23 Mar 2022 12:54

Novak: market to collapse without Russian hydrocarbons, price growth will be unpredictable

MOSCOW. March 23 (Interfax) - A waiver of Russian hydrocarbons could lead to a collapse in the energy market and an unpredictable increase in prices, Deputy Prime Minister Alexander Novak said during government hour in the State Duma.

"It is obvious absolutely that without Russian hydrocarbons in the event of sanctions on the gas and oil markets will collapse. The rise in energy prices could be unpredictable," Novak said.

He noted that, for example, the U.S. ban on the supply of oil and petroleum products from Russia has already led to a 19% increase in fuel prices in the country. At the same time, the share of Russian energy resources in the U.S. market is only 3% of Russian exports.

"Our partners are trying to shift their problems with rising prices onto Russia. Although, obviously, our country has nothing to do with this crisis. In fact, the U.S. authorities themselves are progressively abandoning the development of their oil industry. The oil industry in the U.S. is subject not only to administrative pressure, but also to growing financial pressure. They are not allowed to build oil pipelines, no new areas for drilling, a number of benefits for the industry have been canceled, a number of investments have been reduced, banks have been advised not to finance new projects," Novak said.

According to Novak, a diesel fuel shortage in the EU countries due to restrictions on supplies from Russia may become a stronger destabilizing factor.

"The European Union has imposed sanctions on the supply of petroleum products with regard to two of our companies. At the same time, stocks of diesel fuel in Europe are at their lowest level since 2008, and 8% below the average for the last 5 years. And here the shortage of diesel fuel may become a stronger destabilizing factor when demand increases due to the resumption of freight and passenger traffic after the pandemic," he said in a speech at the plenary session of the State Duma.

"In Germany, for example, we have seen diesel fuel prices rise by 40%," the deputy prime minister said.

"According to experts, due to sanctions, Western countries may be forced to limit or introduce rationing of motor fuel. European politicians should even today explain to their citizens what their further short-sighted decisions could lead to," Novak said.

Pressured by the United States, the European Union refused to commission the Nord Stream 2 gas pipeline to the detriment of its own consumers, leading to exponential growth in energy prices, Novak said.

"Despite all the European Union's difficulties, rising prices and shortage of energy resources, the EU was pressured by the United States to deny commissioning the already built Nord Stream 2 pipeline to the detriment of European consumers," he said.

Novak said that the price of electricity in Europe has increased 10-fold and gas five-fold over the past year, and that there has been significant price increases for petroleum products in some countries, for example, by 40% in Germany.

Meanwhile, Russia could load refinery capacities in the event of problems with oil exports, Novak said.

"In a normal situation, if our export goods are sold, we will have a normal situation in our domestic market, we will keep prices at the level of inflation. If, say, there is a situation of excesses, this will of course be quite unnatural for the domestic market - we will have to take non-trivial decisions concerning the loading of refineries, among other things. Although in some periods wholesale prices may go down," he said.