EU proposes complete ban on Russian crude oil
06 May 2022
On May 5, the European Union proposed a total ban on Russian oil imports as part of a new round of sanctions as a result of the invasion of Ukraine. During a speech, European Commission President Ursula von der Leyen said Russian crude oil would be phased out within six months, however the proposal has been met by opposition from some EU members, including Hungary, Slovakia, and the Czech Republic.
European Commission President Ursula von der Leyen – Image: Shutterstock
During her speech, von der Leyen said that addressing the EU’s dependency on Russian oil would not be easy because some members are strongly dependent on Russian energy imports. However, she said the EU simply had to work on it and proposed a complete import ban on all Russian oil, seaborne and pipeline, crude and refined.
“We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimises the impact on global markets. This is why we will phase out Russian supply of crude oil within six months and refined products by the end of the year. Thus, we maximise pressure on Russia, while at the same time minimising collateral damage to us and our partners around the globe. Because to help Ukraine, our own economy has to remain strong,” von der Leyen said.
In response to the proposal, Hungary’s Prime Minister Viktor Orban said his country could not support the embargo in its current form as it would amount to dropping an “atomic bomb” on the Hungarian economy. Orban said that talks would continue to see if a new proposal could meet Hungary’s interest.
Whilst speaking on Hungarian state radio, Orban said that the country would need at least five years and a significant amount of investment in its refineries and pipelines in order to be able to cut its reliance on Russian oil. In addition to Hungary, several eastern EU countries have also expressed concerns about the import ban saying that there wasn’t enough time for them to find alternative sources of oil.
The EU has spent weeks looking at ways of cutting its dependency on Russian energy. It has already announced that it will cut Russian gas imports by two-thirds by the end of 2022, however as it stands, the Russian oil ban will likely be vetoed by Hungary and possibly other EU members such as Slovakia and Czech Republic.
German Chancellor Olaf Scholz, who has been criticised by some who say he had been dragging his feet in response to the Ukraine crisis, said in early May that his country would reduce its dependence on Russian gas to zero as soon as possible. However, Scholz reaffirmed his opposition to an immediate reduction in imports, saying: “It doesn't help anyone if the lights go out here. Not us and not Ukraine.”
Some EU members fear repercussions from Russia if they were to announce a complete ban on energy imports after Gazprom stopped gas exports to Poland and Bulgaria in April. State-owned energy giant Gazprom said it would not restore its services until payments were made in Russian roubles. President Vladimir Putin has said that “unfriendly” countries that do no pay for Russian gas in roubles would have their contracts stopped.
The EU announced on March 8 that it would reduce Russian gas imports by two-thirds. This followed announcements from the US – which banned all imports of Russian oil, liquefied natural gas, and coal – and the UK. The announcements led to Russia threatening to close cut off all gas supplies to European countries via the Nord Stream 1 pipeline.
As part of its move to reduce its dependency on Russian gas, the EU signed a deal with the United States on March 25 that will see the US supply an additional 15 billion cubic metres (bcm) of liquefied natural gas (LNG) to Europe in 2022, with expected increases going forward. The deal will see the creation of a joint Task Force that will organise its efforts around two primary goals: diversifying LNG supplies in alignment with climate objectives and reducing demand for natural gas in order to strengthen European energy security and help reduce dependence on Russian oil and gas.
In a statement, the White House said the agreement’s long-term aim is ensuring, until at least 2030, demand for approximately 50 bcm/year of additional US LNG that is consistent with both US and EU net-zero goals.