Macron's Victory May Sound Warning Bells To Russian Oil and Gas Industry 2

Candidates’ stance on the Paris accord

The 2015 Paris climate agreement calls for all industrialized nations to transition from fossil fuels to 100 percent renewable energy by 2050. Emerging markets (EEM) (VWO) would have to transition by 2080.

In France (EWQ), Marine Le Pen’s National Front has previously opposed pursuing international climate-change agreements, calling the Paris accord “flawed.”

Centrist Emmanuel Macron, on the other hand, has said that his party “will make implementation of the Paris Agreement a priority of our international action.” Macron has also been heard calling for EU (VGK) (FEZ) sanctions against countries pulling out of the Paris accord.

Macron’s victory may ring warning bells for the Russian oil and gas industry

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Now, what makes this issue relevant is that Russia, the 3rd largest emitter of greenhouse gas accounting for about 7.5% of global greenhouse gas emissions, hasn’t yet ratified the deal. Russia (RSX) (RUSL), being a huge oil and gas producer, is also a big emitter.

Russia (ERUS) (RSXJ) is one of the EU’s largest suppliers of energy. In 2014, some 29% of the EU-28’s imports of crude oil were from Russia. So, if European countries such as France decide to phase out fossil fuels, it would definitely have a noticeable impact on the energy sector in Russia which provides the Russian government with about a third of its revenue. Russian oil & gas companies such as Gazprom (OGZPY) (GZPFY), Lukoil (LUKOY), Tatneft (OAOFY), Surgutneftegaz (SGTZY) (SGTPY), and Rosneft (OJSCY) stand to be affected.

So, an Emmanuel Macron victory at the 2017 French Presidential Elections may ring warning bells for the Russian oil and gas industry.

Will history repeat itself?

On the other hand, Marine Le Pen, who normally concentrates her campaign issues on immigration, globalization and her bid to leave the EU, doesn’t hold a very strong stance towards the Paris accord. Hence, we should see Russian support tilting in her favor. We’ve already seen a similar situation in the US (SPY) last year where Putin’s support towards Donald Trump was bolstered by his anti-Paris agreement stance. This was in opposition to Hillary Clinton, whose likelihood of upholding the Paris climate agreement was very strong.

Similar to the US, will we also see heightened protectionism and populism win voter favor in France? Only time will tell.

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