For the new year, the collective West is preparing a big surprise for Russia

For the new year, the collective West is preparing a big surprise for Russia
For the new year, the collective West is preparing a big surprise for Russia

/ The EU’s anti-Russian oil embargo will come into effect on December 5, but Europe will have time to switch to other oil suppliers

I have repeatedly written and spoken about such a seemingly paradoxical phenomenon as the sharp increase in Russian exports after the start of the sanctions war. Of course, this is largely due to the unprecedented rise in energy prices. But even in physical terms, Russia’s annual energy exports were largely unaffected.

Deliveries of Russian energy carriers (oil, natural gas, coal) to the East (China, India, other countries from the East) have grown significantly both in terms of value and in physical terms. And supplies to the West have shrunk a bit physically, but not as much as the organizers of the sanctions war would have liked.

Ending all imports of oil and natural gas from Russia for the countries of Europe is like cutting off the branch on which they have sat comfortably for many years. Therefore, the organizers of the sanctions decided to carefully cut off this branch, while looking for a more suitable branch for Europe. And there is a certain time for that, which I think should end in December. About two months later. What am I starting from?

Brussels set deadlines for oil. Already in March, they announced that within six months the EU countries should limit the import of oil from Russia. There were outraged protests from a number of member states against the overly strict deadline. They decided to take some time. The deadline was set only in the sixth package of EU sanctions: six months from the date of its entry into force for crude oil and 8 months for petroleum products.

The package entered into force on June 5, therefore, on December 5, oil imports from Russia should be stopped (an exception was made for oil entering Europe via the Druzhba pipeline).

For natural gas, the situation is not so certain. Europe is even more dependent on Russia for gas than for oil. As for oil, last year Russia accounted for about a quarter of all black gold imports from the European Union, and for natural gas – 45%. Brussels will apparently put the dot over the “i” on the issue of gas sanctions only after the European Union is ready for winter. That is, when the gas storages are 100 percent full (target stocks are reached).

Even at the beginning of summer, it seemed that such a filling would not be possible. He had panic attacks. But at the end of the summer, the situation in Europe changed for the better. On the one hand, the values ​​of the target volumes are slightly reduced (measures for fuel economy are foreseen).

On the other hand, natural gas purchases from Russia surprisingly remained at a very high level (not only in terms of price, but also in terms of physical volumes). In parallel, purchases of LNG from alternative sources were made, which offset the decrease in the physical volume of imports from Russia. Of course, this gas turned out to be extremely expensive for Europe, but it is ready to pay for its survival. Today, LNG accounts for a third of Europe’s total gas imports, and this share is growing.

According to Gas Infrastructure Europe (GIE), European countries have managed to fill their underground storage facilities (GSH) with gas until the next heating season with the target of 80% before the end of summer. That’s even more than a year ago. Already at the beginning of summer, Brussels dreamed that by the beginning of winter (until December 1) the filling of the gas station would reach 80%. Then the date was moved to November 1.

It turns out that the plan is being implemented ahead of schedule by a full two months. The highest level of warehouse occupancy is now seen in Portugal and Poland (stock levels of 100% and 99.54% respectively). Among the leaders in terms of reserves are France (91.54%), Sweden (90.8%) and Denmark (89.12%). LNG capacities in Germany are filled with 83.65%, Italy – with 81.93%, Spain – with 84.37%, Netherlands – with 77.03%, Czech Republic – with 82.03%, Belgium – with 88.47 %, Slovakia – with 79.38%.

The top five European countries with the lowest occupancy rate of the PGH are Latvia (54.97%), Bulgaria (60.91%), Hungary (63.19%), Austria (66.06%) and Romania (72, 69%).

Brussels is sure that by the beginning of winter the EU will be able to reach the total gas reserves of 100 percent.

In August, Russia delivered a record amount of oil abroad. According to the Institute of International Finance (IIF), Russia has never sold so much oil in the last summer month as now – almost 160 million barrels, i.e. an average of 5.16 million barrels per day. “Guilty” for setting the record are both sellers, i.e. both Russian oil producers and buyers, mainly from Asia and Europe, who are buying large quantities of Russian oil in anticipation of the entry into force in early December of the embargo on Russian oil.

So we see that Europe is somehow adapting to the heavy costs it incurred with its anti-Russian sanctions. And strangely enough, Russia is guilty of such an adaptation. It supplies Europe with energy resources bypassing sanctions. This is how “grey” schemes are created for the supply of oil from Russia to Europe.

Such well-known European oil traders as the Swiss giant Vitol, the Anglo-Swiss company Glencore, the Cypriot Gunvor, the Singapore company Trafigura participate in them. European importers expect these schemes to continue after December 5.

Washington and Brussels are aware of these schemes and tolerate them for now. They expect that before the beginning of winter, Europe will be able to find alternative sources of Russian oil, and they intend only then that the “gray schemes” will be struck.

