Filenews 9 May 2022
The European Union is set to de-escalate the sanctions package against Russian oil after a weekend of disagreements, although it intends to maintain a key shipping provision that would block Russian crude exports globally.
The bloc would abandon the plan that would ban EU ships from transporting Russian oil to third countries, while maintaining the provision that would not allow these shipments to be insured, according to documents seen by Bloomberg and people with knowledge of the matter.
Greece, which is among the countries with the largest number of ships in the world, pushed - along with other states - for the removal of the above provision from the sixth package of EU sanctions against Russia for the invasion of Ukraine, citing the non-agreement between the G7 countries.
A ban on European ships carrying Russian oil anywhere in the world would hit Moscow's exports even harder. But even with the blockade on the possibility of insuring charterers, the EU is putting a major obstacle in the way of Russian crude exports. Shipping companies insure their ships in the Shipowners Protection and Compensation Clubs, which buy reinsurance from 80 companies, among them the top-20 worldwide, that cannot ignore European legislation.
EU member states are still discussing the sixth package of measures this week, with diplomats trying to overcome Hungary's objections to the Russian oil embargo after they were unable to reach an agreement over the weekend.
In its first proposal, the EU sought to ban the transport of Russian oil to third countries, even by channelling it from one ship to another.
The blockade on consignment insurance, which excludes goods that do not come from Russia even if they pass through the country, will take effect three months after the formal adoption of this provision.
In practice, this would limit Russian oil sales of Russia, while trade would begin to operate more underground, with smaller shipowners coming into play.
"The oil will be sold at a reduced price and the ships will be traded at a premium, because the shipowner engaged in this activity will find that his ships are not accepted by anyone else for some time," said Mike Muller of the Vitol Group.
The EU's proposal seeks to ban imports of Russian crude within the next 6 months and refined fuels from early January. European companies will also be prohibited from providing 'technical assistance, intermediation services, financing or financial assistance or any other service related to these sanctions'.
The EU had given Hungary and Slovakia until the end of 2024 to comply with the measures against Russia and the Czech Republic by June of the same year, as they are highly dependent on Russian crude. Bulgaria is also seeking a similar transition period.
A source who spoke to Bloomberg said oil supplies from Kazakhstan are vital in these technical discussions at the EU level, as are the guarantees for the investments needed to finance the transition phase, for infrastructure delivery in Croatia. Oil coming from Kazakhstan - and any other third country - will be exempt from the embargo, even if it arrives via Russia.
Source: Capital.gr
