Washington/Moscow: Oil and gas take the centre stage on the 36th day of the Ukraine crisis today.
US President Joe Biden today authorized the largest release from the Strategic Petroleum Reserve in American history – 1 million barrels a day for six months in an attempt to keep a check on the surging oil prices.
Russian President Vladimir Putin signed an Executive Order establishing the rules for trading Russian natural gas “with so-called unfriendly states”. Putin said Russia had offered its counterparties from these countries “a clear and transparent procedure”. He explained that to purchase Russian natural gas, they will have to open ruble accounts with Russian banks to be used to pay for gas distribution starting tomorrow, April 1, 2022.
European leaders though rejected Russia’s demand that gas deliveries be paid in rubles. Putin warned if no payment is made, “we will consider this a default on the part of the purchaser – with all the ensuing consequences”. He added: “No one sells us anything without payment, and we are not doing charity either. This means the current contracts will be suspended.”
The Oil Producing and Exporting Countries (OPEC) and its allies, including Russia, meanwhile, have decided to continue with their previously agreed-upon plan of modest monthly production increases.
Putin emphatically announced that in a situation where the Western countries’ financial systems were being used as a weapon, when companies from these countries refuse to fulfil their contracts with Russian banks, enterprises, and individuals, when Russia’s dollar and euro assets were frozen, “it makes no sense to use those countries’ currencies”.
“In fact, what has been happening? We supplied resources to our European customers – in this case, gas. They received it and paid in euros – which they later had frozen. Thus, we have reasons to believe that some of the gas supplied to Europe was essentially provided free of charge,” Putin said.
He added: “Obviously, this cannot continue, especially considering that, should we continue to supply gas under the same process, euro or dollar payments could once again be blocked. This development is quite possible, especially given that some Western politicians have been talking about it publicly. Moreover, EU heads of governments have been suggesting similar approaches. This kind of risk is, of course, unacceptable to us.
“If we look at this issue from a general perspective, converting to gas payments in Russian rubles is an important step towards reinforcing our financial and economic sovereignty. It has been our long-term plan to consistently and gradually move in this direction, increasing the share of national currency transactions in foreign trade – that is, in our currency and the currency of our reliable partners.
“You may have already heard that many long-time energy suppliers in the world market are also talking about diversifying transaction currencies.
“To reiterate, Russia values its business reputation. We fulfil and we will continue to fulfil our obligations under all contracts, including our gas contracts. We will continue to supply gas as agreed and, I would like to stress, at the rates specified in the effective long-term contracts.”
Putin stressed that these rates were several times lower than the current rates on the spot market. “What does this mean? In simple terms, Russian gas means cheaper energy, heat and power in European homes, affordable fertilisers for European farmers and, consequently, cheaper food. Finally, it means higher competitiveness for European companies and higher wages for European citizens. However, judging by the statements made by some politicians, they are willing to disregard their citizens’ interests so they can enjoy the good graces of their overseas master and overlord. This is the opposite of populism. People are urged to eat less, put on more clothes, and use less heating, give up on travel – presumably for the benefit of the people who are demanding this kind of voluntary deprivation as a sign of some abstract North Atlantic solidarity,” he said.
Putin said this was not the first year that he had been observing “such questionable” approaches and actions in the economic, energy and food policy of the Western countries. He predicted that the food crisis will inevitably be followed by another one, another wave of migration, primarily to the European countries, but regardless of this, the decisions that were being made, “one after another”, were pushing the global economy towards crisis. “They are leading to the disruption of production and logistics chains, an increase in global inflation and the aggravation of inequality, to a decline in the living standards of millions of people, and to the tragedy of mass famine in the poorest countries, as I have just said,” he said.
Holding the United States responsible for this, he said Washington will “again try to resolve its problems – just its own problems – at the expense of others”.
Washington meanwhile said Americans face rising prices at the pump because of Putin’s Price Hike. “Prices at the pump right now are up almost $1 since Vladimir Putin accelerated his military buildup in January. That’s because Russian oil now is coming off the market. The United States banned the import of Russian oil, which Republicans and Democrats in Congress called for and supported. It was the right thing to do. And as the United States and others aren’t buying Russian oil, supply is dropping and the price has increased,” the White House said today. A spokesperson said President Biden was committed to doing everything in his power to help American families who are paying more out of pocket as a result. At the start of this year, gas was about $3.30 a gallon. Today, it’s over $4.20, an increase of nearly $1.
However, Washington claimed that there was nothing standing in the way of domestic oil production. The United States was already approaching record levels of oil and natural gas production. Right now, domestic production is expected to increase by 1 million barrels per day this year and nearly 700,000 barrels per day next year. “Still, too many companies aren’t doing their part and are choosing to make extraordinary profits without making the additional investments to help with supply.
Taking note of the fact that right now, the oil and gas industry was sitting on more than 12 million acres of non-producing Federal land with 9,000 unused but already-approved permits for production,Biden today called on Congress to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing.
– global bihari bureau
