Financing Putin’s war: Fossil fuel exports from Russia in the first six months of the invasion of Ukraine

August 24 marked Ukraine’s 31st Independence Day, and the passage of six months since the beginning of Russia’s full-scale aggression aiming to end that independence.

To shed light on who purchases Russiaʼs oil, gas and coal, and how the volume and value of imports have changed since the start of the invasion, the Centre for Research on Energy and Clean Air has compiled a detailed dataset of pipeline and seaborne trade in Russian fossil fuels.

Figure 1 | Heatmap of Russian fossil fuel shipments in the first six months of the invasion

Key findings include:

Fossil fuels continue to fill Kremlin’s war chest, due to high prices

  • Russia earned EUR 158 billion in revenue from fossil fuel exports in the first six months of the war (February 24 to August 24). The EU imported 54% of this, worth approximately EUR 85 billion. 
  • Fossil fuel exports have contributed approximately EUR 43 billion to Russia’s federal budget since the start of the invasion, helping fund war crimes in Ukraine.
  • The largest fossil fuel importer was the EU (EUR 85.1bln), followed by China (EUR34.9bln), Turkey (EUR10.7bln), India (EUR6.6bln), Japan (EUR2.5bln), Egypt (EUR2.3bln, and South Korea (EUR2bln). 
  • Surging fossil fuel prices mean that Russia’s current revenue is far above previous years’ level, despite the reductions in this year’s export volumes. 

Russia’s export revenues inched up in July-August due to a rebound in crude oil
  • In August, Russia’s fossil fuel export revenues and volumes rebounded slightly from the low reached in June.
  • Russia’s exports were however down 18% compared with the record level reached at the start of the invasion (February–March). The fall was driven by reductions in exports of pipeline gas, oil products, and coal.
  • Compared with the start of the invasion, the reductions in imports of Russian fossil fuels cost the country EUR 170 million per day in lost revenue in July and August. The overall fall in export volumes was driven by a drop in exports to the EU which fell by 35%.
  • Only a small fraction of the coming impact of the EU ban on Russian oil has been realised.
Figure 2 | Russia’s estimated revenue from fossil fuel exports since January 2022
EU’s import ban hit Russia’s coal exports and production
  • After the EU coal ban entered into force on August 10, Russia’s coal export volumes fell to the lowest level since the start of the invasion. Russia failed to find other buyers to replace falling EU demand, despite the ban having been public knowledge for months.

Oil bans need better enforcement
  • Russia is finding ways to reroute oil supplies: refining, blending, transshipments and ship-to-ship transfers.
  • Stronger rules and enforcement are needed to prevent crude oil and oil products containing Russian oil from entering markets with bans in place.
  • The EU and the UK need to start using their leverage in global shipping: the EU must  ban the use of European-owned ships and European ports for shipping Russian oil to third countries, while the UK needs to stop allowing its insurance industry to participate in this trade.

How Europe is replacing imports from Russia
  • Reducing the consumption of fossil fuels plays a key role in managing the impacts of Russia’s export cuts and EU’s import bans. Europe has reduced gas consumption in response to the high prices, but oil and coal consumption have increased.
  • It is essential for Europe to accelerate energy saving measures, particularly targeting oil and gas consumption, and to accelerate the deployment of clean energy, heat pumps, electric vehicles, and other technology to replace Russian fossil fuels.

The energy crisis is accelerating clean energy around the world
  • While the immediate impact of the crisis has been to drive up demand for non-Russian supplies of fossil fuels, the sky-high fuel prices are making clean energy investments attractive around the world and creating momentum for clean energy policies. 
  • 19 European governments have accelerated their clean energy targets in response to the COVID-19 pandemic, the gas crisis, and Russia’s aggression. These strengthened targets will result in a 30% reduction in fossil fuel use in the power sector by 2030, compared with energy plans in place in 2019.
  • In the U.S., the Inflation Reduction Act is projected to be the single most consequential piece of legislation on clean energy.
  • Wind and solar installations in China made new records in the first half of the year, putting the country on track to add 130–150 gigawatts of capacity this year.

Lauri Myllyvirta, Lead Analyst; Hubert Thieriot, Data Lead; Jan Lietava, Data Analyst; Erika Uusivuori, Analyst; Ronja Borgmästars, Research Assistant; Vera Tattari, Research Assistant; Lyder Ulvan, Research Assistant; Oleksii Mykhailenko, Guest Writer; Andrei Ilas, Guest Writer;