The Russian invasion of the Ukraine has thrust Russia’s energy strategy to the forefront.

Which is more strategically important, oil or natural gas?

  • In terms of dollars, oil and natural gas have about the same economic value. Here is a direct BTU/$ comparison:
  1. Oil = 58,250 BTU/$
  2. NG using Asian price of $16/Tcf = 64,813 BTU/$
  • However, natural gas is used for heating and the generation of electricity, so it has a greater effect on people’s lives. People can’t live without heat and electricity, while the use of oil, i.e., gasoline, merely hits their pocketbook. From the users perspective, natural gas may be more important.

(Germany also imports large quantities of hard coal from Russia after shutting down its unprofitable hard coal mines. Hard coal is used for generating electricity and producing steel. This article assumes that hard coal would be readily available from other countries.)

(Oil refers to crude oil and not products)

Major energy producing and consuming countries fall into three categories:

Those entrapped in Russia’s web, those that have energy to spare, and those that may benefit from the effects of the energy crisis.

Entrapped Nations

All European countries, especially Germany, are trapped in Russia’s web, and are reliant on Russian oil and/or natural gas.

  • Europe imports 27% of its oil and 40% of its natural gas from Russia.

Japan is also trapped. It has few natural resources and must import virtually all its energy, other than nuclear, including, coal, oil and natural gas.

Japan has invested heavily in Russian oil and natural gas production facilities, especially in Sakhalin Island adjacent to Japan’s northernmost islands. As a result, Japan imports substantial quantities of natural gas from Russia.

  • Japan imports 4% of its oil and 9% of its natural gas from Russia.

Countries with Energy to Spare

The United States has energy to spare as the result of its fracking capabilities and untapped Alaskan resources, but policies to fight climate change have impeded its ability to produce oil and natural gas.

The US war on fossil fuels is made clear by this statement by EPA Administrator Michael S. Regan on March 8, 2022, after the Russian invasion of Ukraine, who said,

“Tackling the climate crisis requires action across all levels of government, and our partnership with states has never been more important to reduce [CO2] emissions and deliver solutions.”

And this from Energy Secretary Granholm on March 9:

“We’re on the cusp of the most important transition human society has ever seen. I hope we’ll look back at 2022 as the year the world took giant steps to improve energy security and tackle climate change.”

The United States has exported LNG to Asia and Europe, but its export capabilities are nearing their limit with a new export facility in Louisiana adding 11 MMT. New export terminals could be built In two or three years, but, new pipelines would also have to be built.

Canada could increase oil exports to the US, but is hampered by Canadian policies to fight climate change and by US policies against pipelines.

Saudi Arabia, a major oil exporter, could increase its oil exports by 2 to 3 million barrels per day, and could, in a year or two, increase exports beyond that level.

Australia is exporting LNG to Asia, but is near its limit to do so.

Qatar exports LNG to Asia, and to a lesser extent Europe.

Countries Benefitting from Energy Crisis

China is likely to benefit by buying Russian oil at discounted prices. This could be the major source of cash available to Russia after other countries stop importing oil from Russia.

Iran could export an additional 3 million barrels per day, over and above what it is exporting clandestinely now, if the JCPA is abandoned or modified.

Venezuela could export oil if US sanctions are lifted.

The following charts provide some insight into LNG export and import capabilities.

LNG Export Capacity 2021 from Statista.

LNG Import Capacity 2021 from Statista.


Crude Oil

Russia exports around 2.7 MMBD to Europe, around 0.6 million to the United States and around another 0.6 to various other countries.

This means that approximately 3.5 to 4 MMBD of new supply must be found to offset the embargo on Russian oil.

Chart showing Russian crude oil exports with China importing around half.

Replacing Russian oil could be accomplished fairly quickly, i.e., within six to nine months, if two conditions are met.

  1. Persuading Saudi Arabia to increase output by 2 to 3 million barrels/day (MMBD), using its existing spare capacity.

However, recent US actions favorable to Iran have angered Saudi Arabia and other Arab countries who see Iran as an existential threat.

In addition, OPEC has also recently included Russia as a partner in establishing output quotas, raising the question of whether Saudi Arabia would be willing to abandon OPEC+.

  1. The US could increase its production by approximately 1.5 MMBD if the war on fossil fuels was ended, thereby freeing producers to increase output. Eliminating restrictions on building pipelines, including restoring the Keystone XL pipeline, would help move oil to where it can be processed.

Without these conditions being met, it will likely take years to offset embargoed Russian oil.

(Longer term, ending the war on fossil fuels would allow the US to increase oil production by more than 3 MMBD in three to four years.)

Natural Gas

Europe’s reliance on natural gas precludes any short-term ability to replace Russian natural gas with new supplies.

New supplies will come primarily from importing LNG into Europe.

However, The Netherlands could increase its output of natural gas by extending and increasing output from its Groningen fields, one of the largest in the world.

  • Output has been limited, and is scheduled to be halted, because producing natural gas has resulted in subsidence and earthquakes.
  • Groningen could produce considerable quantities of natural gas if The Netherlands government would accept the risk of earthquakes. It currently produces around one-fifth of its output capacity based on earlier output data.
  • It’s difficult to estimate how much the restoration of Groningen output could offset Russian imports.

Permitting Fracking could increase supplies of natural gas, but that is a longer term solution.

It will take at least two years to offset Russian imports with LNG imports, primarily because existing LNG supplies are nearly tapped out.

New export facilities will take at least two years to construct, assuming there is natural gas available for export.


  • The US has ample supplies of natural gas that could be exported if new terminals are constructed, and if new pipelines are built to bring the natural gas to the export terminals.
  • Qatar is forecasting it can increase its LNG output from 78 to 126 MMT/day by 2027.

In addition, new import terminals will have to be built in Europe.


Oil supplies could be restored relatively quickly if certain conditions are met. If the conditions are not met, it will take years to offset Russian embargoed oil.

In all probability, it will take at least two years to replace Russian natural gas supplies to Europe.


  • Donn Dears

    Donn is an engineer and retired senior executive of the General Electric Company who spent his career in the power sector. He led organizations that provided engineering services for GE’s large electrical apparatus and spearheaded the establishment of GE subsidiary companies around the world. Donn actively participated in providing engineering services to a wide range of industries, including electric utilities, steel, mining, and transportation.