An embargo on Russian oil will be the most negative scenario for all parties, says the former head of LUKOIL (MCX:LKOH), the company’s shareholder Vagit Alekperov. Any move by the EU to stop imports of Russian oil would be “a shock to everyone,” he told the Financial Times. “By imposing sanctions, the Western countries gave a clear signal and declared their position. There is no need to tighten them even more,” Alekperov said.
The founder of the company acknowledged that in the event of a ban on oil imports, “Russia will have to cut production, freeze wells, as we did at the beginning of the pandemic in 2020, because it is impossible to redirect all European volumes to other markets overnight.” But he warned that it is “impossible for the EU to replace a major energy exporter like Russia, even in the medium term.”
Building the new infrastructure to redirect Russian oil currently flowing to Europe will take years, he said, especially at a time when global industry has already lost “hundreds of billions, trillions of dollars” of investment in the recent crises. “Military conflicts can end quickly, while the energy configuration of the world has been determined by decades of investment and the hard work of many generations of professionals,” he added. “There is no need to undermine or destroy it,” Alekperov stressed.
Commenting on the rise in oil prices after the start of the special military operation of the Russian Federation in Ukraine and the decrease in energy security in Europe, he said: “This is not a natural process, such as decarbonization, and not a short-term consumption crisis, as during the coronavirus pandemic. This is a very serious energy crisis with negative long-term consequences for all market participants.”
In April, after personal sanctions, Alekperov decided to step down as head of the company. This decision “was made for the sake of the company, although I will not hide it, it was sad for me,” he said. “We see that sanctions are often chaotic, emotional,” added the ex-president of the NK. “They influence people who do not make any political decisions, do not have any political influence. Not to mention the factual errors in them, in the names, titles or reasons for the application of sanctions. This, at least, does not look serious from a legal point of view and nullifies the importance of these measures in the eyes of the public, ”he believes.
An attempt to include a ban on oil imports from Russia in the EU’s sixth package of measures against Russia has faced opposition from Hungary, which says it cannot afford to find alternative fuels.
On April 21, Alekperov informed the company of his decision to renounce his powers as a member of the board of directors, as well as prematurely resign as president of the company, thus distancing himself from LUKOIL in connection with the inclusion of his person in the sanctions list of Australia and Great Britain. The businessman is the founder of LUKOIL, which was registered as a joint stock company in 1993. At the same time, he headed the company as president.