Letter from Moscow: March 2014

摘要

The annexation of Crimea has widely been regarded as a success here in Moscow – at least for the moment. The president’s approval rating jumped 10-15% to around 72-75%, according to the Levada polling center, following events on the peninsula. Initially, it was thought that any sanctions by western countries against Moscow would be limited to only a few Russian politicians. Anything more serious would have consequences as large for Europe as for Russia. The gas sector creates a high level of interdependence. Russian gas accounts for about 25% of Europe’s gas consumption. Some central and east European countries are almost totally dependent on Russian gas. At the same time, Europe accounts for around half of state-owned Gazprom’s sales, the company enjoying monopoly rights on all Russian gas pipeline exports. The income that this business generates is a key source of revenue for the Russian budget. In addition, many western companies participate in Russian oil and gas projects, including ExxonMobil, Total, Eni, Statoil and Shell. Russian firms also own oil and gas assets in Europe, including Lukoil’s 100% ownership in the 320,000 b/d refinery in Sicily, and Rosneft’s 50% ownership in Ruhr Oel, which owns four refineries in Germany, with total refining capacity of 460,000 b/d.