23 May 2022 11:42

EU will not find replacement for Russian oil in event of embargo - former Lukoil head

MOSCOW. May 23 (Interfax) - A European embargo on Russian oil would be the worst-case scenario for all concerned, the founder and former head of Russian oil company Lukoil , Vagit Alekperov said.

Any move by the European Union to stop importing Russian crude will be "a shock for everyone," Alekperov said in an interview with the Financial Times.

"By imposing sanctions, western countries gave a clear signal and declared their position. There is no need to further tighten them," Alekperov said.

He acknowledged that in the event of a ban on imports of its oil "Russia will have to reduce production, freeze wells, as we did at the beginning of the pandemic in 2020, because it is impossible to redirect all European volumes to other markets overnight."

But he also warned that for the EU "it is impossible to replace such a major energy exporter as Russia, even in the medium term."

It will take years to build new infrastructure to redirect Russian oil that now flows to Europe, particularly at a time when global industry has already lost "hundreds of billions, trillions of dollars" of investment as a result of recent crises, he said.

"Military conflicts can end quickly, while the energy configuration of the world has been set by decades of investment and hard work of many generations of professionals. There is no need to undermine or destroy it," Alekperov said.

Commenting on the growth of oil prices after the start of Russia's military operation in Ukraine and declining energy security in Europe, he said that this "is not a natural process, such as decarbonisation, and not a short-term consumption crisis as in the coronavirus pandemic."

"This is a very severe energy crisis with negative long-term consequences for all market participants," Alekperov said.

Alekperov decided to step down as head of Lukoil in April after the imposition of personal sanctions against him. This decision "was made for the sake of the company, although I won't hide it, it was a sad one for me," he said.

"We see that sanctions are often of chaotic, emotional nature," Alekperov said. "They affect people who make no political decisions, have no political influence. Let alone the factual mistakes in them, in last names, titles, or reasons for being sanctioned. It doesn't look serious from the legal standpoint at the very least and negates the importance of these measures in the eyes of the public."

Attempts to include a ban on Russian oil imports in the EU's sixth package of sanctions against Russia have met with resistance from Hungary, which has said it cannot afford to find alternatives.

Alekperov notified Lukoil on April 21 that he would step down from the board of directors and his position as president, thus distancing himself from the company after being included in the sanctions lists of Australia and UK. He became president of Lukoil in 1993 when it was registered as a joint-stock company.