EU Prepares Ban on Russian Oil

A decision by EU member states could come this week.

The EU’s accelerating preparations for ending purchases of Russian oil come after Germany, Europe’s biggest economy, changed its mind and swung behind the idea of an oil embargo.

“We are also pushing within the EU to now phase out oil together as Europe in the EU’s sixth sanctions package,” German Foreign Minister

Annalena Baerbock

told public broadcaster ARD late on Sunday. She also said the EU’s sweeping economic sanctions on Russia should remain in place until Russian troops withdraw completely from Ukraine.

EU commissioners are expected to complete the proposals at a meeting of top Brussels officials on Tuesday. All 27 EU member states would need to back the new sanctions proposals, and diplomats warn that a consensus might take some time to craft. Hungary is among the countries that have so far opposed an embargo.

Amid an escalating energy war between the EU and Russia, EU energy ministers were also meeting in Brussels on Monday to discuss how to respond to Moscow’s decision last week to cut off natural-gas deliveries to Poland and Bulgaria.

Germany said last week that it is rapidly reducing its reliance on Russian oil by arranging new oil-supply contacts. Berlin said that only 12% of the country’s oil imports currently come from Russia, down from 35% before Moscow launched its full-scale invasion of Ukraine on Feb. 24.

Berlin says it has also reduced Russian gas to 35% of its gas imports, down from 55%, in that time. The country is rapidly replacing Russian energy with imports from the U.S., Norway and Gulf countries, according to a German government official.

Moving away from cheap Russian energy means a permanent increase in prices for German consumers and industry, German Economy Minister

Robert Habeck

said on Monday. “This is the bitter and harsh reality,” Mr. Habeck said after a meeting with industry representatives. The era of cheap energy is over, he said.

German officials said the country could become fully independent of Russian oil within weeks, but that fully giving up Russian natural gas would be more difficult and take longer.

Large amounts of gas are less readily available on the global market than oil. Russia exports gas to Germany and the EU through a network of pipelines, a cheap and reliable means of transport that has allowed the region to buy gas relatively inexpensively.

In contrast, it will take until around 2024 before Germany can import large amounts of gas from other suppliers such as the U.S., Qatar or Algeria. Such imports come in the form of liquefied natural gas, which is frozen at extremely low temperatures and transported via special ships.

Germany doesn’t yet have re-gasification terminals to receive such shipments. The government says it will take between one and three years to build the necessary infrastructure on Germany’s North Sea coast.

The Commission is also likely to propose sanctions against additional Russian officials and possibly new sanctions against Russian banks, including Sberbank, diplomats and officials have said. Senior officials from the EU’s member states are expected to discuss the proposals on Wednesday.

Hungarian government officials said again at the weekend that Budapest opposes further energy sanctions, but EU diplomats said the bloc was discussing a longer transition period for Hungary, as well as Slovakia, which is likewise heavily reliant on oil sent via pipelines from Russia.

Austria’s energy minister said on Monday that her government, which has been wary of an oil embargo, is now prepared to support such a step.

Before Russia’s invasion of Ukraine, the EU was importing between 3 million and 3.5 million barrels of oil a day from Russia, sending just under $400 million in payments daily, according to Brussels-based think tank Bruegel. That amounts to some 27% of EU oil imports.

Oil-and-gas revenues accounted for 45% of Russia’s federal government budget in 2021, according to the International Energy Agency.

While the bloc hasn’t so far imposed sanctions on Russian gas, Moscow last week made a pre-emptive move amid growing tensions over energy, halting gas flows to Poland and Bulgaria in what was seen as a warning shot to the rest of the bloc.

Russian energy giant Gazprom PJSC said it made the decision because it hadn’t received payment in rubles for gas sales to Poland and Bulgaria as required by a new decree by President Vladimir Putin. For now, the two countries are receiving gas from their neighbors to prevent disruptions.

To coordinate the bloc’s response to Gazprom’s decision, France, which currently holds the rotating presidency of the EU, called an emergency meeting of energy ministers for Monday afternoon.

With the next set of EU gas payments to Russia coming due later this month, EU members—and in particular Germany—are racing to reduce their dependence on Russian gas imports by striking new contracts with alternative suppliers and taking measures to reduce gas consumption at home.

The EU has said complying with Russia’s new ruble payment decree would require that firms breach the bloc’s own sanctions on Russia and has urged member states to ensure that payments are made only in euros and dollars. EU officials say around 97% of the bloc’s energy contracts with Russia stipulate payment in euros or dollars.

“We will continue to pay in euros the contracts where it’s stipulated in euros or in dollars where it’s stipulated in dollars,” said French Energy Minister

Barbara Pompili

on her way into Monday’s meeting in Brussels. “We cannot accept this type of scheme which tears up agreed contracts.”

—Bertrand Benoit contributed to this article.

Write to Laurence Norman at [email protected] and Bojan Pancevski at [email protected]