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Russia to lose $300m daily oil revenue to new EU restrictions

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The Finnish research institute, Centre for Research on Energy and Clean Air (CREA), has stated that Russia’s oil revenue losses to European Union sanctions will increase from February 2023.

According to the researcher, Russia has been losing about $172 million per day to previous EU ban on crude oil imports from Vladimir Putin, but starting from February 5, the loss will rise by 74.4 per cent, a new report released on Wednesday says.

What you need to know about EU’s sanctions on Russia

Ripples Nigeria had reported that countries within the European Union have been deliberating on methods to hurt Russia’s economy, to reduce their financial capability to fund the war against Ukraine.

Some of the outcome of the deliberation include reduction in crude oil import from Russia, which accounts for 30 per cent of the oil used in the EU in 2021, and accounting for around 45 per cent of EU gas imports and close to 40 per cent of its total gas consumption.

Over €300 billion will be spent by the European Union to reduce its dependence on Russian fossil fuels, as it had outlined plan to reduce its dependence on Russian gas by at least one-third by the end of December 2022.

Ripples Nigeria gathered from EU’s 10-point plan that the group intends to totally eliminates the need for Russian gas imports before 2030. And with the EU not planning to sign any new gas supply contracts with Putin’s country in 2023, and planning to replace Russian supplies with gas from alternative sources, Russia’s revenue will drop further.

Read also:Russian oil executive who criticised Putin over Ukraine war dies after falling out of window

How EU’s sanction will hurt Russia

According to CREA, Russia will lose over $300 million per day when new sanctions or restriction commence in February, “The steps taken by the EU and allies in December–January cut Russia’s fossil fuel export revenue by an estimated EUR 160 mn per day. Further measures that are being implemented by February 5, 2023, will result in an estimated additional EUR 120 mn per day reduction.

“These include the EU oil product import ban, price cap (assumed at USD65/barrel) and Polish Orlen’s announcement of not renewing a contract with Rosneft in January for pipeline crude oil. Further steps that the EU and allies can take, most importantly lowering the price caps for crude oil and oil products, have the potential to cut off another EUR 200 mn/day.”

It stated that in December 2022, Russia recorded its lowest fossil fuel revenue level since Putin invaded Ukraine, as earnings from the product’s export dropped by 17 per cent.

CREA report also reads that Russia’s revenue from fossil fuels export fell between March to end of last year, “Russia is still making an estimated EUR 640 mn per day from exporting fossil fuels, down from a high of EUR 1000 mn in March to May 2022. The EU’s ban on refined oil imports, the extension of the price cap to refined oil, and Polish Orlen’s announced reductions in pipeline crude oil imports will slash this revenue by an estimated EUR 120 mn per day by February 5.”

Meanwhile, it was learnt that Russia’s “current revenue comprises EUR 260 mn/day from crude oil exports, EUR 80 mn from LNG, EUR 90 mn from pipeline gas, EUR 80 mn from coal and EUR 140 mn from oil products, expected to fall to EUR 40 mn after 5 February.”

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