EU leaders launch fresh push for summit deal on Russian oil embargo

Pipeline deliveries could be exempted in concession to holdout Hungary

Duna oil refinery, near Szazhalombatta, south of Budapest. Hungary says it would need years to replace Russian oil in its refineries and power stations. AFP

European leaders were poised to make concessions to Hungary as they sought an elusive deal on sanctioning Russian oil on Monday, on the first day of a summit in Brussels devoted to the fallout from the war in Ukraine.

After diplomats failed to reach an eleventh-hour agreement before the summit, European Union presidents and prime ministers will discuss a possible compromise in which an embargo covers only oil deliveries by sea, exempting pipelines such as the 4,000-kilometre Druzhba network.

The 27 leaders will seek a political agreement at Monday's talks, an EU official said, settling on an outline that could then be finalised at a technical level.

Diplomatic sources said concessions on pipeline oil, and temporary exemptions for certain import-reliant countries such as Slovakia and the Czech Republic, would be revisited as soon as possible once an embargo is agreed.

The concessions were offered after Hungary’s Prime Minister Viktor Orban refused to support a blanket oil ban and said the effect of such an embargo would be like dropping a nuclear bomb on his country.

Agreement at the level of EU ambassadors remained elusive despite talks stretching late into Sunday and resuming on Monday morning, leaving the bloc’s sixth sanctions package in limbo almost a month after it was put forward. The initial proposal covered all Russian oil exports to the EU.

EU foreign policy chief Josep Borrell told French television the discussions had been tough but that “in the end, there will be an agreement”.

Leaders are under pressure to free their economies from Russian fossil fuels in order to stop financing the invasion of Ukraine. They will discuss proposals in Brussels for a wider revamp of EU power grids.

Oil prices rose to two-month highs on Monday as traders waited for a decision. Brent crude futures were up 0.4 per cent at $119.89 a barrel.

Mr Orban suggested in a letter before the summit that EU heads of state avoid discussing oil sanctions altogether this week and leave the subject to technical negotiations among diplomats.

Germany, which supports the oil ban, after initially opposing it, has sided with Mr Orban in arguing that the European Council summit should show unity rather than being overtaken by squabbling about energy.

But Mr Borrell said he hoped a deal could be presented to EU heads of state and government on Monday afternoon.

Fellow landlocked countries Slovakia and the Czech Republic have asked for grace periods to impose any oil embargo but have not taken Mr Orban’s outspoken tone against the package.

A final sanctions package must be approved by all 27 member states. Countries such as Hungary can receive special treatment, if other nations are willing to go along with it.

A German government source said it was hard to imagine Hungary being completely exempt from an oil ban, but Mr Orban’s government has sought to work around it by focusing the embargo on sea trade instead of pipelines.

Hungary gets about 65 per cent of its oil from Russia, and European refineries set up to handle Russian crude cannot be converted overnight. The Druzhba pipeline serves Poland, Germany, Hungary and Slovakia, among others.

The EU agreed a ban on Russian coal in the fifth round of sanctions. A possible gas embargo, sought by Ukraine and some member states, has not yet been proposed.

Russia has demanded that the sanctions be lifted in exchange for unblocking food exports to ease an emerging global hunger crisis, a ploy described as blackmail by Ukraine.