The latest barrage of sanctions has been issued against Russia for its invasion of Ukraine. Fresh restrictions will impact Russian energy sector investments, imports of steel products from Russia, luxury goods exports to Moscow as well as others from previous weeks.
What Are The Latest Sanctions On Russia?
The European Union’s sanctions against Russia increased on Tuesday, hitting the energy sector and steel industry. This latest wave also included freezing the assets of more business leaders who are in support of the Russian state.
One of the most prominent hits was Chelsea football club owner Roman Abramovich, as well as Konstantin Ernst, head of Russian state TV Channel One. Both were included on an already long blacklist of wealthy Russians.
Three rounds of measures have already been accounted for, including some Russian and Belarusian banks excluded from the SWIFT banking system, assets frozen from the Russian central bank and assets of oligarchs and top politicians, including Russia’s President Vladimir Putin and foreign minister Sergey Lavrov frozen.
What Are The Sanctions On The Energy Industry?
An incoming ban on new investment across the Russian energy sector has also been included by the European Commission. These measures will focus on Russia’s oil majors such as:
- Gazprom Neft
- Rosneft (ROSN.MM)
- Transneft (TRNF_p.MM)
The listed companies will have a transactions ban, however, EU members can still buy oil and gas from them. Gas giant Gazprom will also have restrictions, with investments in energy projects within Russia run by other Russian companies halted.
This investment ban spreads across the whole energy sector apart from nuclear energy. This is due to several EU countries still reliant on technology provided by Moscow for Russian reactors on their soil. Exports from Russia for numerous raw minerals, such as palladium and fossil fuels may still be possible.
Some Russian state-owned enterprises linked to the Kremlin’s military-industrial complex will have a total ban on transactions.
What Are The Sanctions On Oligarchs?
Under new sanctions, Abramovich and other oligarchs will have their assets frozen, however, EU governments are still undecided on how to apply the measures. Currently, it remains unclear what impact it will have on companies owned by blacklisted businessmen.
At the moment, the European Union is beginning to facilitate seizures through the exchange of information amongst EU states. Some members could lack the political will and staff to complete the actions.
What Are The Sanctions On The Steel Industry?
An estimated 3.3 billion euros ($3.6 billion) worth of products will be impacted by the ban on Russian steel imports. Right now, any luxury goods worth more than 300 euros cannot be exported to Russia by EU companies.
The focus is to impact the lifestyle of Russia’s elites. These products include:
- Caviar
- Crystals
- Precious stones
- Leather goods
- Wine
- Handbags
- Shoes
- Coats
What Industries Have Been Sanctioned?
| Nationwide | Individuals | Sports | Transport And Industry |
| All transactions within the institution have been banned by the EU and US. | The Russian president, foreign minister, Sergei Lavrov, and the defence minister, Sergei Shoigu, have been frozen in the EU, US and UK. | The UK and EU airspace has banned Russian private jets and airlines. | Russian clubs and national teams from all competitions by Uefa and FIFA. |
| Numerous Russian banks have been impacted, as well as cut out of the Swift international payments system. | Over a dozen billionaire oligarchs with ties to Putin’s regime are on asset freeze and travel ban lists around the world. | Russian energy company Gazprom has been banned by the United States as well as other major energy companies. | The Uefa Champions League final has been removed from St Petersburg to Paris. |
| Russia’s top 10 financial institutions have been placed under restrictions by the United States. | A £50,000 limit on bank accounts held by Russian nationals in the UK has been imposed. | Russia’s biggest freight, rail and telecoms companies have been banned from the United States credit markets. | All World Cup skiing events in Russia have been cancelled as well as the Formula One grand prix. |
| Assets of other Russian banks have had worldwide strict asset freezes. | All 351 members of Russia’s parliament have had sanctions placed on them. | Bans on exports of aircraft and aviation parts to Russia has been introduced by the EU. | The International Chess Federation will no longer take place in Russia. |
What Is The UK Doing To Help Ukraine With Energy?
New plans have been announced by the UK government to offer vital energy support to Ukraine. The Ukraine Electricity Network Support Taskforce has been set up in response to a direct request from President Zelenskyy.
Ukraine will be provided with portable generators, providing power for thousands of essential services in Ukraine, such as hospitals and shelters. More than 500 mobile generators will be donated by the UK.
Much needed essential facilities have lost power during the ongoing Russian invasion, leading to the UK government creating the dedicated Taskforce. This project will source and send the generators to Ukraine.
An estimated 20,000 homes or equivalent buildings could be powered by the generators, coming at a crucial time to help boost Ukraine’s war efforts, as well as supporting and protecting Ukrainian people’s access to energy.
UK commercial suppliers will be used to provide the generators, offering their available stocks of generators to the effort. By using neighbouring countries, suppliers can send large proportions of these generators to Ukraine.
What About the UK And Russian Energy?
There has been a call to reduce the reliance on Russian energy in the UK. To do this, oil and gas may have to remove a barrier to increased extraction of fossil fuels from the North Sea.
Meetings at Downing Street this week have seen BP and Shell bosses meet with the prime minister who is keen to accelerate investment and development of domestic gas supplies.
After Vladimir Putin invaded Ukraine, there has never been clearer evidence of how UK energy must develop. With ambitious targets of achieving net-zero carbon emissions by 2050, this is a difficult time for the energy sector.
Will The UK Stop Using Russian Oil?
Announcements last week from the prime minister stated that by the end of 2022, the UK would cease use of Russian oil, however, not gas. To make up for the lost amounts, homegrown hydrocarbons are expected to be the replacement.
However, many environmentalists are warning that the race to break the energy dominance may result in global warming targets being forgotten. To combat this, many are asking for increased deployment of renewables.
In addition, upgrades to inefficient homes through the likes of insulation and heat pumps have been called for. It takes an average of 28 years to develop a newly licensed oil and gas field.
This means that any results would take decades, even with sharp accelerations in technology. £4bn of public money has been given to North Sea oil and gas companies since 2015 while many households in the UK have struggled to pay bills for years.
There have been some developments, such as ending the use of coal by 2024. Meanwhile, there has been a boost to the supply of domestic gas through increasing investment in the North Sea oil and gas industry.
The UK government sees the North Sea oil and gas industry as a vital part of the UK’s plans for achieving greater energy independence. They also include the sector in the transition to net-zero.
To do this, it is crucial to distance the UK from Russian hydrocarbons. However, many energy companies are seeing surging profits as the war in Ukraine and international sanctions drive energy prices sky-high.
Calls from Lib Dems and Labour for a one-off tax to cushion have seen growing popularity. This would help the blow of household gas and electricity bill rises this year, with increases of up to £1,700 for the typical household.
Fracking could be an option explored by the UK government to boost energy security. A £9bn package of support has been announced to help households that are facing the rising cost of living due to the current energy crisis.
Boris Johnson has set out an energy security strategy that could consider the current bans in place with shale gas drilling. Others have called for new nuclear plants as well as adjustments to planning law so more onshore wind farms can be built. This would be a better environmental solution to the problem, but it may take longer to complete.
What Is Happening To Prices In Russia?
Shoppers in Russia are stating that price increases for some products, mainly electronics and appliances have seen rises due to the latest restrictions. There has been a ramp-up for domestic production of food due to previous sanctions, however, many people rely on imports such as medication and tech.
There is uncertainty over future prices, leading to many residents stocking up. Russia’s largest supermarket chains have agreed to limit price increases to no more than 5% for dairy and bakery goods, sugar and some vegetables.