Originally published on Forbes.com on April 8, 2022

Outflows of oil versus natural gas from Russia, and their payments by the EU, are very different — the West should focus on cutting oil from Russia, not gas.

All the news is about embargoing Russia’s exports of oil and gas to hit the bear hard on its revenue intake. This is because certain European Union (EU) countries are overly dependent on imports of Russian oil and gas. But some countries like Germany would be hit hard by these embargoes.

Let’s turn to the data to clarify the situation.

Export revenues from Russia. 

Figure 1 shows the main export revenue from Russia is crude oil and refined petroleum (meaning gasoline for cars and diesel for trucks, etc). This totals about 74% of the export revenue in the graph and explains why the West would like to embargo Russia’s oil and refined petroleum.

Natural gas is next at 10% and is a much smaller revenue fraction.

Gas imports from Russia to EU.

While natural gas is a small fraction of Russia’s export revenues, it’s a much larger fraction of the oil and gas mix imported by the EU.

Germany in particular imports 55% of its gas from Russia (Figure 2) and 35% of its oil, although these numbers are now falling as a result of the Ukraine war.

Italy is next then a big drop down to Turkey and other countries. Germany and Italy together import almost 50% more than all other EU countries in Figure 2. It’s clear now how much worse the situation would have been if the new gas pipeline under the Baltic Sea, NordStream 2, had been pumping Russian gas into Germany. It was shuttered by Germany right after the war began.

The main point is, the West is talking a lot about reducing or even banning gas imported from Russia. But this would have little effect on Russia’s economy, because natural gas provides only about 10% of Russia’s export revenues.

To say it another way, if the West banned all they could of Russian gas, it would reduce Russia’s export revenue by less than 10%.

The West, and Germany and Italy in particular, are not scratching where they are itching, if they are itching to hurt Russia’s export revenue and economy.

Every little bit counts, of course, but cutting Russia’s petroleum exports by 20% of their 74% revenues would have a more severe effect on Russia’s economy than cutting Russia’s gas exports by 20% of their 10% revenues.

Despite this, calls to stop buying Russian gas are intense. But as shown above, even a total ban on gas imports from Russia is insignificant to their export revenues. Germany, Hungary and Austria are against cutting gas from Russia, worrying over serious industry job losses and household poverty.

The big question though is how much oil is being exported from Russia to Europe?

Oil imports from Russia to EU. 

The main countries that receive Russian exports of crude oil are in Figure 3. The numbers don’t include refined petroleum products.

The fraction of the graphic that goes to EU countries is 45%, so the EU is a major buyer, and supplier of revenue to Russia’s export revenues – because crude oil is 48% of Russia’s export revenue.

If the EU import refined petroleum in the same proportion as in Figure 1, then the EU would supply 45% of 74% of Russia’s export revenue – an enormous amount of money.

In fact, a spokesman for the EU announced recently that the EU had made to Russia energy payments amounting to $38 billion since the Russian invasion of Ukraine. This is just in the past 6 weeks! This is a bit over $6 billion per week. One seasoned observer called it blood money.

No wonder President Zelensky is urging the EU to place embargoes on Russian oil and gas.

In sum, if the West are aiming to reduce their contribution to Russia’s revenues from exports, and therefore Putin’s war chest, crude oil and its petroleum products should be where they are banning and embargoing — not natural gas.