Moscow is beginning to feel the heat of its war in Ukraine, and could be losing as much as $4 billion a month in energy revenues.

Russian President, Vladimir Putin has inaugurated the Kovykta natural gas field in eastern Siberia, located strategically to allow Russia to increase gas exports to China.

The inauguration of the gas field last Wednesday is one of the strategic measures introduced by Russia amid growing tensions between Moscow and the West, and the biting sanctions from the G7 and the EU.
Last Monday it was reported that Russia and Iran, which have grown increasingly closer in recent years, have joined forces to evade the Western sanctions on their exports by constructing a $20billion, new waterway-railway route from Russia-occupied territories in Ukraine to the southernmost ports in the Islamic Republic.

Bloomberg reported that Russia and Iran, united by their increasingly closer military ties and the fact that they are both pariahs in international trade due to the Western sanctions, are now looking to expand their trade ties with Asia and are expanding canals on navigable rivers and building railroads to support growing trade.

Also Read: As Sanctions Kick In, Putin Vows To Deepen Trade Ties With China, Others

The inauguration of the Kovykta natural gas field in eastern Siberia by Putin is the culmination of efforts that began about a decade ago to develop new fields and build the Power of Siberia pipeline to deliver to the rapidly expanding market.

“We are launching the unique Kovykta gas field, the largest in eastern Siberia. Its recoverable reserves are 1.8 trillion cubic meters of gas,” Putin said via video link during a televised ceremony.

Currently, Russia lacks pipelines to transport gas from its Western Siberian and Arctic gas fields that serve China and Europe. The first Power of Siberia pipeline began to deliver gas from eastern Siberia to China at the end of 2019. It won’t be the last.

Russia has laid out plans to build a Power of Siberia 2 pipeline as it increasingly turns to the Middle Kingdom in the face of heavy western sanctions.

China and India have become some of the biggest buyers of Russian oil and gas, with Bloomberg’s oil strategist Julian Lee revealing that Russia’s flagship Urals crude oil has been trading at a massive discount of more than per barrel $30, or about 40% to the international Brent crude oil, at the end of last week.

Also Read: Putin Considers Slashing Russia’s Oil Production

This time last year, Urals traded at a much smaller discount of $2.85 to Brent. Urals is the main blend exported by Russia. The result: Moscow is beginning to feel the heat of its war in Ukraine, and could be losing as much as $4 billion a month in energy revenues, as per Bloomberg’s calculations.

Supplies of Russian pipeline gas – the bulk of Europe’s gas imports before the Ukraine war – are down to a trickle and might be further impacted after a gas pipeline in central Russia that brings gas from Russia’s Arctic through Ukraine to Europe was shut down on Tuesday following a deadly blast.


Be the first to know when we publish an update

Leave a Reply