EU prepares Russian oil sanctions, warns against gas payments in rubles

  • EU to propose oil sanctions against Russia: officials
  • EU ministers hold talks on threat to Russian gas supply
  • Europe warns against full compliance with the demand for payment in rubles

BRUSSELS, May 2 (Reuters) – The European Union was preparing sanctions against Russian oil on Monday, with possible exemptions for wary countries, and warned that fully complying with Moscow’s proposed scheme to receive gas payments in rubles would breach existing sanctions. from the EU.

The European Commission is expected to propose a sixth package of EU sanctions this week against Russia over its invasion of Ukraine, including a possible embargo on the purchase of Russian oil, a move that would deprive Moscow of a major source of revenue, but which has so far divided EU countries.

Russia supplies 40% of the EU’s gas and 26% of its oil imports.

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To keep the 27-nation bloc together, the Commission may offer Hungary and Slovakia an exemption or a long transition period, and any blanket ban is likely to be phased in by the end of the year, officials said Monday.

Both Hungary and Slovakia are heavily dependent on Russian crude. Hungary has said it will oppose energy sanctions. read more

Resistance from other countries to an oil embargo appeared to be fading ahead of a meeting on Wednesday in which ambassadors from EU countries will discuss proposed sanctions.

“We have managed to reach a situation where Germany can withstand an oil embargo,” German Economy Minister Robert Habeck said on Monday. “This means it will not be without consequences.”

Austrian climate and energy minister Leonore Gewessler said Vienna would agree to oil sanctions if other countries did.

EU countries have paid more than 47 billion euros ($47.43 billion) to Russia for oil and gas since it invaded Ukraine on February 24, according to the research organization Center for Research on Energy and Clean Air.

At a meeting of EU energy ministers on Monday, the bloc sought to clarify its stance on Russia’s demand that countries actually pay for gas in rubles, or face loss of supply.

Russia cut off gas supplies to Bulgaria and Poland last week for refusing to honor their payment plan, raising fears that other countries could be next.

The Commission said on Monday that complying with Russia’s proposed scheme would breach existing EU sanctions against Russia over its invasion of Ukraine, but promised more detailed guidance on what companies can and cannot legally do.

“Paying rubles through the conversion mechanism managed by Russian public authorities and a dedicated second account in Gazprombank is a violation of sanctions and cannot be accepted,” EU Energy Commissioner Kadri Simson told a conference in Russia. press after the meeting of ministers.

Moscow has said foreign gas buyers must deposit euros or dollars in an account at Russia’s private bank Gazprombank, which would convert them into rubles.

Many European companies are facing payment deadlines this month and are seeking clarity on whether they can legally pay, after Brussels said last month that complying with the scheme could breach EU sanctions, but also suggested countries could make payments. that they comply with the sanctions if they declare that the payment is complete once. has been made in euros and before its conversion into rubles.

The Russian decree said that the buyer’s obligation would be considered complete only after the foreign currency was converted into rubles.

European capitals have been divided on whether to commit to the mechanism, as the EU struggles to forge a united response.

Poland and Bulgaria refused to use the Russian scheme before Moscow cut off their gas supply, and Warsaw said on Monday it was not acceptable for countries to commit to Russia’s mechanism.

Last week, Germany echoed the Commission’s suggested solution to allow companies to pay and Hungary said it would send euros to Gazprombank to be converted into rubles. read more

An immediate cutoff of Russian gas would push countries, including Germany, into recession and require emergency measures, such as factory closures, to cope, according to analysts.

In the longer term, the EU plans to drastically reduce dependence on fossil fuels to meet climate change goals. Brussels will unveil plans later this month to expand renewable energy and renovate buildings faster, to help countries wean themselves off Russian oil and gas within a few years.

Simson said the countries were expected to agree within a few weeks on emergency legislation requiring them to fill gas storage by 80% before this winter, which would allow them to start negotiations with the European Parliament, which must also approve the rules. EU gas storage is currently 33% full. read more

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Edited by John Chalmers, Barbara Lewis, William Maclean

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