Gas and oil: Russia is heading for economic oblivion
Russia is heading for economic oblivion according to YALE Chief Executive Leadership Institute (Yale CELI) Review of the Impact of the Sanctions on the Russian Economy. The IN DEPTH REPORT claims the damage done to Russia is far worse than officially reported and that the economy has problems are UNSOLVABLE. In this video I share the details of the findings, analyze the Report and provide my views on whether I agree with the findings. Is Russia HEADING FOR OBLIVION?
It is expensive to produce relative to say Saudi oil. The profit per bbl for Russian crude is significantly lower than low-cost producers and less able to suffer discounts. It again must be stressed and re-stressed that Russian oilfields were damaged in soviet times and were only saved by Western technology input and expertise. This has evaporated.
Oilfields also do not like being shutdown or throttled from optimal production. The longer the sanctions continue the more likely it is that severe damage is done to Russian production and their cost base will rise in trying to eventually recover.
China’s economy is also slowing down rapidly hitting just 0.4% growth in Q2 having some experts in national economy even claiming that China’s period as the main global economic driver might have passed and that foreign investment are already starting to diversify away from China, meaning the amount of support it actually can’t provide Russia with is narrowing.
So another question is, what is China suppose to do with all the excessive energy Russia hypothetically could supply them in 5 years or so if its industry is shrinking? China is also, believe it or not, a large proponent for reducing fossil fuels (probably because their main economic hubs are some of the most exposed to threats by increased sea water levels) and have invested large amount in non-fossil energy.
They also have their own gas reserves, so it would just not make much sense to for them to invest in infrastructure to rewire the former European supply from Russia, if they can invest in infrastructure domestically and then get it for free.
Last factor, after seeing how Russia been using energy as a weapon against Europe there’s no way China would expose it self to the same situation, meaning the energy import from Russia is never gonna reach a significant level as it did with Europe, where it could threaten China in a similar fashion.
