The EU hopes to impose an embargo on Russian oil in May

The European Union still hopes to be able to agree on a phased embargo on Russian oil this month, despite concerns about supplies to Eastern Europe.

Four diplomats and officials told Reuters, rejected proposals to delay or dilute the proposals.

Dependence on Russian oil in Bulgaria, the Czech Republic, Hungary, and Slovakia is the biggest obstacle to the embargo agreement proposed by the European Commission in early May in response to Russia’s invasion of Ukraine.

However, Reuters sources say they are optimistic that an agreement will be reached, although European Commission President Ursula von der Leyen has not yet broken the resistance of Hungarian Prime Minister Viktor Orbán, the most vocal critic of the proposed embargo.

“There will be a deal,” said a senior EU diplomat, noting that there is flexibility in proposed levels of transition and investment for Russian oil-relying countries that will have to find other sources of supply.

A second senior diplomat said the agreement could be reached as early as Monday, when EU foreign ministers meet in Brussels, following technical talks expected over the weekend.

A third diplomat said there was a chance for an agreement later in the week. “This will be decided at the highest political level, between Budapest and Brussels. I am optimistic,” the diplomat said.

While most EU countries will have to fully implement Russia’s oil embargo by the end of the year, Hungary has already received an exemption by the end of 2024, as has Slovakia, and the Czech Republic will have until mid-2024.

In addition to the oil ban, more Russians close to President Vladimir Putin are expected to be sanctioned in the same package, the sixth since the start of the war in Ukraine, which Moscow calls a “special military operation.”

Ukrainian Foreign Minister Dmytro Kuleba is expected to call for more economic sanctions, more weapons, and more financial support when he joins his EU counterparts on Monday.

The EU is discussing special aid for oil pipelines and refineries

The European Commission is considering offering landlocked countries in the eastern European Union more money to modernize oil infrastructure in a bid to persuade them to agree to an embargo on Russian oil, an EU source told Reuters.

The measures are part of a broader package of new sanctions against Russia following its invasion of Ukraine, but the adoption of the legal text still requires an agreement on the size of the investment, the source said, adding that another obstacle was Cyprus’ concerns over a proposed ban. for sale of real estate to Russians.

Disputes between member states have delayed approval since the Commission unveiled its proposal for the sixth package of sanctions last week, and the text has already been revised once to try to win over skeptics.

A new version, which is currently being drafted, is likely to lift the ban on EU tankers carrying Russian oil, following pressure from Greece, Cyprus, and Malta, the source said, declining to be named due to the delicate nature of the issue.

However, EU companies will be prevented from offering insurance and other financial services to transport Russian oil around the world, the source added, noting that in this element, the original proposal will remain unchanged.

While most EU countries will have to fully implement Russia’s oil embargo by the end of the year, Hungary – the most vocal critic of the new sanctions package – has already been released by the end of 2024, and Slovakia and the Czech Republic by mid-2024.

European Commission President Ursula von der Leyen will meet with Hungarian Prime Minister Viktor Orban in Budapest later Monday to discuss issues related to European security of energy supply, a European Commission spokesman said.

The three countries are the only eastern members of the EU that do not have access to the sea and therefore risk greater economic consequences than the ban on Russian oil.

EU officials say their concerns are well-founded and are now considering spending more than originally planned on modernizing and expanding pipelines that will supply oil from other EU countries.

The source declined to comment on the size of the investment, but noted that it should not be calculated in billions of euros, but rather far less.

The EU withheld 7.2 billion euros ($ 7.5 billion) in EU funds for recovery from Hungary’s COVID under the so-called Recovery plan due to concerns about the rule of law. Diplomats said Budapest could try to link the oil embargo talks to unblock the funds.

But a Reuters source rejected such a hypothesis, saying additional funding would be provided for investments in pipelines. There is still debate over whether this money can also be used to modernize oil refineries in Eastern European countries, many of which can currently only process Russian oil.

Bulgaria also threatens to veto the oil embargo if it does not receive discounts, but EU officials said the Black Sea country has fewer structural problems and risks to its energy security could be limited in other ways.

The other open question concerns Cyprus, where many Russians have invested in real estate, something the EU wants to ban with new proposals. Talks are underway on legal issues that would allow a compromise on the issue, the source said.

The ban on insurance and other financial services for Russian oil tankers is considered a potentially serious obstacle to Russian oil exports to China and other non-EU trading partners, but it is unclear how effective such a measure would be.

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