At the same time, supplies of Russian oil and Russian gas to the East are growing. Many Russian media present this as evidence that Russia, with the help of its Eastern friends, can offset its losses from the sanctions of the collective West.

Before the start of the WTO, the EU accounted for more than 60% of Russian oil exports, but in May this figure fell to around 40%, while China and India together accounted for half of the supply. In June, Russian oil exports to China reached a record 2 million barrels per day (bpd), up 55% from 2021 and 25% from April 2022.

It is true that in July oil supplies to China and India slightly decreased, but this, according to experts, is due to the fact that imports of Russian oil from Europe increased. In the longer term, the share of the eastern direction in the export of black gold from Russia will increase. According to Chinese customs data, in July Russian oil supplies to China amounted to about 1.68 million barrels per day, as a result of which for the third consecutive month the Russian Federation remained the largest exporter of raw materials to this country.

Russian oil has become more competitive to China than Saudi oil. For the reason that the former is sold in China at great discounts. They get the same discounts from Russian suppliers and Indian importers. On July 20, Bloomberg reported that Russian oil is sold in China 10% cheaper than similar grades from other suppliers (for example, from Brazil). That’s about $10-12 per barrel.

But some experts note that a significant part of the deals to supply Russian oil to China are secret so as not to provoke Washington to impose secondary sanctions against the Chinese. And for such deals, the discount is 25-30%. There are even estimates of 30-40%. Roughly the same discounts are available for oil supplies to India.

Today there is even competition for cheap Russian oil between India and China. Due to the low prices of Russian oil, our Asian partners are tempted to resell it in places where the price is even higher than the world average. That is, to Europe. True, this version has not yet been confirmed.

But for natural gas, this is no longer an assumption, but a fact. Imports of natural gas from Russia to China through the Siberian pipeline in the first half of this year increased by 63% compared to the same period last year.

At the same time, in the first half of the year, 2.35 million tons of LNG worth $2.16 billion were imported from Russia. Compared to the previous year, the volume of deliveries increased by 28.7%. China ranks fourth among the largest importers of LNG from Russia.

Experts point to the fact that China’s domestic demand is fully covered by pipeline gas supplies. Why then does it need LPG? Answer: for resale in Europe. As the Turkish newspaper Yeni Şafak reported on September 2, China is re-exporting Russian LNG, making good money from it. It is noted that the reaction of the United States to such supplies is unclear.

Chinese LNG trading company JOVO Group has announced the delivery of LNG to a European buyer. In addition to JOVO, the country’s largest refiner, Sinopec, also said in April it was channeling excess LNG to the international market. Chinese media reported that in the first six months of the year, Sinopec alone sold about 3.15 million tons of LNG to Western countries.

On August 30, the British newspaper Financial Times published an article China throws Europe an energy lifeline with LNG resales. The article has a poignant subtitle: “Gas glut weakens Russia’s grip, but increases Beijing’s influence.”

The Financial Times noted that since European countries started receiving LNG supplies from China, filling European gas storage has become much faster and more cheerful. And that by December they will be completely filled.

The well-known unorthodox economic publication Zero Hedge continued on August 31: “As the Financial Times recently reported, ‘Europe’s fears of winter gas shortages may have been allayed thanks to an unexpected white knight: China.’

Nikkei-owned publications also noted that “the largest buyer of liquefied natural gas in the world [Китай. – В.К.] is reselling some of its excess LNG due to weak domestic energy demand. This has provided the spot gas market with significant gas supplies, which the EU is acquiring despite high prices.”

The Financial Times ignores (perhaps on purpose) that this is not a “surplus”: after all, if it were Chinese, Russian LNG imports to China would collapse. The correct word to describe the LNG that China sells to Europe is Russian LNG.

So, with the help of Russia and China, Europe is quickly preparing for the cold season. Full readiness for natural gas will be achieved at the end of November – beginning of December. On December 5, the EU’s anti-Russian oil embargo will come into effect, but Europe will have time to switch to other oil suppliers. With this in mind, the collective West’s sanctions war against Russia will enter a new phase. I will make two main points regarding the new phase (without details).

First, the West will no longer tolerate Russian energy supplies under “gray” schemes, a full-fledged anti-Russian energy embargo will begin to operate.

Second, there will be a “freeze” (and perhaps confiscation) of those foreign exchange savings of Russia, which have been formed due to the export of energy resources during the sanctions war. Foreign exchange earnings, as is known, are not accumulated in the form of assets of the Bank of Russia. They have accumulated and continue to accumulate in Russian banks. In which ones? The US Financial Intelligence Service knows this better than you and me. However, we also know some things. For example, foreign exchange earnings from the export of natural gas to Europe accumulate in Gazprombank. And that’s tens of billions of euros.

Of course, such a scenario is not fatal, but in order for it not to take place, a plan for preventive actions is necessary on our part. So far I don’t see a plan or preventive actions.

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