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Talks on an EU-wide Russian oil ban could drag on until end of May

13.05.2022
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An ambitious proposal to ban all Russian oil imports from the European Union’s market remains stuck in negotiations, as several member states argue the rapid energy switch will wreak economic havoc.

After more than a week of intense discussions, there is still no agreement in sight.

Hopes are low that a breakthrough can be achieved during the weekend or even at a meeting of foreign affairs ministers on Monday.

Talks are expected to drag on and might stretch until the extraordinary EU summit scheduled to take place on 30 and 31 May, diplomats told Euronews, where a political solution at the highest level could be found.

The main point of contention remains the timeline envisioned by the European Commission: a phase-out of all Russian crude in six months and all refined oil products by the end of the year.

The measure will apply to both seaborne and pipeline oil.

This has put a group of three landlocked countries — Hungary, Slovakia and the Czech Republic — in a bind: the trio are physically connected to the Russian-operated Druzhba pipeline and obtain the majority of supplies from the massive conduit.

Hungary and Slovakia initially pushed for a tailored extension to complete the embargo by December 2024, while the Czech Republic asked for June 2024, the date by which it expects to be connected to the Transalpine Pipeline.

Bulgaria, which has access to the sea, has joined the sceptical group and asked for a similar dispensation. The government argues the oil refinery in Burgas, which is owned by Russian energy multinational LUKOIL, would not be able to operate entirely without Russian oil.

The stakes are high for the EU to introduce the embargo, seen as one of the last resorts to curtail the Kremlin’s ability to finance the invasion of Ukraine after the previous rafts of sanctions failed to inject the necessary economic pain to force Vladimir Putin’s hand.

Ursula von der Leyen, president of the European Commission, flew earlier this week to Budapest and met with Viktor Orbán, prime minister of Hungary, in a bid to iron out differences and reach a deal. But von der Leyen left the meeting empty-handed, saying “further work is needed”.

Hungary has since then doubled down on its resistance. In an interview with Spanish newspaper El País, the country’s foreign affairs minister, Péter Szijjártó, said the energy transition would take over five years and require between €500 and €550 million, in addition to €200 million to boost the capacity of the Adria pipeline.

“We told the president of the European Commission that his proposal was a problem for us. We cannot vote in favour unless a solution is offered,” Szijjártó said.

“No such plan has been presented so far. The rational thing would be for the ban on Russian oil imports to apply to shipments by sea. However, deliveries by pipeline should be exempted.”

Even if most Russian oil barrels arrive into the bloc via ports, removing pipeline supplies from the embargo would open up a considerable loophole in the collective action and offer Moscow an unrestricted path to keep reaping profits from the European market. 

An official from a hardliner country told Euronews exemptions are not a “good idea,” pose a “threat to competition rules” and should be accompanied by extra taxes and a prohibition to sell Russian oil to other countries.

The Commission has said it is open to negotiating protracted timelines and “pragmatic solutions” for countries in “very specific” situations but has so far refused to remove pipeline supplies from the proposed embargo. 

EU sanctions require the unanimous approval of all 27 member states. This means the group of four could hold up the final decision for as long as they think necessary to secure their carve-outs.

Negotiations are taking place at a political and technical level, with national representatives, the French presidency of the EU Council and the Commission all involved in the talks.

President von der Leyen is yet to hold the video call with “regional partners” that she announced on Monday. The call was supposed to take place on Tuesday but has been indefinitely postponed 

“We will call that when we feel that the solutions that we find are sufficiently ripe to be discussed by the leaders,” a Commission spokesperson said on Thursday.

Diplomats fear Viktor Orbán might want to drag the talks until EU leaders meet on 30 May for an extraordinary summit where a political, rather than technical, solution could be found, diplomatic sources told Euronews.

The summit’s agenda will include “defence, energy and Ukraine,” according to European Council President Charles Michel, who convened the summit in early April, well before the oil embargo was presented.

Orbán had previously said sanctioning Russian fossil fuels was a “red line” for his country, despite having voted in favour of an EU ban on Russian coal. More recently, the prime minister compared the proposed oil embargo to “a nuclear bomb dropped on the Hungarian economy.”

Splitting the sixth package of sanctions in two parts to approve the other measures – such as expelling Sberbank, Russia’s largest bank, from the SWIFT system – while waiting for the approval of the oil ban is not an option at the moment, said a EU official, speaking on condition of anonymity.

The question of money is set to feature prominently in the ongoing discussions. 

The Commission will present on Wednesday its much-anticipated REPower EU initiative, a plan to gradually wean the bloc off Russian fossil fuels. 

The announcement is expected to include financial contributions to support the costly energy transition of member states, particularly of those who currently depend the most on Russian imports.

The ban on Russian oil is considered the most radical and consequential step taken by the EU in response to the Ukraine war.

Since the onset of the conflict on 24 February, the 27 member states have spent about €24 billion on Russian oil, according to a tracking tool set up by the Centre for Research on Energy and Clean Air (CREA), an independent research organisation.

This article has been updated to include new developments and reactions.

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