Russia looks to utilize Nord Stream 2 domestically to boost markets as Europe shuns oil
OPEC, Russia refuse oil production increase, securing themselves an economic windfall
The Schork Group principal Stephen Schork weighs in on the spike in diesel prices.
Russia is looking to ease strains on its market caused by massive international sanctions and gas boycotts by opening the Nord Stream 2 pipeline domestically.
The West heavily relied on the threat of shutting down the controversial pipeline in an attempt to preserve Ukraine’s sovereignty in the lead-up to the invasion.
RUSSIA INVADES UKRAINE: LIVE UPDATES
E.ON, Europe's largest operator of energy networks, rejected demands to shut down the Nord Stream 1 gas pipeline as part of sanctions against Russia for invading Ukraine, the company told Rheinische Post newspaper on Monday. (AP Photo/Dmitry Lovetsky, File / AP Newsroom)
Moscow dismissed the threats and on Feb. 21 announced its recognition of the "independence" of the separatist regions of Luhansk and Donetsk in eastern Ukraine.
Germany the next day blocked the certification of the $11 billion pipeline and just two days later Russian President Vladimir Putin announced his "special military operation" in Ukraine.
Russian-owned energy giant Gazprom has since decided to use part of the pipeline to boost domestic consumption.
"Reformatting the Nord Stream 2 infrastructure will be a significant help for the Russian market and gasification of the regions," Russian state-owned media said Friday.
The publication said this decision would create "opportunities for launching new gas projects" throughout Russia.
Pipes at the landfall facilities of the Nord Stream 2 gas pipeline are pictured in Lubmin, northern Germany, on Feb. 15, 2022. (AP Photo/Michael Sohn, File / AP Newsroom)
PRICE OF DIESEL HITS ALL-TIME HIGH, STRAINING THE TRUCKING INDUSTRY
The deputy head of the National Energy Security Fund, Alexei Grivach, said the move does not mean Russia is abandoning the Nord Stream 2 pipeline but said, given the uncertainty of the project, it will utilize the pipeline as it can now.
Nord Stream 2 would have fueled gas from Russia to Europe via Germany through a pipeline that cut under the Baltic Sea – bypassing a pipeline that was once heavily relied on that runs into Ukraine.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SHEL | SHELL PLC | 65.79 | +0.31 | +0.47% |
| XOM | EXXON MOBIL CORP. | 120.57 | +0.09 | +0.07% |
| PTR | PETROCHINA CO. LTD. | 46.8296 | -0.24 | -0.51% |
According to the U.S. Energy Information Agency, Russia in 2021 was the largest natural gas-exporting country in the world.
The U.S. and European allies went after Russian oil exports following its deadly invasion into Ukraine and vowed to cut oil ties with Moscow.
The U.S. blocked all future purchases of Russian oil, while several European nations made moves to completely sever oil purchases by the end of 2022.
The European Union, Russia’s biggest energy importer, further proposed this week to ban all Russian oil from Europe.
But even with sanctions and boycotts on its number-one moneymaker, Russia is still expected to reap a substantial income boost to its energy export profits this year.
Bloomberg Economics forecasted in April that Russia could still see a 36% increase from profits made last year, in large part due to spiking inflation rates.
Russian President Vladimir Putin (Mikhail Klimentyev, Sputnik, Kremlin Pool Photo via AP, file / AP Images)
CLICK HERE TO READ MORE ON FOX BUSINESS
Nations that encompass the Organization of the Petroleum Exporting Countries (OPEC) and Russia have refused to increase their oil production despite globally spiking energy prices brought on by post-pandemic inflation and Moscow’s war in Ukraine.
This means prices at the pump are expected to remain high while nations like Saudi Arabia, the United Arab of Emirates and Russia will see an economic windfall this year.