Putin Claims Russia's Energy Sector is Stable

---

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Despite stranded cargos and ever-tightening sanctions, Russia's president said the nation's energy sector appeared to be in a state of stability.

Russia's invasion of Ukraine in February 2022 was met with swift and crippling sanctions targeting its energy sector, a prime source of national revenue. The result was a loss of market share for one of the world leaders in oil and gas production.

Once a main supplier of natural gas to the European economies, for example, Russia has seen its market share taken up by the likes of the U.S. and Norway. Addressing the needs at home, however, Russian President Vladimir Putin said the nation's economy is growing and demand for fuels can be satisfied through domestic resources.

"I would like to emphasize that despite the sanctions and strong volatility on the global and regional energy markets, the domestic fuel and energy complex is developing steadily, opening new areas for exports and reliably and fully meeting growing domestic needs, which is fundamentally important and is a priority for us," he said Tuesday.

Sanction pressures continue unabated, however, as the war in Ukraine drags on. As recently as May 1, the U.S. State Department imposed new sanctions on 280 individuals and entities in Russia, including those engaged in Russia's energy future and export capacity.

Speaking in Germany on Tuesday, U.S. Treasury Secretary Janet Yellen called on all Western allies to honor the various sanctions imposed so far on Russia. Global action, she said, is starving Russia of the revenue needed to fund its military action in Ukraine.

"However, our objectives have only been partially met," she said. "Russia continues to procure sensitive goods and to expand its ability to domestically manufacture these goods."

Revenues from oil and gas fell off sharply during the early stages of the war, but are on something of a rebound as Russia finds a way to maneuver around Western sanctions. India, for example, may be in pursuit of long-term oil deals with Russian suppliers.

Putin said Tuesday that oil production was down about 1.8% relative to year-ago levels, but he claimed that was largely due to the voluntary restraints from agreements with OPEC+, the core members of the Organization of the Petroleum Exporting Countries (OPEC) and their non-member state allies.

OPEC economists put Russian crude oil production at about 9.3 million barrels per day (BBL/d) last month, about a half-million BBL/d lower than pre-war levels.

A review of shipping data from the Bloomberg news agency, meanwhile, found that 40 ships have been added to the U.S. Treasury Department's sanction list since October, and only one of them picked up cargo since then. That, however, does not count the ships running with their tracking features turned off.

Gas production, meanwhile, was about 8% higher than last year, Putin said. As with crude oil, Russia is enjoying a strong energy relationship with China, with the Kremlin claiming progress on a long-promised expansion to the Power of Siberia natural gas pipeline.

Russia's economy, too, has shown a degree of resiliency since the start of the war. OPEC economists in their monthly market report for May said Russia's economy is expected to expand by about 2.4% this year, comparable to growth in the U.S. economy.

Inflation is another story, however. While U.S. inflation is moving closer to a 2% target rate set by policymakers, Russia at 7.7% year-over-year to March is nearly twice as high as the goal set by Russia's central bank.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).