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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Union (EU) has agreed to ban three quarters of Russian oil imports immediately in a compromise deal that will still allow oil via pipeline, after objections by EU Member State Hungary.
The oil ban, which will cover all seaborne imports but not pipelines, is expected to cover 90% of imports by the end of the year and signals the acceptance of the EU's sixth package of sanctions against Russia over its invasion of Ukraine. Implementation of the latest sanctions had been held up by Hungary, whose leader, Victor Orban, is a supporter of Russian leader Vladimir Putin. Russia currently supplies 27% of the EU's imported oil, and two-thirds of that arrives by sea. Prior to the Ukraine invasion, Europe got 60% of its diesel from Russia.
European Council President Charles Michel called the deal a "remarkable achievement" and added: "We want to stop the Russian war machine and stop the financing of Russian military capacity by implementing sanctions which aim to put pressure on the Kremlin. The European Council was able to agree on a sixth package of sanctions which will, to be concrete, make it possible to ban Russian oil with a temporary exception concerning oil coming by pipeline. To be very clear, this means that there is immediately an impact on 75% of the Russian oil which is targeted by this measure. And that means that before the end of the year, nearly 90% of Russian oil that is imported into Europe will be covered by this measure."
Poland and Germany have committed to stop importing pipeline oil by the end of this year, which will raise the effectiveness of the ban to 90% of Russian imports. European Commission President Ursula von der Leyen said: "Left over is around 10-11% that is covered by the southern Druzhba pipeline," which delivers oil to Hungary, Slovakia and the Czech Republic. She said that the European Council will revisit this exemption "as soon as possible."
Europe is still heavily reliant on Russia for gas imports--around 45% of its total--and the EU cannot afford to add gas to its sanction list. However, Russia has been using gas as a weapon in recent weeks by first temporarily halting supplies to Poland and Bulgaria and then cutting off supplies to Finland for failing to pay in the Russian rubles, which President Putin is trying to prop up in the face of growing sanctions. For additional information, see June 1, 2022, article--Russia Cuts Gas Supplies to Finland.
In recent weeks the European Commission has enacted a massive 300 billion-euro (US$316 billion) plan to cut Europe's reliance on Russian oil and gas, called REPowerEU. The funding will be divided across a wide range of energy areas with the bulk--113 billion euro (US$119 billion)--going to renewables. This includes 27 billion euro (US$28 billion) for the creation of a hydrogen infrastructure by 2030. For additional information, see May 19, 2022, article--Europe Proposes $220 Billion Boost To End Reliance on Russian Energy.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The oil ban, which will cover all seaborne imports but not pipelines, is expected to cover 90% of imports by the end of the year and signals the acceptance of the EU's sixth package of sanctions against Russia over its invasion of Ukraine. Implementation of the latest sanctions had been held up by Hungary, whose leader, Victor Orban, is a supporter of Russian leader Vladimir Putin. Russia currently supplies 27% of the EU's imported oil, and two-thirds of that arrives by sea. Prior to the Ukraine invasion, Europe got 60% of its diesel from Russia.
European Council President Charles Michel called the deal a "remarkable achievement" and added: "We want to stop the Russian war machine and stop the financing of Russian military capacity by implementing sanctions which aim to put pressure on the Kremlin. The European Council was able to agree on a sixth package of sanctions which will, to be concrete, make it possible to ban Russian oil with a temporary exception concerning oil coming by pipeline. To be very clear, this means that there is immediately an impact on 75% of the Russian oil which is targeted by this measure. And that means that before the end of the year, nearly 90% of Russian oil that is imported into Europe will be covered by this measure."
Poland and Germany have committed to stop importing pipeline oil by the end of this year, which will raise the effectiveness of the ban to 90% of Russian imports. European Commission President Ursula von der Leyen said: "Left over is around 10-11% that is covered by the southern Druzhba pipeline," which delivers oil to Hungary, Slovakia and the Czech Republic. She said that the European Council will revisit this exemption "as soon as possible."
Europe is still heavily reliant on Russia for gas imports--around 45% of its total--and the EU cannot afford to add gas to its sanction list. However, Russia has been using gas as a weapon in recent weeks by first temporarily halting supplies to Poland and Bulgaria and then cutting off supplies to Finland for failing to pay in the Russian rubles, which President Putin is trying to prop up in the face of growing sanctions. For additional information, see June 1, 2022, article--Russia Cuts Gas Supplies to Finland.
In recent weeks the European Commission has enacted a massive 300 billion-euro (US$316 billion) plan to cut Europe's reliance on Russian oil and gas, called REPowerEU. The funding will be divided across a wide range of energy areas with the bulk--113 billion euro (US$119 billion)--going to renewables. This includes 27 billion euro (US$28 billion) for the creation of a hydrogen infrastructure by 2030. For additional information, see May 19, 2022, article--Europe Proposes $220 Billion Boost To End Reliance on Russian Energy.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
