European Union rushes to reach agreement on Russia’s oil export ban

European Union rushes to reach agreement on Russia's oil export ban

Russia-Ukraine war: Hungary’s opponents may show dissent within the EU, officials say.

Brussels:

EU countries are set to reach an agreement on Friday that bans Russian oil supplies by sea but still allows supplies through the pipeline, a compromise to win over Hungary and block new sanctions against Moscow, officials say.

An agreement could be reached by envoys of European Union governments in Brussels on Sunday, with their leaders approving it at their May 30-31 summit, officials said, citing urgency after nearly a month of negotiations failed.

Hungary has suspended the sixth European Union sanctions package against Russia over its aggression in Ukraine. It says stopping Russian oil imports would be a physical blow to its economy because the landlocked country cannot easily get oil from anywhere else.

It delayed implementation of other components of the sanctions package: Russia’s largest bank, Sberbank, disconnected from the SWIFT messaging system, banned Russian broadcasters from the European Union, and added more people to the list of those whose assets have been frozen and who cannot enter the EU. .

Hungary’s opposition to the oil embargo has threatened to turn next week’s summit into a public relations disaster, expressing dissent within the European Union, officials say.

“It would be insulting not to discuss sanctions because there is no agreement, or just pushing through other elements to completely remove the oil embargo parts of the package,” said an EU official.

“So the idea is to impose sanctions on Russian oil and to give the Hungarian supplier the Russian Druzeba pipeline some time off, to give the (European) Commission and Hungary time to solve the problem,” the official said, underlining an earlier agreement. The summit was far from certain.

Hungary says it will take up to four years to move away from Russian crude oil, upgrade refineries and invest about 750 million euros ($ 804 million) to expand the oil pipeline from Croatia.

It says the long-term transformation of its economy away from Russian oil could cost as much as 18 billion euros, and it is looking to the EU to fund such a transformation.

The Druze pipeline, which runs through Slovakia, the Czech Republic and Hungary, will be the biggest problem in finding alternative oil supplies to the three landlocked EU countries and those who have objected to the oil embargo.

According to Brussels-based Brugel think-tank, only a quarter of Russian oil purchased by Russia’s largest oil consumer, the 27-nation bloc, is supplied through the pipeline.

Three-quarters of Russian oil for Europe is supplied by tankers, so a ban on shipping by sea would still have a huge impact on Russia’s oil revenues, reducing Ukraine’s ability to finance the war.

But it will also create competition in the EU, as Hungary, Slovakia and the Czech Republic will get cheaper Russian oil for their refineries – which can sell their products across the EU – while refineries in other countries will have to pay more for imported Brent crude. .

Officials still had no immediate solution to the problem.

(Except for the title, this story was not edited by NDTV staff and was published from a syndicated feed.)

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