EU revises its plan to ban Russian oil

Hungary and Slovakia given a year long exemption before having to comply with EU sanctions banning oil from Russia.

Fri, 06 May, 2022 - 15:33

The European Union has proposed a revision to its Russia oil sanctions ban that would grant Hungary and Slovakia an extra year to comply beyond what they had already been offered, giving them until the end of 2024, according to people familiar with the matter.

The Czech Republic would separately be granted an exemption until June 2024, the people said. All other member states would phase out their imports by the end of this year as originally proposed, with imports of crude halting in six months and refined petroleum products in eight months.

Hungarian Prime Minister Viktor Orban said earlier he opposed the EU’s original proposal to ban Russian oil, saying it was tantamount to a “nuclear bomb” being dropped on his country’s economy. He said he wanted a five-year exemption on an oil ban after the EU originally proposed giving the country one extra year.

European Commission President Ursula von der Leyen told an audience in Germany that finding unity on oil sanctions isn’t easy and may take “some days,” but added she is confident that a deal will be reached. EU diplomats are meeting to discuss the revised proposals and negotiations could stretch into the weekend, one person said.

Reliant

Hungary, Slovakia and the Czech Republic are heavily reliant on Russian oil, but they account for a relatively small portion of the EU’s overall imports from Moscow. The three countries would not be allowed to sell the supplies they import to others, under the proposed plans. The Czech exemption may be cut short if work on the Transalpine Pipeline is operational in time.

Hungary has been biggest obstacle to a deal, with Orban warning the oil ban push risks fracturing the EU’s unity over Ukraine. “If the commission insists on the adoption of its proposal, it will have to bear full responsibility for a historical failure in the court of European integration,” he wrote in a letter to von der Leyen.

Under the EU’s plan, European companies and individuals would also be banned from providing vessels and services, such as insurance, needed to transport oil to third countries. With the revision, that measure would now kick in within three months of the new sanctions being adopted, up from one month, the people said. Greece and Cyprus had raised questions about the original proposals, arguing the measure would benefit non-EU firms and damage European companies.

The EU is also proposing to cut three more Russian banks off the international payments system Swift, including Russia’s largest lender Sberbank as well as restricting Russian entities and individuals from purchasing property in the EU.