IPE Analysis No. 4/2023

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The Russian Federation’s aggression against Ukraine has necessitated a redefinition of strategic priorities for the oil and petroleum-related energy sector. The challenge of setting new key targets is much more difficult for countries in the Central European and Baltic Sea region than in those located to the west or south of the European Union. Countries located geographically closer to the Russian Federation, due to the existence of inland oil trunk lines, allowing cheaper imports of crude from the eastern direction, as well as geographic proximity to the producer country, were significantly more dependent on Russia than the rest of the European Union. The response to the aggression against Ukraine was the introduction of an embargo by European Union countries on oil imported from Russia by land routes and the establishment of a low price level for oil transported by sea routes at $60 per barrel. These measures have been accompanied by further sanctions on the purchase of petroleum fuels from Russia and a political commitment that all European Union countries will completely abandon the purchase of raw materials and fossil fuels from Russia by 2027.

The aforementioned measures are aimed at stopping Russia’s ability to continue the war against Ukraine by imposing high penalties/sanctions on Russian society and economy. It should be strongly emphasized that from the perspective of the strategic interests of the NATO allied states and the European Union, the consistent implementation of the indicated measures is fundamentally justified. Taking into account the statistical data covering all countries of the Community, it can be seen that Russia’s share of EU imports of petroleum products has been continuously reduced starting from the second quarter of 2022. It fell from a monthly average of 8.7 million tons in the second quarter of 2022, to 1.6 million tons in the second quarter of this year. This represents an 82% reduction. In contrast, imports from suppliers other than the Russian Federation increased by 5.8 million tons, from 31.5 million tons to 37.3 million tons.

From the perspective of Poland, Central Europe and the Baltic Sea region, it should be noted that Russian oil and fuel imports were significantly higher than the EU statistical average. Thus, the challenge facing PERN Group, which manages critical infrastructure 7 Eurostat, EU imports of energy products continued to decline in Q2 2023. 6 for oil and fuels is significantly more difficult than for other logistics operators in this sector operating in Western Europe. The embargo and the cutting off of supplies via the inland Druzhba Pipeline has made Poland and the region dependent on supplies by sea for energy security. In this view, the receiving capacity and the entire logistics infrastructure of the PERN CG such as marine raw material terminals, product terminals, warehouses, oil and fuel pipelines, as well as their efficiency and flexibility of operation, have become a kind of key and necessary element to ensure the energy security of Poland and the region.

 

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PERN S.A. was a partner in the analysis. The Ignacy Lukasiewicz Institute for Energy Policy thanks PERN for providing up-to-date technical information on Poland’s energy infrastructure.

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