‘According to the Ministry of Finance of Russia, the main share of budget revenues for 2022 is income from oil and gas industry.

We conducted a study of Russian oil and gas industry and found the so-called “Achilles heel” and in case of a sanctions strike at this point, Russia will face unprecedented economic difficulties.

This point is the presence of a huge percentage of imported equipment in all areas of the Russian oil and gas industry. For example, in the field of drilling, imported equipment accounts for about 65%, and the volume of liquefied natural gas is about 75%. Whoever, in one way or another, has been connected with the extraction of oil, gas or with the process of liquefying it, knows that equipment in these areas fails almost every day. It follows from this that Russia replenishes the stocks of imported components regularly. Oil refineries are generally equipped with 90% imported equipment.

Now let’s look at the companies that, in our opinion, acted decently by refusing to cooperate with Russia after it unleashed a war against Ukraine. One of these companies is Linde (Germany), which terminated the contract with the Russian company Novatek for the construction of the Arctic LNG 2 natural gas liquefaction plant. The DSME company from South Korea acted the same, which also terminated the contract with Novatek for the construction of three LNG tankers, although it had previously built 15 large-tonnage tankers for Russia.

But there are other companies that, on the contrary, have increased trade with Russia in 2022 in the supply of equipment to the oil and gas industry.  This is SLB (Schlumberger), which increased its revenue in Russia by 45% in 2022. This happened due to the exit of its competitors from the Russian market, namely, the companies Halliburton CO and Baker, Hughes CO.

In 2022, the supply of Russian LNG to the EU countries increased by 4.4 billion cubic meters, which is 12.9% more than in 2021. Only France, Spain and Belgium increased imports of Russian LNG by 55%.

Let’s summarize. If Western countries, led by the United States, impose sanctions that will concern a complete ban on the supply of equipment and components for the oil and gas and oil refining industries, then all these sectors of the Russian economy will stop within a month, so it will be impossible to replace imported equipment with domestic or analogues from China even in 6 months.