Russia may cut off gas to Europe altogether and plan to divert trade and oil to BRICS countries instead

Russia may cut off gas to Europe altogether as it seeks to strengthen its political leverage in the midst of the Ukraine crisis, says the head of the International Energy Agency (IEA), adding that Europe must prepare now.

“I do not want to rule out that Russia continues to find various problems here and there and continues to find excuses to further reduce gas supplies to Europe and perhaps even cut it off completely,” IEA Executive Director Fatih Birol said in a statement.

“This is why Europe needs contingency plans,” Mr Birol added, saying a recent reduction in flows could be an attempt to achieve political leverage ahead of the winter months with greater demand.

However, the IEA did not see a full cut-off as the most likely scenario, he added.

The European Union has sanctioned Russian oil and coal, but has refrained from banning gas imports, in part because of its heavy reliance on supplies from Moscow.

In terms of total energy investment for 2022, the IEA said in a report that $ 2.4 trillion should be invested in the sector this year, including record spending on renewable energy.

It added, however, that it failed to close a supply gap and tackle climate change.

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Rising 8 percent from the previous year, when the pandemic was more severe, investment includes large increases in the electricity sector and efforts to strengthen energy efficiency, it says in its annual investment report.

Investments in oil and gas, in addition to putting back efforts to achieve the climate goals, could not meet the growing demand if the energy systems were not converted to cleaner technology, it says.

“Today’s oil and gas spending is caught between two visions of the future: it’s too high for a path adapted to limit global warming to 1.5 degrees C, but not enough to meet rising demand in one scenario. “where governments are sticking to today’s political attitudes and failing to live up to their climate promises,” the agency said.

Redirection of Russian trade and oil

With Western countries cutting ties to Russian trade and oil, Russia is said to be redirecting its enemy exports to countries from the BRICS group of emerging economies.

The BRICS countries include Brazil, Russia, India, China and South Africa.

To cope with the sanctions, Russia is trying to forge closer ties with Asia and try to replace the markets it lost in the ranks with the EU and the US.

The world leaders of Brazil, Russia, India, China and South Africa are pictured smiling and waving at the BRICS summit in Brasilia.
Russia’s presence in the BRICS countries is growing, said Russian President Vladimir Putin (second from the right).(Reuters: Pavel Golovkin / Pool)

In a video speech to the participants in the BRICS Business Forum, President Vladimir Putin said that Russia discussed the increased presence of Chinese cars in the Russian market as well as the opening of Indian supermarket chains.

“For its part, Russia’s presence in the BRICS is growing. There has been a noticeable increase in Russian oil exports to China and India,” Mr Putin said.

According to data from the Chinese General Administration of Customs, China’s crude oil imports from Russia rose 55 percent from a year earlier to a record high in May, displacing Saudi Arabia as China’s top supplier as refineries cashed in discounted supplies.

Putin also said that Russia was developing alternative mechanisms for international financial settlements with its BRICS partners.

“The Russian financial messaging system is open to liaison with the banks of the BRICS countries. The Russian MIR payment system is expanding its presence. We are exploring the possibility of creating an international reserve currency based on the curve of BRICS currencies,” he said.

Reuters / ABC

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