Russia scraps plans to reopen major gas pipeline – deepening Europe’s difficulty in securing winter fuel
A heroic wish list that remains very short on detail
Paul Kelso
Business correspondent
@pkelso
G7 and EU nations have already vowed to reduce or cut imports of Russian oil and gas.
The “price cap” announced by G7 finance ministers today is an attempt to further choke Moscow’s fossil fuel revenue by targeting the service companies that provide the logistical and administrative architecture of the oil trade.
The G7 says services providers will be prohibited from “enabling maritime transport” of crude oil and petroleum products if they’re traded above a yet-to-be-determined cap.
The communique is not specific about which services, but we can assume shipping, transport, insurance, finance and trading companies, many of which are based in the EU, US, UK and Switzerland, are in the finance ministers’ sights.
The aim, according to Chancellor Nadhim Zahawi, is to cut Moscow’s oil revenues while also protecting low and middle-income countries still reliant on Russian imports, and to insulate British consumers from future price shocks.
That’s a heroic wish list but one that remains theoretical and very short on detail. This communique signals only an “intention to finalise and implement” a plan and it is unclear how it would be enforced.
What is clear is that existing measures to curb fossil fuel reliance are not hitting the Kremlin revenues as hard as hoped.
Even as Russian oil export volumes have fallen, higher global prices triggered by the war mean revenues are rising. Research by the Centre for Energy and Clean Air suggests revenue rose in July as exports fell 6%.
And while Western customers are turning their backs, India and China are picking up the slack, with Beijing now relying on Moscow for almost 25% of oil imports.
The G7’s move is an acknowledgement that so far, Russia’s strategic weaponising of fossil fuels has been a strategic win-win.
While European consumers are hit with higher bills, in turn perhaps weakening support for Ukraine, Moscow is still cashing in.
A heroic wish list that remains very short on detail
G7 and EU nations have already vowed to reduce or cut imports of Russian oil and gas.
The “price cap” announced by G7 finance ministers today is an attempt to further choke Moscow’s fossil fuel revenue by targeting the service companies that provide the logistical and administrative architecture of the oil trade.
The G7 says services providers will be prohibited from “enabling maritime transport” of crude oil and petroleum products if they’re traded above a yet-to-be-determined cap.
The communique is not specific about which services, but we can assume shipping, transport, insurance, finance and trading companies, many of which are based in the EU, US, UK and Switzerland, are in the finance ministers’ sights.
The aim, according to Chancellor Nadhim Zahawi, is to cut Moscow’s oil revenues while also protecting low and middle-income countries still reliant on Russian imports, and to insulate British consumers from future price shocks.
That’s a heroic wish list but one that remains theoretical and very short on detail. This communique signals only an “intention to finalise and implement” a plan and it is unclear how it would be enforced.
What is clear is that existing measures to curb fossil fuel reliance are not hitting the Kremlin revenues as hard as hoped.
Even as Russian oil export volumes have fallen, higher global prices triggered by the war mean revenues are rising. Research by the Centre for Energy and Clean Air suggests revenue rose in July as exports fell 6%.
And while Western customers are turning their backs, India and China are picking up the slack, with Beijing now relying on Moscow for almost 25% of oil imports.
The G7’s move is an acknowledgement that so far, Russia’s strategic weaponising of fossil fuels has been a strategic win-win.
While European consumers are hit with higher bills, in turn perhaps weakening support for Ukraine, Moscow is still cashing in.
