The Russia-Ukraine crisis changes the new world order in the energy market

The European Union has responded by accelerating the disconnection of the Russian gas pipeline. In particular, Germany is the leading country in these changes. A few days after Russia launched a special military operation in Ukraine, German Chancellor Olaf Scholz announced the cessation of the deployment of the gas pipeline. Nord Stream 2 (worth $11 billion), connecting from Vyborg in Russia, across the Baltic Sea, to Greifswald, Germany.

Meanwhile, the US has banned the import of Russian oil products and is looking for alternative sources. The prospect for this supply is Venezuela, which has the largest known crude oil reserves in the world. Last weekend, a US delegation arrived in Venezuela and was given the green light by the Venezuelan President by saying it was ready to increase production up to 3 million bpd.

Meanwhile, according to Bloomberg, China said it will continue to carry out “normal commercial cooperation” with Russia, including oil and gas, and may even increase its stake in Russian oil and gas companies.

Russian President Vladimir Putin at the opening ceremony of the 2022 Winter Olympics in Beijing. Photo: AP.

People have also begun to see a shift of Russian energy flows to the East. Russia has turned to accelerating other projects, including expanding the Power Siberia-2 pipeline to bring fuel to Mongolia and China. In addition, a new pipeline called “Pakistan Stream” is also being planned, aimed at boosting gas demand in the South Asian country.

While many major partners in the world have stopped cooperating with Russia, Moscow’s partnership with oil corporations in the Middle East remains intact. Saudi Arabia ignored US pressure, refusing to exploit spare production capacity to replace oil supplies from Russia, sending oil prices to a 13-year high, near $140 a barrel. Russia and Saudi Arabia are the world’s top oil exporters, accounting for 29% of total global production.

So while Europe accelerates the disconnection of Russian gas pipelines, the US bans Russian oil imports and is likely to shift supply to Venezuela. Saudi Arabia gains strategic importance as crude oil prices hit new highs. And Russia, by threatening to stop exporting energy to Europe, is being pushed closer to China.

Mr. Bob Mcnally – Chairman of the Rapidan Energy Group, an energy consultancy, said: “These changes will redraw the energy map in Europe and possibly the world. The world is in a new era, no same as before.”

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