What you should know about the EU plan to ban Russian oil imports

The European Commission has proposed a plan to phase out imports of Russian crude and refined oil in response to Russia’s invasion of Ukraine.

An oil treatment plant in the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk, Russia
Russia is Europe's biggest oil supplier, providing 26 percent of the bloc's oil imports in 2020 [File: Vasily Fedosenko/Reuters]

The European Commission has proposed its toughest sanctions yet against Russia, including a phased oil embargo, as part of a sixth round of retaliatory measures following Moscow’s invasion of Ukraine.

European Commission President Ursula von der Leyen said on Wednesday the embargo “will be a complete import ban on Russian oil, seaborne and pipeline, crude and refined”, that will take place in stages to give states time to find alternative energy sources.

In order for the proposal to be approved, it will need the support of all member states. Some countries within the 27-member bloc have expressed their opposition to an all-out embargo.

“Today we are addressing our dependence on Russian oil, and let’s be clear, it won’t be easy,” von der Leyen told the European Parliament in Strasbourg.

“Some member states are strongly dependent on Russian oil, but we simply have to do it,” she added.

Envoys from European Union countries have not yet reached an agreement, but discussions are expected to resume on Thursday.

Here is what you need to know about the proposed embargo:

What’s in the EU plan?

The European Commission is seeking to phase out supplies of Russian crude oil within six months and refined products by the end of 2022.

Under the proposal, Hungary and Slovakia could be granted a longer period to adapt to the embargo, until the end of 2023.

Measures include the ban in a month’s time of all shipping, brokerage, insurance and financing services offered by EU companies for the transport of Russian oil worldwide, an EU source told the news agency Reuters.

The ban would apply to Russian exports of oil worldwide, potentially affecting Moscow’s ability to find alternative buyers after the EU stops buying Russian oil.

The EU’s chief executive also proposed adding Russia’s top bank, Sberbank, and two other financial institutions, to a list of several banks already cut off from the SWIFT messaging system.

If agreed, the embargo would follow the United States and the United Kingdom, which have already imposed bans in an attempt to cut one of the largest income streams for the Russian economy.

Ambassadors from the EU’s 27 governments are widely expected to adopt the proposal as early as this week, allowing it to become law soon after.

A similar embargo on Russian coal, imposed by the EU in April, took immediate effect for the spot market, and had a four-month wind-down period for existing contracts.

Kremlin spokesman Dmitry Peskov said on Wednesday that Russia has been looking into various options as it braces for an EU oil embargo.

How would a ban affect EU economies?

Russia is Europe’s biggest oil supplier, providing 26 percent of the bloc’s oil imports in 2020. Germany, Poland and the Netherlands are Europe’s biggest buyers of Russian oil.

Europe has paid Russia 14 billion euros ($14.94bn) for oil since the start of what Moscow calls a special military operation in Ukraine two months ago, according to research organisation the Centre for Research on Energy and Clean Air.

The European Commission is working to speed up the availability of alternative energy supplies to try to cut the cost of banning Russian oil.

However, lacking sufficient and moderately priced alternatives, the EU is likely to end up facing an increased energy bill or a slowdown of economic activity.

Russian political analyst Andrey Ontikov told Al Jazeera that Moscow was likely to find other buyers outside Europe, including China and India, and said the EU would face paying higher prices for alternative oil imports.

“European countries are shooting themselves in the leg,” Ontikov said. “I can’t imagine at what price those countries will get oil [elsewhere]. Maybe the United States will provide crude oil, but again, at what price?”

Russia’s RIA news agency cited Vladimir Dzhabarov, first deputy head of the Russian upper house’s international affairs committee, as saying that Europe will continue buying Russian oil via third countries once it introduces an embargo.

Why was natural gas not included in the sanctions plan?

Natural gas has yet to be targeted with sanctions. A potential ban has not yet been properly discussed at EU level because of the bloc’s reliance on it.

In 2021, the EU imported more than 40 percent of its total gas consumption from Russia.

Ever since the gas disruptions that hit some eastern EU countries in the winters of 2006 and 2009, the EU has worked on a common energy policy to strengthen its energy security and the internal energy market.

In 2021, energy represented 62 percent of EU total imports from Russia, down from 77 percent in 2011, but the bloc is still a long way from cutting its dependence on Russian energy imports.

Al Jazeera’s Dominic Kane, reporting from Berlin, said gas was “the elephant in the room” at the Strasbourg Parliament on Wednesday.

“European leaders want to act fast against Russia, but they are stuck with the reality of decisions that governments across Europe made over decades, when they thought that it was in their best interest to make deals with President Putin,” he said.

However, the EU Commission has taken steps to end its dependency on Russian gas.

On March 8, it published its “REPowerEU” plan, outlining measures to drastically reduce Russian gas imports before the end of the year and reach complete independence from Russian fossil fuels before the end of the decade.

INTERACTIVE - Russian gas imports into the EU - Europe's reliance on Russian gas
(Al Jazeera)

Which countries have raised concerns over the proposal?

Hungary, Slovakia, the Czech Republic and Bulgaria have raised concerns about the oil embargo plan.

Slovakia gets nearly all of its imported crude from Russia, mainly via the Soviet-era Druzhba pipeline, and it has joined Hungary, also highly reliant on Russian supplies, in seeking an exemption from the embargo.

“We agree with this sanction, but are saying that we need a transitory period until we adapt to the situation,” Slovakia’s economy minister Richard Sulik told a news briefing in Bratislava on Wednesday. “What is being discussed today is the duration of the transitory period.”

Sulik said a longer transition would give Slovakia time to secure alternative supplies.

Hungary said it could not support the proposed embargo as it would destroy its energy security.

“The Brussels package of sanctions would ban oil shipments from Russia to Europe, with a rather short notice, in case of Hungary the end of next year,” foreign minister Peter Szijjarto said in a Facebook video, adding that Hungary cannot support the measures in their current form.

Hungary could only agree to these measures if crude oil imports from Russia via pipeline were exempted from the sanctions, the minister said.

Source: Al Jazeera and news agencies