A former Lukoil boss said an EU ban on Russian oil would bring the worst outcome for both sides
- The ex-chief of Russia's second largest oil company said an EU ban would be the worst outcome for all parties involved.
- Vagit Alekperov told the FT of the consequences of an EU ban on Russia's "impossible to replace" crude.
The former chief of Russia's second biggest oil company said an EU ban on Russian oil would be "the most negative scenario" for both sides.
"It is impossible to replace such a major energy exporter as Russia, even in the medium term," if the European Union goes ahead with its proposed ban. He said building new infrastructure to redirect Russian oil flowing to Europe would take years," Lukoil founder and ex-CEO Vagit Alekperov told the Financial Times in an interview on Sunday.
He said the consequences for Russia would also be severe, saying the country would have to reduce production and take wells offline. "It is impossible to redirect all European volumes to other markets overnight," he said.
The EU has proposed a total ban on Russian oil imports, including cutting out crude within six months, as it seeks to step up the pressure on Moscow over the invasion of Ukraine.
Russia supplied 25% of the EU's oil imports in 2021, far more than any other individual country, official figures show.
"Let us be clear: it will not be easy. Some member states are strongly dependent on Russian oil. But we simply have to work on it," European Commission President Ursula von der Leyen said. EU member state Hungary is blocking the EU's proposals, given that it relies more heavily Russian oil and is landlocked, meaning it has fewer alternatives to crude that arrives via pipeline than other countries.
Russian oil exports to the European Union would drop by around 3 million barrels per day under the bloc's embargo plans, in what would be a "seismic shift" for global markets, consultancy Rystad Energy said.
Alekperov said the ban would be "a shock for everyone".
"Military conflicts can end quickly, while the energy configuration of the world has been set by decades of investment and hard work of many generations of professionals," he said. "There is no need to undermine or destroy it."
The billionaire founder and long-serving executive of Lukoil said further Western sanctions against Russia were unnecessary, saying the West had already shown its opposition to the country's war in Ukraine.
Alekperov was also targetted with sanctions and stepped down as Lukoil CEO last month. He has said the company had no say over Moscow's policies.
Oil prices have surged since the proposed ban, and it could force Russia to shut down a significant supply of oil. Russia is the world's third-largest largest oil producer after the US and Saudi Arabia, with some 11 million barrels a day in output, most of which is exported.
"The repercussions of the embargo would be comprehensive and wide-ranging, pushing oil prices higher in the short to medium term," Rystad Energy said. "As the sanctions are negotiated, crude prices will stay elevated."
Oil gained on Monday, with Brent crude price rising 1.11% to $111.21 per barrel and WTI crude gaining 1.13% to $111.53 per barrel. The oil price has risen by 15% since Russia's invasion of Ukraine on February 24 and is a full 73% above where it was this time last year.