Energy War Escalates in Ukraine-Russia Conflict

Strategic Insights -

As winter slows the pace of battlefield combat, both Moscow and Kyiv are investing in a parallel war on each other's energy assets, a conflict that could be decisive in breaking the stalemate in the Ukraine-Russia conflict. The measures come as the United States and Europe have announced sweeping new sanctions on Russia's oil industry, the lifeblood of the Kremlin's war machine. Ukraine has been working to rally international action against Russia's energy economy, while imposing its own "long-range sanctions": drone strikes that have damaged dozens of Russian refineries. Russia's target is the Ukrainian electricity and gas infrastructure, which it has attacked repeatedly in a devastating campaign as winter approaches. The goal, experts say, is to cripple Ukraine's ability to function and sap its people's will to abide the war.

Key Takeaways:

  • The energy war between Ukraine and Russia has intensified, with Ukraine targeting Russian refineries and oil infrastructure, and Russia retaliating with attacks on Ukraine's electricity and gas infrastructure.
  • The United States and Europe have imposed sweeping new sanctions on Russia's oil industry, targeting Russia's two biggest oil companies, Lukoil and Rosneft.
  • Ukraine has also targeted Russia's military-industrial complex to curb Moscow's ability to conduct attacks, using long-range, Western-made Storm Shadow missiles.
  • Russia's goal is to plunge Ukraine's population into cold and darkness, undermining morale and disrupting economic activity.
  • Ukraine is facing electricity and gas shortages, with several cities delayed turning on centralized heating in residential buildings.
  • Ukraine lacks the money to import sufficient gas before cold temperatures set in, and it remains unclear whether its European partners will finance the imports.
  • A European plan to use frozen Russian assets to lend Ukraine $163 billion could alter both Kyiv's and Moscow's calculations.

Statistics:

  • 20% of Russia's refining capacity has been destroyed or damaged by long-range strikes from Ukraine (as of last month)
  • The new US sanctions on Russia's oil industry target the lifeblood of the Kremlin's war machine, which generates hundreds of millions of dollars daily
  • Analysts estimate that Rosneft and Lukoil account for roughly half of Russia's crude oil production
  • Over 60% of Ukraine's gas production capacity has been knocked out by recent attacks on gas facilities
  • Ukraine aims to import roughly 4 billion cubic meters of gas before cold temperatures set in

Sources:

  • Balazs Jarabik, a former European Union diplomat in Kyiv who now works for R.Politik, a political analysis firm
  • Jack Watling, a research fellow at the Royal United Services Institute in Britain
  • President Trump
  • Vladimir V. Putin, President of Russia
  • Ukrainian military
  • European official (speaking on condition of anonymity)
  • Katharina Reiche, Germany's economy minister
  • Deutsche Welle news outlet