Australian motorists ‘indirectly’ fueling Russian invasion of Ukraine, advocacy group CREA says

Motorists could inadvertently help fund Vladimir Putin’s invasion of Ukraine, according to a report that claims Australia is indirectly importing Russian oil supplies.

The Center for Energy and Clean Air Research (CREA), a Finland-based advocacy group, says countries like Australia and the United States continue – despite bans – to receive Russian oil via subcontinent refineries.

Indian imports of Russian crude oil have soared since Moscow launched its invasion of Ukraine in February and CREA said many of those barrels have been re-exported as refined products to countries such as Australia.

The report comes amid heightened tensions over energy supplies in Europe after Russia all but cut off gas supplies ahead of the Nordic winter, further driving up record prices.

Aussie dollars ‘flowing to Russia’

Lauri Myllyvirta, senior analyst at CREA and co-author of the report, said there was too little oversight to ensure Russian oil was not entering Australia.

Mr Myllyvirta says, albeit indirectly, that Australia may be helping prop up the Kremlin while funding what it claims are Russian war crimes against neighboring Ukraine.

“Our analysis shows that Australia receives oil shipments from Indian refineries that import large volumes of Russian crude oil,” Mr Myllyvirta said.

“This means that Russian oil could come to the Australian market and, by extension, Australian dollars could fund Russia’s invasion of Ukraine.

“Stricter tracking of oil shipments is needed to prevent Russia circumventing oil import bans, and Australia must be vigilant about where its fossil fuels come from to avoid complicity in the crimes of Russian war.”

Moscow’s invasion of Ukraine in February set global energy prices on fire.(Ukrainian State Emergency Services via Reuters)

According to the center, Indian refinery spending on Russian oil rose from negligible levels before the invasion to around 7 billion euros, or more than $10 billion, after the outbreak of the war.

Since May, according to the group, India has been importing oil worth around 40 million euros ($58 million) a day.

The report claimed that Russia’s windfall gains from high fossil fuel prices amounted to 158 billion euros ($230 billion) between February and August, more than offsetting the cost of invading Ukraine. , which it valued at 100 billion euros ($146 billion).

Although India’s purchases of Russian crude rose sharply, the report found the European bloc was still the biggest buyer, shelling out $85 billion. Euro ($124 billion) on fossil fuels over the period, followed by China at 35 billion euros ($51 billion) and Turkey at 11 billion euros ($16 billion).

“Disappointing” but difficult to approach

A close up of the hand holding a bowser fuel pump
Refueling costs more but can also carry the risk of pumping Russian oil.(ABC News: Jessica Hayes)

Geopolitical analyst James Bowen said it was entirely plausible that Australia could inadvertently import Russian oil given the opaque and complex nature of the international oil trade.

Mr Bowen, policy officer at the Perth USAsia Centre, said such a revelation was unlikely to be welcomed by most Australian motorists, who he said were strongly opposed to Russia’s actions.

However, he also noted that other countries that banned imports of Russian oil were likely to be in the same boat because it was so difficult to “track every molecule”.

“Any Australian probably wouldn’t want to offer material support to Russia,” Mr Bowen said.

“And fossil fuels – oil, coal, gas – are massive sources of Russian revenue.

“So I think Australians would be disappointed.

“But, at the same time … by participating in these international markets and because the price of oil has risen so much because of Russia’s war in Ukraine, we are indirectly supporting Russia’s efforts anyway.”

Mr Bowen says Russia’s belligerence could bring short-term financial gains to the Kremlin, but the war in Ukraine will likely cost the country dearly in the long run.

He said this was because many of Russia’s most important markets for its fossil fuel experts – such as the European Union – would partially or fully reduce their dependence on such supplies.

The “powerful” political weapon of energy

Despite this, Mr Bowen acknowledged that Europe’s dependence on Russian oil and gas has given Mr Putin enormous influence on the continent in the meantime.

“After the end of the Soviet Empire, Vladimir Putin, once he came to power, deliberately sought to position Russia as this energy superpower,” he said.

“They obviously have the wealth of resources, but they’ve also – and Putin in particular – realized that because of the intense dependence countries have on energy, it can be a very powerful political weapon.”

Vladimir Putin looks worried during a meeting in the Kremlin
Vladimir Putin has positioned Russia as a true energy superpower, with added political leverage.(PA: Mikhail Klimentiev)

Mark McKenzie, head of the Australian Convenience and Petroleum Marketers Association, agreed there was a possibility of Russian oil entering Australia.

But Mr McKenzie, whose organization represents some refined fuel importers as well as wholesalers and retailers, says the industry is working to prevent Russian supplies.

He said he understood that all importers had redrawn contracts since the invasion to prevent the secondary importation of Russian oil or other petroleum products.

“Because India is going after Russian oil, it’s possible that some of that oil will inadvertently leak into our economy,” McKenzie said.

“But companies are doing everything they reasonably can through trade agreements to prevent that.

“Short of tracking molecules, there’s virtually nothing a company can do from here.”

Increase efficiency to reduce demand

A mix of cars and trucks occupy four lanes of rush hour traffic on the freeway.
Australian motorists are heavy consumers of oil.(ABC News: Andrew O’Connor)

Mr Bowen said India was likely to continue buying large quantities of Russian oil despite pressure from Western countries led by the United States.

He explains that while India seems to be getting closer to the West through forums such as the Quad, which also includes Australia, the United States and Japan, the rising Asian power has its own national interests.

These were strongly linked to Russia, which was India’s largest supplier of arms as well as other primary commodities such as fossil fuels.

For Mr Myllyvirta, Australia could help shift the long-term balance of power against Russia by reducing its oil consumption and therefore demand for crude.

“Australia also has one of the highest levels of oil consumption per capita and has no vehicle fuel efficiency standards,” Mr Myllyvirta said.

“[Australia’s] oil import demand helps support Kremlin revenues by driving up global prices and demand.”

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