. Last year, the US imported nearly 700,000 barrels per day of crude oil and refined petroleum products from Russia.
New US investments in Russia’s energy sector have also been banned and Americans will also be prohibited from financing or enabling foreign companies that are making investment to produce energy in Russia.
On the same day as the US ban, the UK said it would phase out imports of Russian oil by the end of the year in response to the illegal invasion of Ukraine. The UK government said the phasing out of imports will not be immediate, but instead allows the UK enough time to adjust supply chains, supporting industry and consumers. The government said it will work with companies through a new Taskforce on Oil to support them to make use of this period in finding alternative supplies.
Russian imports account for 8% of total UK oil demand while Russian natural gas makes up less than 4% of the UK’s supply, the UK government said.
Business and Energy Secretary Kwasi Kwarteng said: “Unprovoked military aggression will not pay and we will continue to support the brave people of Ukraine as they stand up to tyranny, building on our existing sanctions that are already crippling Putin’s war machine. We have more than enough time for the market and our supply chains to adjust to these essential changes. Businesses should use this year to ensure a smooth transition so that consumers will not be affected.”
Meanwhile, the EU has also said it would be reducing its Russian gas imports by two-thirds. The EU imports around 40% of its gas and 30% of its oil from Russia meaning a widespread ban on Russian energy is unlikely due to the difficulty of finding alternative sources of oil and gas.
The announcements led to Russia threatening to close cut off all gas supplies to European countries via the Nord Stream 1 pipeline. While speaking on state television, Russia’s Deputy Prime Minister Alexander Novak said a ban on Russian energy imports would be “catastrophic” for global markets. Oil and gas prices rose sharply following the US and UK announcements with global commodity prices also set to soar.
Deputy Prime Minister Novak said that Russia has every right to retaliate with its own sanctions on the West, including the pumping of gas through the Nord Stream 1 pipeline which connects Russia with Germany.
The $11 billion Nord Stream 2 project was frozen by Germany in February after Russia formally recognised two breakaway regions in eastern Ukraine – the Donetsk and Luhansk People’s Republics – as a precursor to its invasion of Ukraine. Construction of the pipeline, which was planned to increase Russian gas imports into Western Europe, was completed in September 2021 and was awaiting certification before the project was put on hold.