Ukraine suggests imposing ‘Iranian model’ of sanctions on Russian gas

“As for Russia's natural gas supplied via pipelines, it is now the most difficult to replace. It accounts for 40% of total EU imports. We suggest imposing an ‘Iranian model’ of sanctions: natural gas is supplied from Gazprom to Europe, but all funds are kept on special deposit accounts in European banks until Russia fulfills certain conditions," Deputy Minister of Energy of Ukraine Yaroslav Demchenkov told Ukrinform on the sidelines of the conference on security and stability of the Ukrainian energy sector organized by the Energy Community in Vienna on Monday.

According to him, in this way the money will not go directly to Russia and will not finance its war against Ukraine.

The deputy energy minister stressed that "the myth that Europe will die without Russian energy resources has been cemented for a very long time" in the EU, in particular in Germany. However, the real situation is quite the opposite as "Russia's energy will die without Europe." "The EU remains the only major market for Russian gas. Without a European market, the Russians will have to shut down their gas fields, preserve them, and then lose 70% of their gas fields when they rebuild them. So if Putin decides to bluff and stop gas supplies to Europe, he will simply destroy his gas infrastructure," Demchenkov said.

According to the official, with regard to liquefied natural gas (LNG) from Russia, the EU may give it up completely, which will be a "right signal to the market and business." "In 2021, Russia's total LNG supply was less than 8% of world supply. Almost half was imported from Europe. A complete EU embargo on Russian LNG imports will carry little risk as these volumes could easily be offset by increased supplies in 2022 from other suppliers," he noted.

The deputy energy minister also pointed out that the European Union was able to completely stop using Russian oil products: "Europe imports about 15% of its total diesel fuel from Russia. This can be replaced by increased domestic production and additional imports from North America and Asia."

As for crude oil, according to Demchenkov, "there is a need to give more signals to producers." "If the market sees that Europe is serious about the embargo on Russian crude oil, there will be strong competition to replace the ‘quota’ of Russian oil and ensure long-term relations," he said.

The imposition of such an embargo "should be carried out gradually with the immediate cessation of maritime imports of Russian raw materials and the subsequent gradual cessation of oil imports through a pipeline over the next nine months."

"We draw the European colleagues' attention to the need for an immediate embargo on Russian LNG and oil supplies and prove that gas and diesel can also be replaced. We are also talking about sanctions against Rosatom and an embargo on nuclear fuel supplies from Russia," stressed the deputy minister of energy of Ukraine.

As reported, the European Union adopted the fifth round of sanctions against Russia in response to the unprovoked military aggression against Ukraine.

Among other things, the sanctions provide for a ban on buying, importing or transferring coal and other solid fossil fuels to the EU if they originate in Russia or have been exported from Russia since 22 August 2022.

Coal imports to the European Union currently total €8 billion a year.

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