EU completely end dependence on Russian oil and gas?

Although the European Commission’s proposal states that the cessation of oil imports from Russia will be implemented over a number of stages spanning six months, but it is still a turning point for the European Union (EU), which relies on energy from Russia. Then how will the EU have to find alternative sources of supply, if the plan is approved?

The President of the European Commission, Ms. Von der Leyen, pledged to minimize the impact of the virus ban This applies to economies in the EU, but after the proposal was published, crude oil prices still increased by 2%. Currently, Hungary and Slovakia have announced that they will not participate in any Russian oil embargo. The president of the European Commission also did not say whether the two countries would be exempt from participating, although it seems likely that this will happen.

“Curse” Russian oil and gas – a difficult decision

A difficult decision has finally been made by the EU executive body. However, according to EU rules, the European Commission’s proposal must be approved by all 27 member states, which is of course not easy. A number of member countries, regardless of the size of their economies, have been dependent for decades on energy from Russia. EU is the number 1 customer of Russian oil. Since the beginning of Russia’s special military campaign in Ukraine, the EU has spent more than 20 billion euros on buying Russian oil, so will the EU this time get rid of its addiction to Russian oil?

The EU’s purpose is clear. The EU wants Russia to reduce its income, and oil is Russia’s number one export, the mainstay of the Russian economy. But cutting itself off from Russian oil could split the EU. On the one hand, countries like Spain, Portugal, and France use less Russian oil, and on the other hand, countries like Hungary and Slovakia import more than 75% of their oil from Russia.

“We know that the main challenge is that many European countries, including Germany, depend on imported fossil fuels from Russia,” German Chancellor Olaf Scholz said.

Mr. Christian Sewing – CEO of Deutsche Bank: “Cutting off Russian energy supply will reduce the output of the German economy by 5%. Now that we see this risk as real, we have to prepare for it. ready for this.”

Hungary’s foreign minister even stated that ‘it is really impossible to operate Hungary and the Hungarian economy without crude oil from Russia’. Because of the fact that 85% of Hungary’s gas and 65% of its oil are imported from Russia. Due to its infrastructural condition, Hungary has no alternatives to secure energy sources or routes that would allow it to stop importing energy from Russia in the coming years. Therefore, the Hungarian Foreign Minister stated that his country does not support the embargo on Russian oil.

Mr. Peter Szijjarto – Hungarian Foreign Minister said: “Hungary can only agree to these sanctions if the transportation of crude oil through pipelines is exempt from sanctions. In that case, source security Hungary’s energy supply will be maintained. Otherwise, the sanctions package will destroy the security of Hungary’s energy supply. As such, a sanctions package of this kind cannot be responsibly supported.”

Meanwhile, Slovakia’s Economy Minister said the country needs three years of preparation before imposing a ban on Russian oil imports to have time to ensure an alternative oil supply.

Challenges and consequences for the EU

Russia’s oil import ban is the result of a very difficult decision for the EU. Some member countries may still not support this decision, while this proposal must receive the consensus of all 27 member countries to take effect.

The EU’s ban on oil imports from Russia within 6-8 months, especially Hungary and Slovakia, implemented a few months later, is facing many challenges because Hungary and Slovakia depend almost 100% on crude oil from the EU. Russia, these countries need several years to implement this ban. Hungary opposes the EU’s complete ban on Russian oil and gas, a government spokesman said. Slovakia argues that its refineries are designed to process Russian oil, so it will have to be adjusted or replaced almost entirely when importing oil from elsewhere. This is an expensive and lengthy process.

In addition, there are also reports that Bulgaria and the Czech Republic may find a way not to impose sanctions on Russia.

If the European Commission’s proposal to ban oil imports from Russia is approved with an exemption for one or two countries, the embargo may not create economic pressure on Russia. EU countries still buy oil from Russia, what European officials see as an indirect act of funding the Russian economy.

In addition, the embargo with exemptions for some countries also causes division within European countries, disturbing the EU’s energy market. While the exempt countries have a reasonable energy supply, energy prices in the countries subject to the ban continue to rise, pushing up the cost of living. This is the risk of people’s protests across Europe.

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