Putin outmanoeuvres EU as Russian oil continues to flow through ‘backdoor’ blend

Economist explains why Germany is still using Russian gas

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Since Russia’s invasion of Ukraine, EU countries have looked to end their dependence on Putin’s energy exports, which form the backbone of Russia’s economy. In the past year, the bloc imported a staggering €48.5billion (£38billion) of crude oil and €22.5billion (£19billion) of petroleum oils other than crude. However, despite all the strong statements against Vladimir Putin, reports claim that Russian oil is still flowing into the EU, as energy companies blend it with oil sourced from other countries.

According to a report from Bloomberg, European energy companies continue to buy Russian oil that flows to the EU, but relabel it in what has been dubbed a “backdoor blend”.

These energy companies are able to do so by blending the shipments of Russian oil with oil from other countries, which they can then relabel as long as less than 50 percent of the oil in the new blend is sourced from Russia.

Javier Blas, an energy expert noted: “When is Russian oil not really Russian oil?

“The answer is via blending. For example in diesel, Shell considers that as long as the Russian stuff only accounts for 49.99 percent of the volume, the cargo isn’t technically from Russia.”

This comes after Shell vowed to stop buying Russian crude oil on the spot market and would not renew long term contracts for Russian oil, except if under Government direction.

The company noted that it will however be legally obliged to take delivery of oil bought under contracts signed before the Ukraine invasion.

This technique of blending the oil allows energy companies to still fulfil these orders as a growing number of countries demand an end to Russia’s energy imports.

A spokesman for Shell said: “A month ago we announced a phased withdrawal from all Russian hydrocarbons in response to Russia’s war on Ukraine.

“We have always said the withdrawal from Russian hydrocarbons would need to be phased to avoid a risk to the secure and continuous supply of fuels that people, societies and economies rely on.

“Fuels like diesel may be blended by other traders long before we buy them and fully traceable origin documents are not always readily available, in a reasonable timeframe to make a purchase, that would be able to signify whether the cargo had Russian hydrocarbons in it or not.

“Because of this, our guidance to our traders does allow them to buy fuels with a proportion of Russian product blended in to maintain security of fuel supplies to markets.

“However, the guidance ensures deeper scrutiny into the origin of the product, and is beyond what sanctions require.”.

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Shell stated its decision to pull out of Russia would cost the company up to £3.8billion, nearly 65 percent more than expected.

Given that EU countries have not yet applied sanctions on Russian oil, owing to the bloc’s heavy dependence on Moscow, it is completely legal for energy companies to buy oil from Russia.

However, the report claims that blending the Russian oil and selling it under a different name allows companies to openly say that they are phasing out Russian energy while continuing to use and sell it.

This type of oil is known by oil traders as a “Latvian blend”, where Russian oil is exported from Primorsk in Russia to Ventspils, a port in Latvia that has a large oil terminal and tanking capacity where blending can take place.

According to the report, the Latvian blend is now just a shorthand for any blend that contains Russian oil in it, regardless of its point of origin.

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