EU nears compromise agreement for partial ban on Russian oil

The European Union is edging towards a partial ban of Russian oil, as leaders attempt to find a compromise to placate the Hungarian prime minister, Viktor Orbán, who has been holding up a deal on the latest sanctions against Vladimir Putin’s war machine.

Under a compromise plan to be discussed at a Brussels summit on Monday, Russian oil transported through the Soviet-era Druzhba pipeline for Hungary, the Czech Republic and Slovakia would be exempt from the EU embargo.

The EU has stalled over its latest sanctions against Russia for nearly four weeks since the European Commission president, Ursula von der Leyen, proposed a complete ban on Russian oil by the end of the year.

Arriving at the summit, Orbán said “the pipeline solution is not bad” but insisted his country needed guarantees it could get oil from other sources if there was an “accident” at the Druzhba pipeline, which runs through war-torn Ukraine. In typically pugnacious style, Orbán attacked the commission for what he called its “irresponsible behaviour” and blamed it for creating a “difficult situation”.

Under a compromise drafted by France, which holds the EU’s rotating presidency, EU member states would agree most of the latest sanctions package, which includes more restrictions on Russian banks, asset freezes on people close to the Kremlin and a ban on most Russian oil.

A draft of the summit conclusions seen by the Guardian describes the compromise as “a temporary exception for crude oil delivered by pipeline”, with EU ministers instructed to agree on how to close the loophole “as soon as possible”.

The bloc has come under increasing criticism for slow progress in agreeing the latest sanctions package, the sixth, including from Ukraine’s president, Volodymyr Zelenskiy, who is to address the gathering later on Monday by video link.

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The German chancellor, Olaf Scholz, said he was confident there was a “good solution” on the oil embargo, adding that he saw the “will to reach an agreement”. Germany, along with Poland, has pledged to phase out Russian oil by the end of the year. Officials close to the talks say the decision of these two large economies to forgo oil from the northern leg of the Druzhba pipeline means the EU oil embargo would cover 93% of Russian oil supply by the end of the year.

As yet there is no end date on the exemption for the southern leg of Druzhba, covering Hungary, Slovakia and the Czech Republic, landlocked countries that are heavily dependent on Russian oil.

Budapest had already been offered a two-year delay in implementing the ban on Russian oil, but said this wasn’t enough to allay its concerns about rising energy prices or pay the bill for retooling its refineries. A European diplomat suggested it could take “some weeks” to find a solution for countries that were ultra-dependent on Russian oil.

Von der Leyen dialled down hopes of a quick agreement: “My expectations are low that it will be solved in the next 48 hours, but I am confident that thereafter there will be a possibility.”

Latvia’s prime minister, Krišjānis Kariņš, said he intended to warn his fellow leaders not to get “bogged down” in details. “The big picture is that we have to starve Russia, Moscow, of the funds to continue the war,” he said. “If each European country only thinks about itself then we will never move forward.”

Italy, the Baltic states, the Netherlands, Belgium and other countries that import oil on tankers had initial reservations about an exemption for pipeline oil that would give an advantage to those countries that can continue to import cheaper Russian oil. But there is growing willingness to accept an imbalance on the EU’s internal market to secure agreement on sanctions.

Estonia’s prime minister, Kaja Kallas, said: “It would be best if everybody is onboard,” but that a deal with an opt-out was “still better than nothing”, adding that it was up to every country’s moral compass.

Beyond sanctions, EU leaders are expected to approve €9bn in emergency support for Ukraine, although there is no decision yet on whether the funds will be low-interest loans or non-repayable grants.

Ukraine will need hundreds of billions to rebuild destroyed schools, hospitals, residential buildings and infrastructure. The European Commission has proposed a jointly managed reconstruction body to be organised by Ukraine and the EU, with contributions from international institutions.

Some EU leaders are already talking about a seventh round of Russia sanctions targeting gas. But some argue the EU rushed too quickly into an oil embargo. “We talked about oil, under pressure from [the] Baltics and Poland before having done our homework,” a senior EU diplomat said. “Under the pressure of this war we have maybe taken some steps too soon and we are now facing the consequences.”