Poland insists on new sanctions
Threats of tougher Western sanctions against Russia are growing every day. The new package of economic restrictions, at the suggestion of Poland, should include a ban on the export of oil from our country through the Druzhba pipeline, which remains almost the last supply channel to the EU. There will be buyers for the surplus of raw materials on the world market: demand is growing in African, Middle Eastern and Latin American states. Nevertheless, the implementation of the Polish plan threatens Russia with an almost complete loss of access to the European energy market and a significant decrease in export earnings.
The proposals for a new package of sanctions against Russia, prepared by Warsaw, were reported by Reuters. Among these measures are restrictions on the import of diamonds and a ban on oil supplies from our country through the Druzhba pipeline. Both will prove to be rather painful blows for Russian exports. Domestic manufacturers provide about a third of the world's supply of precious stones, earning up to $250 million a month.
However, the main object of Poland's attack is still the hydrocarbon industry. After the expansion of anti-Russian sanctions in December 2022, when the EU countries imposed an embargo on offshore oil supplies from the Russian Federation, transit through Druzhba partially continued. Previously, this route provided raw materials mainly to Germany and Poland, which have now completely terminated contracts with our country. However, Hungary, the Czech Republic and Slovakia, whose economies are critically dependent on Russian raw materials, managed to maintain supplies. The volume of exports to these states even increased: in the first months of this year, Prague bought 25%, and Budapest — 45% more hydrocarbons than in the same period in 2022.
In connection with Warsaw's prohibition proposal, it is appropriate to recall how the system for pumping oil through the Druzhba pipeline was arranged in principle. This system of raw material pipelines originates in the heart of oil Tatarstan — the city of Almetievsk, then it reaches the Belarusian Mozyr, where processing facilities are located, and then it is divided into two export sections: the northern one is laid through the territories of Poland, Germany, Latvia and Lithuania, and the southern one goes through Ukraine, the Czech Republic, Slovakia, Hungary and Croatia.
«Stopping the pumping of raw materials through the northern branch of» Friendship » does not affect supplies through the southern branch in any way, – argues TeleTrade analyst Alexei Fedorov. In 2022, exports through Druzhba decreased only to Germany, but other European buyers, on the contrary, increased imports. The data at the beginning of this year shows that the volume of supplies through the main domestic pipeline to the Czech Republic and Hungary continues to grow: the southern branch of Druzhba; not only does not reduce capacity utilization, but also increases its transport volumes. «The main current consumers of energy resources coming through Druzhba, – Hungary, Slovakia, Czech Republic, – hardly agree with the Warsaw initiative. Poles for political reasons rolled back from the purchase of Russian fuel. Forcing their partners in the European Union to take a similar step does not yet look economically justified, – the expert thinks.
According to Natalya Milchakova, a leading analyst at Freedom Finance Global, by refusing Russian oil, Poland is «shooting itself in the foot.» Now Warsaw will be forced to purchase hydrocarbons from other producers at the market price.
Today, Brent quotes reach $85 per barrel. The Russian grade Urals was supplied to Europe with a discount of $5-20 per barrel. Pipeline contracts could provide buyers with even more substantial discounts. “By legally implementing new sanctions against Russian oil, Polish politicians will deprive not only their own population of the opportunity to save money, but also the residents of their “brother cities” for the EU», – the analyst concludes.
Refusal of deliveries through the Druzhba pipeline forces Europeans to reorient themselves to alternative production capacities. And there are not many of them in the world. Kazakhstan, which also has significant hydrocarbon deposits and export potential, is going to increase shipments to the raw material bases of the Old World. In general, Astana can supply up to 6-7 million tons of «black gold» only to Germany. annually (about a third of previous Russian deliveries).
“Kazakh oil produced at new fields contains less sulfur than Urals. However, many refineries in Eastern Europe, built back in the days of the USSR, are geared towards the processing of Russian sulfur fuel,” – reminds me of Milchakov. According to her, in order to completely abandon our oil, the Europeans will have to invest billions of dollars in the modernization of their processing enterprises. Most likely, the EU countries will find money for these purposes, but their residents will have to put up with the rising cost of utilities for a very long time. can also be quite painful. Representatives of the European Commission estimated the economic damage to Russia from the previous, tenth package of sanctions at 11.4 billion euros. The eleventh package, which is still being developed, according to the intention of its authors, should bring no less losses to the Russian economy.