EU Reportedly Proposes Partial Oil Embargo Against Russia

The EU has called for a ban on seaborne Russian oil deliveries while delaying restrictions on imports from a key Soviet-era pipeline in a bid to break a deadlock over talks to clinch a deal on Brussels’ sixth package of sanctions against Moscow over its ongoing special operation in Ukraine, according to Bloomberg.

The news agency quoted unnamed sources as saying that the European Commission had sent a revised proposal to national governments in the EU countries that stipulates sparing shipments through the Druzhba pipeline, a main source of crude imports for Hungary, Slovakia, the Czech Republic and Bulgaria.

The sources claimed that under the proposal, EU members would phase out their imports of seaborne crude in six months and refined petroleum products in eight months. The proposal would also give more time to Budapest to find a technical solution that satisfies its energy needs, additionally addressing the concerns of Bratislava and Prague related to the banning of Russian oil imports from the Druzhba pipeline.

The Czech Republic, for its part, has underscored that it needs time to implement the EU's proposed embargo on Russian oil due to the "heavy economic costs" the landlocked country's industrial sector could face over such a move.

Czech Minister for European Affairs Mikulas Bek said that the country can't stop importing Russian oil because the possible halt would cripple the country’s gasoline production, which in turn would have a major effect on transportation and industry, making it impossible to support Ukraine "if we have a practical crisis of the economy in the country”.

This comes after Budapest made it clear that a deal on the sixth package of sanctions against Moscow was out of reach until Brussels offers a "solution" to replace Russian oil in the Hungarian economy.

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Hungarian Foreign Minister Peter Szijjarto wrote on his Facebook in mid-May page that there was still no acceptable proposal in sight, calling for Russian shipments via the pipelines to be exempted from any oil embargo that should only apply to deliveries by sea.

“We are expecting such a proposal not only concerning the transformation of our refineries which costs hundreds of millions of dollars, not only relating to the capacity increase at the Croatian pipeline which would cost several hundreds of millions of dollars, but also concerning the future of the Hungarian economy,” Szijjarto stressed.

The Hungarian oil and gas company MOL (MOLB.BU), in turn, said that it would take at least 2-4 years and between $500 million and $700 million to fully switch its two refineries in Slovakia and Hungary to alternative crude processing.

“MOL's refineries have been built to process Russian Export Blend (REB) crude. It is true that MOL can transform its refineries to use alternative crude and MOL has done a lot so far to process up to 35% of non-Russian oil. To do more we need additional capacity, technological investments and testing time. At the moment we have the advantage of the better Ural prices but this is not granted forever”, the company told Reuters.

The statement was preceded by Hungarian Prime Minister Viktor Orban warning that the EU's six package plan amounts to “a nuclear bomb" for Hungary's economy because it ignores the country’s "circumstances". Orban referred to Brussels’ sanctions draft, which envisages that EU nations would have to phase out Russian oil by the end of the year, with Hungary and Slovakia getting one extra year to do so.

Aside from the Czech Republic, Slovakia, Hungary and Bulgaria, Druzhba, the world’s longest oil pipeline built in 1964, carries Russian oil to Poland and Germany.