Russia’s sixth sanction package opens EU’s Pandora’s Box

Under the Commission’s proposal that would see a “complete ban on all Russian oil” and refined petroleum products within the next six months, Hungary and Slovakia would be allowed to continue buying from Moscow until the end of 2023 under existing contracts. [Shutterstock/PX Media]

Budapest and Bratislava are unhappy with the European Commission’s proposal to ban Russian black gold despite being given extra time to phase it out, while Sofia and Prague have jumped on the bandwagon and are now asking for special treatment. 

Moreover, sources said Greece and Cyprus raised objections to another proposal to ban all shipping companies that are EU-owned or have European interests from transferring Russian oil into Europe or elsewhere in the world.

Under the Commission’s proposal that would see a “complete ban on all Russian oil” within six months and refined petroleum products by the end of the year, Hungary and Slovakia would be allowed to continue buying from Moscow until the end of 2023 under existing contracts.

An EU diplomat told EURACTIV on condition of anonymity that for Europe, the big test is now, considering that it touches upon the core of sanctions against Moscow. 

“Politically, Europe cannot afford not adopting the sixth package,” the diplomat said, adding, however, that the equation will not be easy to solve. 

In an interview with EURACTIV in late February, the Russian ambassador to the EU, Vladimir Chizhov, said energy is an area where the level of interdependence between Russia and the EU is high.

“We understand that any decisions taken in this area are taken unanimously,  which indicates that there is a certain degree of discipline. Whether this reflects all the voluntary positions of any individual country, this remains to be seen.”

Hungarian Foreign Minister Péter Szijjártó was quick to oppose the plan, arguing that it would “completely destroy” the foundations of Hungary’s energy supply.

“It is not a question of lack of political will, it is not a question of intent, it is not a question of timespan, it is quite simply a physical, geographical and infrastructural reality,” Telex reported him saying.

The Hungarian foreign minister said that for Hungary to support the measures, oil transported through pipelines (rather than tankers) should be exempted from the embargo.

Bratislava would back an embargo on Russian oil, said Economy Minister Richard Sulik, noting that it would need a longer transition period of three years instead of the one year – until the end of 2023 – proposed by the European Commission.

Sulik argues that Slovakia, like Hungary and Czechia, is in a difficult position. As a land-locked country, it cannot import oil by sea tankers and is reliant on pipelines, he added. For example, the main pipeline – Druzhba – transports Russian oil.

Sulik cites other issues, however. Slovakia could import oil from the south via the Adria oil pipeline, yet its capacity remains limited. Slovak oil reservoirs are in eastern Slovakia and cannot be filled with oil from Adria because Slovak pipelines are not technically prepared for a reversed flow.

MOL Group, the Hungarian fossil fuel giant that operates all the oil refineries in both countries and uses Russian oil, previously said it would need significant investment and time to transition. EURACTIV has reached out for comments to the MOL Group but had not received a reply by the time of publication.

The Czech Republic, for its part, is only ready to support the proposed ban on Russian oil imports if it also gets a postponement of two to three years until the oil pipeline capacity is increased.

“We are supporting the strictest possible sanctions against Russia. Nothing has changed in our attitude. However, we have been holding the position since the start that the sanctions must not harm Czech citizens more than Russia,” Prime Minister Petr Fiala has said.

Bulgaria, however, wants to be excluded from the EU oil embargo against Russia altogether.

“Bulgaria can continue without Russian oil, but this would significantly increase the cost of fuel. From this point of view, if the European Commission provides for exceptions, we would like to take advantage of these exceptions, as this is in the best interests of Bulgarian consumers, Bulgarian carriers and the Bulgarian people as a whole,” said Deputy Prime Minister and Finance Minister Asen Vassilev.

“If there is a firm European position “we stop everything for everyone” – it is one thing. But if there are exceptions, we will use our right to use the same exception,” Vassilev told the weekly “Capital”.

In Bulgaria, the Russian company Lukoil owns the largest oil refinery in the Balkans.

Even if Bulgaria manages to fully compensate for the supply of oil products from other sources, the Bulgarian government will face serious social discontent in Burgas if the refinery stops operating.

Meanwhile, the state’s representative at the refinery, Krassimir Parvanov, warned that the Lukoil Neftochim refinery could shut down if the EU imposed a full embargo on Russian oil and oil products imports.

Parvanov told the Bulgarian news site Mediapool that the refinery used between 50% and 60% of Russian Urals oil, but it cannot work only with Arab oil, it also needs quantities of Russian oil.

Burgas is the largest employer in the region, and Lukoil Bulgaria is the second largest company in the national economy, with an annual turnover of €1.6- 3 billion

Greece, Cyprus also unhappy

Although it was not presented by the Commission chief Ursula von der Leyen at her speech in the EU House, EURACTIV has learned a proposal to ban all shipping companies EU-owned or with European interests from transferring Russian oil into Europe or elsewhere in the world is still on the table. 

An EU source told EURACTIV that this proposal aims to reduce the possibility of a deal for cheap oil transferred from Russia to China to counterbalance the EU ban considering that EU shipping companies are transferring it. 

The same source added that Athens and Nicosia had reacted strongly to this proposal, as it deals a severe blow to its shipping industries. 

(Vlagyiszlav Makszimov | EURACTIV.com with Telex, Krassen Nikolov | EURACTIV.bg, Michal Hudec, Radovan Geist | EURACTIV.sk, Aneta Zachová | EURACTIV.cz –Edited by Sarantis Michalopoulos)

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