Europe Politics

EU considers exemptions to push through Russian oil embargo

Key Points
  • Imposing measures that could reduce, or fully cut, Russian energy supplies to the EU have been a complicated task for the bloc.
  • This is because the region is reliant on Russia for several sources of energy, including oil.
  • In 2020, Russian oil imports accounted for about 25% of the bloc's crude purchases, according to the region's statistics office.
The European Commission has been prepared sanctions on Russia's oil as the war in Ukraine drags on. However, Slovakia and Hungary want to be granted some exemptions.
Joe Klamar | Afp | Getty Images

The European Union is closing in on a new round of sanctions against Moscow that will likely include an embargo on Russian oil imports.

But the Brussels-based institution first needs to solve division between the member states, with two EU nations demanding exemptions due to their heavy dependency on Russian hydrocarbons.

Russia's unprovoked invasion of Ukraine, and evidence of war crimes, has pushed the EU to take bolder steps on energy sanctions. But imposing measures that could reduce, or fully cut, Russian energy supplies to the EU have been a complicated task for the bloc.

This is because the region is reliant on Russia for several sources of energy, including oil. In 2020, Russian oil imports accounted for about 25% of the bloc's crude purchases, according to the region's statistics office.

"It would be good to have everyone on board, but if it means delaying [oil sanctions] for everyone then that would not be good," an EU official, who did not want to be named due to the sensitivity of the talks, told CNBC Tuesday.

The European Commission, the executive arm of the EU, is expected to put forward a proposal on new oil sanctions later on Tuesday or Wednesday morning. However, Slovakia and Hungary want exemptions.

Hungary's Foreign Minister Peter Szijjarto said Tuesday his country would not support sanctions that would make it impossible to receive oil from Russia, Reuters reported.

Hungary has been skeptical on applying energy sanctions on the Kremlin. The country, and its nationalist leader Viktor Orban, is seen as having warmer relations with Moscow when compared to other European nations.

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Their close links were highlighted during the coronavirus pandemic, for example. Hungary became the first EU nation to buy a Russian-made Covid vaccine — even though it wasn't approved by European regulators.

There have been commercial and energy deals, too. Over the last decade, Hungary has increased its share of imports of Russian natural gas, from 9.070 million cubic meters in 2010 to a high of 17.715 million cubic meters in 2019, according to Eurostat.

Not an immediate approval

Once the European Commission puts forward a new package of sanctions on Russia, then it is up to member states to greenlight them unanimously.

It's possible that an agreement on the EU's sixth round of sanctions could take two separate meetings between European ambassadors. The first set of discussions are due Wednesday morning.

The new set of measures comes after Russia's state-owned energy firm Gazprom halted natural gas flows to two EU nations (Poland and Bulgaria) last week, prompting fears that other EU countries would experience similar issues.

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"It clearly shows that they are not reliable suppliers, and that means that all the member states have to have plans in place for full disruption," Kadri Simson, the EU's energy commissioner, said Monday at a press conference.

"It is an unjustified breach of existing contracts and a warning that any member state could be next," she added.

In this context, the bloc is racing to find alternative suppliers of energy in time for next winter. The commission's idea is to see at least 80% of Europe's natural gas storage full by November and is, in the meantime, diverting some flows within the bloc to support Poland and Bulgaria.