SPIEF 2024: Rosneft chief reveals cost EU paid for rejecting Russian gas

Members of the bloc have shelled out $630 billion to replace Moscow’s resources, Igor Sechin has said

EU nations spent more than $630 billion on non-Russian gas imports in the three years through 2023, the head of Russian oil major Rosneft, Igor Sechin, told an energy panel at the St. Petersburg International Economic Forum (SPIEF) on Friday.

The figure is close to investments made in the bloc into so-called green energy over the same period of time, Sechin said, describing it as quadruple the aggregated gross domestic product of the Baltic states and equal to the total volume of the Swedish and Polish economies.

“The sum also equals the EU’s total gas spending over the previous eight years,” the Rosneft chief highlighted.

Higher energy costs are “eating up” the margins of energy-intensive sectors such as production of steel, fertilizers, chemicals, ceramics, and glass, Sechin claimed, adding that production activity in the euro area has been declining since the middle of 2022.

He stressed that 32% of German enterprises are already planning to transfer their production facilities abroad due to increased energy costs that inevitably deprive them of competitive advantage.

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Russian gas exports to the EU have dwindled due to sanctions related to the Ukraine conflict, as well as to the sabotage of the Nord Stream pipelines, which were previously Russia’s major gas route to the region. Last year, Russia’s share of pipeline gas imports to the bloc dropped to about 8% from 41% in 2021, according to European Council estimates. Meanwhile, Moscow still accounted for around 15% of total EU gas imports, including pipeline gas and liquified natural gas (LNG) combined.

Norway has overtaken Russia to become the region’s top pipeline gas supplier, while the EU is increasing imports of expensive LNG from the US and other countries.

Politico reported in May, citing draft documentation, that the EU was mulling the idea of sanctioning Russia’s LNG sector. The measure is not expected to directly bar the bloc’s imports of the super-chilled fuel, but would reportedly prevent member states from re-exporting it.

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In October 2022, Rosneft CEO Sechin warned that the bloc’s ambitious plan to ditch Russian energy would cost its economy up to 11.5% in GDP. He also said that the potential slump in the chemical industry could reach 20-45%, while metallurgy output could plummet by 30-60%, as these are among the top energy-intensive sectors.

Earlier this year, German Vice-Chancellor and Economy Minister Robert Habeck said that his country had lost its competitive advantage after abandoning Russian gas supplies. He admitted that the EU’s economic locomotive had been in “a particularly difficult situation,” as gas imports from Russia had been “very profitable.”

Last year, the minister warned that Germany would have to wind down or even switch off its massive industrial capacity if Ukraine’s gas transit agreement with Russia is not extended after it expires at the end 2024.