Report: Embargo on Russian gas to hurt EU economy – OMV CEO

VIENNA/BERLIN/MOSCOW/BELGRADE/HELSINKI, May 5 (PRIME) -- Europe is not ready for an embargo on Russian natural gas, which can inflict serious damage on the E.U. industry and economy, Austria’s OMV CEO Alfred Stern said in an interview to daily Kurier published on Thursday.

“I don’t think that we are ready for the embargo today, unless we are ready to accept the consequences. We have to understand clearly that our gas supplies are not secured by our own production in Europe, but by supplies from Russia. We have created a target group on gas to check the contribution each of us can make to the supplies,” he said.

“Of course, there is a law on energy management, which ensures heating of the households. But households consume only about 20% of gas per year, while we spend about 35% on production of power and about 40% on the industry. The issue is not about that, it is about us wanting to maintain our economic activity, which will be impossible to full extent in this case.”

Italian energy company Enel’s CEO Francesco Starace said in a conference with analysts that the company was independent from the Russian gas as its consumption was completely secured by supplies from other countries.

He said that no changes would happen to its Russian business, as Enel plans no new investment and no expansion in the country.

DISCUSSION OF OIL EMBARGO

German Economy Minister Robert Habeck said that Germany’s East that depend on the Schwedt refinery that consumes Russian oil, may face gasoline deficit due to embargo on Russian oil.

“Unfortunately, we cannot rule out deficit. We will be able to solve it, but it could happen so that there is too little oil for a limited amount of time, and this is why too little gasoline,” he said in an interview to RTL Direkt channel.

Karol Galek, Slovakian deputy economy minister in charge of energy policy, said in an interview to Politico that Slovakia would be unable to comply with the end of 2023 deadline set by the E.U. to become independent from Russian oil. It can only do so no earlier than in three years.

The current oil ban proposal of the European Commission would hurt not only Slovakia, but also Austria and the Czech Republic. “It will destroy our European economy,” Galek said.

Lukoil Neftochim Burgas, a subsidiary of Russian oil major Lukoil in Bulgaria, said in a statement there was no real alternative to Russian oil in Bulgaria. “Technically, we are able to refine oil from the Middle East and North Africa, but it will reduce tcapacities of the refinery,” the company said, adding that the oil embargo would drive fuel prices in Bulgaria by 20–30%.

Serbia was firmly on its way to the E.U., but sees the sanctions differently from the other E.U. countries, President Aleksandar Vucic said.

“We were direct and clear on the legal and political nature of the conflict … On the other hand, you know that we have not opened article 31 (of the negotiation platform on accession to the E.U.), and we have to coordinate with all decisions of the E.U. as someone who is on the way to the European Union. I listened to Chancellor (Olaf) Scholz today, he was clear in stating the position and demands of Germany,” Vucic said following a meeting with Scholz.

“We have a different attitude towards sanctions than many others,” he said.

Estonian Foreign Minister Eva-Maria Liimets called for the E.U. to prepare a seventh round of anti-Russian sanctions.

REACTION

Vladimir Chizhov, Russia’s ambassador to the E.U., said that it would be easier for Europe to replace Russian oil than the Russian gas.

“First, oil is produced in almost every continent, and second, it is easier to transport and store. Oil could be pumped into a tanker and transported. It could be left in that tanker if there is no demand, while it impossible to pump gas back into the ground,” he said.

Europe would be able find some oil to replace Russia’s fuel during the summer, but this problem will become more serious in the winter, he added.

The Russian embassy in the U.S. said that the U.S. pressure and energy sanctions will get it nowhere. Moscow will not cave in under the pressure, and the continuous strengthening of the ruble confirms that, while energy sanctions would only destabilize the hydrocarbon market and raise the fuel prices, the embassy said.

End