Almost there: Banning 90% of Russian oil imports could raise energy prices across the EU, but the bloc's determination to see it through may soon have the decision formally ratified | Photo: Fair Observer

Russia looks to channel oil supplies to other buyers as EU tightens oil embargo

The EU approved a resolution to ban nearly 90% of Russian oil imports by the end of 2022 as it continues to tighten sanctions against the country over its military offensive against Ukraine. At the moment the bloc imports around 36% of its oil from Russia, and the decision — although not yet formally ratified — was approved even though it may raise energy prices in the interim across the member nations. While Russian gas imports have not yet been banned, that too may come up for a resolution in the next few weeks. 

Meanwhile, India and China continued to purchase Russian oil at heavily discounted prices, and the Russian permanent representative to the international organisations in Vienna countered the move by saying that the ban would only “reflect negatively on the bloc”. However, the ban could give the EU more political muscle to ask China and India to stop their imports, as and when it is fully enforced. Additionally, the bloc may also cancel the insurance for almost all Russian ships to further exclude them from the West. 

UK imposes windfall tax on oil and gas drillers, may raise coal consumption to counter gas embargo

Britain’s Chancellor of the Exchequer, Rishi Sunak, announced a windfall tax of £5bn on oil and gas drillers active in the country in order to grant taxpayers an extra £400 in October 2022. The grant is aimed at helping Britons cope with the rising energy costs as the UK and the EU battle higher oil and gas prices amidst their pullback against Russian fossil fuel imports. However, the “one-off levy” is expected to remain in effect till December 2025, and the oil and gas drillers expressed their “surprise” at the decision and warned that it could stymie further investments into the UK’s oil and gas market.  

The standoff with Russia has also forced the UK’s Business Secretary to instruct the National Grid to use more coal, if necessary, during the winter if Russian gas supplies were cut off. The announcement could reportedly worsen the already high gas prices in the UK, even though less than 4% of its gas supplies come from Russia. 

Shells looks to India to offload its Russian natural gas holdings 

Oil and gas giant Shell is reportedly in talks with GAIL, ONGC and other state-owned entities for them to buy its 27.5% stake in Russia’s Sakhalin-2 LNG plant. The talks are a part of Shell’s strategy to fully exit its Russian oil and gas holdings, and India’s imports of Russian oil have risen from zero to 10% this year as it snaps up the fuel at a steep discount. Also, the country intends to greatly increase its imports of Russian gas, and refuted criticisms from the West over the imports by saying that the fuels accounted for a minor percentage of its total foreign fuel intake. Stopping the imports, it reasoned, would only raise energy prices for Indian consumers. 

India power crisis: NTPC to boost captive coal mining by 86%, Coal India to open new mine 

India’s largest power producer, NTPC, will boost the output from its captive coal mines by 86% this year as it attempts to keep its import costs down and lower its reliance on rail- and road-dependent coal supplies. The increase is massive when compared to the 10% raise in domestic coal requirement initiated by the Indian power ministry, and would allow NTPC to cover 10% of its coal needs from its captive mines alone. The move comes as India reels under a heatwave, which has sharply increased the power requirement across the country. 

Also, Coal India Ltd. (CIL) approved the opening of a new coal mine in Odisha to raise its annual output. The Siarmal mine in the east of Odisha will reportedly reach an output of 50 million tonnes in about five to seven years, and is likely to start production in October this year with an output of two to five million tonnes. However, the miner will also open two more coal mines by March 2023 as it ramps up its output and inches closer to producing a billion tonnes of the fuel every year by 2025. 

Coal prices rise by 800% amidst power crisis, new mine approved in Hasdeo forests 

India’s coal buyers reported that the spot prices of coal ballooned to over 800% of the notified price in a recent spot e-auction, as the demand for the fuel grows under strict orders by the government for power producers to keep their units operational. The situation had led to several buyers buying power from the spot exchanges instead, which was driving up power tariffs even more and worsening the crisis even further. 

Additionally, the demand for coal was reportedly at such high levels that the development of a new coal mine has started in the previously-untouched Hasdeo forests. The first signs of activity were noted on April 26, when 300 trees were logged by contractors (under police protection) before local residents could stage any resistance. 

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