Russia could cut off gas supplies to Europe altogether, planning to redirect trade and oil to BRICS countries

Russia could cut off gas supplies to Europe altogether as it seeks to bolster its political leverage amid the crisis in Ukraine, the head of the International Energy Agency (IEA) has said, adding that Europe must prepare now.

“I do not rule out the possibility that Russia may continue to find different issues here and there and continue to find excuses to further reduce gas supplies to Europe and possibly even cut it off altogether,” said the IEA Executive Director. Fatih Birol.

“That’s why Europe needs emergency plans,” Birol said, adding that a recent reduction in flows could be an attempt to gain political leverage in the face of higher winter demand.

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

The European Union has imposed sanctions on Russian oil and coal, but has banned 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 was invested in the sector this year, including record spending on renewable energy.

However, he added that he had failed to fill a supply gap and tackle climate change.

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Increasing by 8 percent from last year, when the pandemic was more severe, investment includes large increases in electricity and efforts to boost energy efficiency, it said in its annual investment report.

Investments in oil and gas, other than halting efforts to meet climate targets, could not meet growing demand if energy systems were not re-adapted to cleaner technology, he said.

“Today’s oil and gas costs are caught between two visions for the future: They are too high for a course that aligns with global warming to 1.5 degrees Celsius, but not enough to meet growing demand in a scenario where governments stay with the current political arrangements and fail. “to meet their climate commitments,” the agency said.

Change in Russian trade and oil

With Western countries severing ties with Russian trade and oil, Russia is said to be in the process of rerouting energy exports to countries from the BRICS group of emerging economies.

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

To counter the sanctions, Russia is trying to forge closer ties with Asia, seeking to replace the markets it lost in the conflict with the European Union and the United States.

In a video address to participants in the BRICS Business Forum, President Vladimir Putin said Russia was discussing increasing the presence of Chinese cars in the Russian market as well as opening Indian supermarket chains.

“In turn, Russia’s presence in the BRICS countries is growing. There has been a significant increase in Russian oil exports to China and India,” Putin said.

China’s imports of crude oil from Russia rose 55 percent year-on-year in May, shifting Saudi Arabia to China’s top supplier as refineries hit, according to the Chinese General Administration of Customs. discounted supplies.

Mr Putin also said Russia was developing alternative mechanisms for international financial arrangements with BRICS partners.

“The Russian financial messaging system is open for connection to 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 BRICS currency basket,” he said. .

Reuters / ABC