Page 8 - FSUOGM Week 16 2022

FSUOGM POLICY FSUOGM

The EU’s sixth package of sanctions will

target Russian oil exports to Europe

RUSSIA EUROPEAN officials are drafting plans for an agreeing to Russian President Vladimir Putin’s
embargo on Russian oil products, the most con- rubles-only-for-gas deal that was imposed in
The fifth package tested measure yet to punish Russia for its inva- April. EU President Ursula von der Leyen has
targeted coal supplies, sion of Ukraine and a move long resisted because accused Hungary of sanctions busting, but
but for the time being of its big costs for Germany and its potential to Budapest says the EU has no jurisdiction over a
sanctions against gas disrupt politics around the region and increase contract signed and altered by the two parties.
are off the table. energy prices. Orban has demanded future sanctions be
The EU earlier this month banned Russian decided by EU leaders rather than senior dip-
coal for the first time in a fifth package of sanc- lomats or ministers, raising the prospect of an
tions imposed in April. Now oil is set to become emergency summit meeting to debate the topic.
part of a sixth package that is likely to be imposed Sanction deals have to be agreed unanimously by

even if there are no new triggers, say EU officials. all 27 EU members. The next European Union
Russia is the European Union’s largest oil leaders’ summit on Ukraine is scheduled for
supplier, providing the bloc with a quarter of its the end of May, but observers say that could be
oil and petroleum product imports in 2020, and moved forward as the crisis gathers momentum.
as bne IntelliNews reported in a deep dive into Putin has admitted that the sanctions are
Russia’s oil and other energy businesses, “sanc- causing Russia economic pain and has urged his
tions by the numbers” (UN voting, coal, oil, gas, minions to find new markets for Russian hydro-
grain), a ban on oil exports could have a devastat- carbon exports in anticipation of new sanctions
ing impact on Russia’s budget revenues. on oil and gas coming into effect soon.
The earliest the proposed EU embargo will be “The most urgent problem here is the disrup-
put up for negotiation will be after the final round tion of export logistics,” Putin said at a meeting
of the French elections, on April 24, to ensure on April 12, which included his top advisers.
that the impact on prices at the pump doesn’t “Furthermore, there are setbacks in payments
fuel the populist candidate Marine Le Pen and for Russian energy exports. Banks from these
hurt President Emmanuel Macron’s chances of unfriendly countries are delaying the transfer of
re-election, officials told the New York Times. funds.”
Germany is particular vulnerable, as it None of the details of the proposed oil ban
imports 34% of its oil from Russia and has been have been made public, for fears that would
resisting a quick, universal and simultaneous expose rifts within the EU membership and
EU-wide oil embargo. Out of all the European cause a public backlash, particularly in France
countries, Germany is the biggest importer of which is in the middle presidential elections.
Russian oil and its two big refineries are fed by However, details on the structure of the ban are
Soviet-era pipelines that make it difficult for being thrashed out by small working groups over
them to change suppliers. In addition, the refin- the Easter break to try to arrive at a phased for-
ery in the eastern city of Schwedt near the Polish mula all the member state can live with, reports
border provides 95% of Berlin’s oil products and the NYT.
is majority owned by Russian oil major Rosneft. The most likely approach is to distinguish
Hungary has also been resisting the ban, as between oil products and modes of transport.
it is also highly dependent on Russian oil, and As bne IntelliNews reported in its deep dive into
Hungarian Prime Minister Viktor Orban has the oil business, Russia exported $48bn worth
been a vocal Russian supporter. Orban recently of refined products last year to a wide number
signed a new and expanded long-term gas sup- of EU countries from its domestic refineries
ply deal with Russia and also caused a furore by and those it owns in Europe. These sales would

P8 www. NEWSBASE .com Week 16 21•April•2022