Russia oil ban: EU agreement to stop shipping imports, but not pipeline oil

The EU is heading for agreement on Russian oil imports that will however be a watered-down version a proposal last unveiled four weeks ago by the European Commission.

While the original embargo was to target seaborne and pipeline imports, member states like Hungary, Slovakia, the Czech Republic and Bulgaria requested exceptions to have more time to adapt their refineries and cushion the economic impact.

EU sanctions require the unanimous vote of all 27 member states.

The compromise will exclude all imports from oil pipelines, to ensure security of supply.

Around 80% of Russian oil to Europe is shipped from ports. The rest is directly pumped through the Druzhba pipeline into Poland, Hungary, Slovakia, the Czech Republic and Germany, refineries that are dependent on the reliable and comparably cheap deliveries of a specific type of Russian oil.

It was a victory for Hungary’s Prime Minister Viktor Orbán, who had previously described the embargo as an economic “atomic bomb”, despite EU willingness to cut all oil supplies from Russia.

The original plan was to move away from Russian oil, something that cost countries €210 billion, while €2 billion would have to be spent on revamping oil infrastructure.

But Brussels thinks it can raise €300 billion by 2030 from funds linked to its recovery fund.

These same funds are yet to be discharged to Hungary itself, which is challenging a penalty on its rule-of-law breaches.

The exemption might see member states complaining that while some countries can receive pipeline oil, others cannot get the same fuel to their ports, having to resort to more expensive non-Russian oil.

The sixth package of sanctions features the expulsion of Sberbank, Russia’s largest bank, from the SWIFT system and the backlisting of individuals involved in the alleged war crimes committed in Ukraine.