Latest news with #EnergySanctions
Al Jazeera
a day ago
- Business
- Al Jazeera
EU squeezes Russia financially to reach ‘peace through strength' in Ukraine
The European Commission floated a plan last week to phase out all Russian gas imports by the end of 2027. The plan, unveiled on Tuesday at the end of the Group of Seven summit in Canada's Kananaskis resort, would immediately ban new contracts to buy Russian gas. It would allow existing short-term contracts to run their course by next June, and cut short any long-term contracts at the end of 2027. 'To achieve peace through strength, we must put more pressure on Russia to secure a real ceasefire, to bring Russia to the negotiating table, and to end this war,' said Commission President Ursula von der Leyen. 'Sanctions are critical to that end.' Russia unleashed 32 missiles and 440 drones on Kyiv as the plan was unveiled, killing 26 people and injuring 134. The attack damaged railway infrastructure and lit fires. Odesa was also hard hit. '[Russian president Vladimir] Putin is doing this deliberately – right during the G7 summit. It's a clear signal of total disrespect toward the United States and other partners calling for an end to the violence,' said Ukrainian Foreign Minister Andrii Sybiha. Putin had done the same right after a phone call with Trump on Sunday, sending 183 strike drones and 11 missiles of different types into Ukraine. The European Union has dramatically reduced its imports of Russian energy during the war – by almost 80 percent, according to the commission. But it still spent about 22 billion euros ($25bn) buying 19 percent of its gas and about 3 percent of its oil from Russia last year. The Centre for Research on Energy and Clean Air recently estimated that eliminating that revenue would deprive the Kremlin of 22 percent of its gross revenues. Hungary and Slovakia have been the main holdouts, arguing against an outright import ban. They argue that being landlocked, they have few alternatives to Russian oil and gas. Slovak premier Robert Fico called Ukrainian President Volodymyr Zelenskyy 'an enemy of Slovakia' in January because Ukraine shut down the Yamal pipeline that carries Russian gas across Ukraine to Slovakia. The only remaining functional Russian pipeline to Europe is TurkStream. The day before the commission's announcement, Hungary vetoed a statement of support for the ban. The EU banned Russian coal and oil imports in 2022, and has since planned to ban gas. The EU and G7 in December 2022 also launched a $60 per barrel price cap on Russian oil sold to anyone else in the world, by threatening to uninsure tankers selling above that price. 'It is no secret that we wanted the price to be lower,' Estonian then-premier Kaja Kallas, now the EU's foreign policy chief, wrote on Twitter. 'A price between 30-40 dollars is what would substantially hurt Russia,' she said. There was speculation that the EU and G7 would lower the cap to $45 this week. That's because even if the EU were to stop buying Russian energy, Moscow would still make an estimated 215 billion euros ($248bn) from sales to others. But the EU announced it was shelving the plan due to rising energy prices – partly the effect of Israel's war on Iran. The current $60 cap 'had little effect' while oil was cheap, 'but in the last days, we have seen that the oil price has risen [and] the cap in place does serve its function,' von der Leyen told reporters on the sidelines of the G7 meeting. 'So for the moment, there's little pressure on lowering the oil price cap.' Ukraine's President Volodymyr Zelenskyy disagreed. 'If Russian oil is sold at no more than $30 a barrel, then Moscow will suddenly sound peaceful,' he wrote on the Telegram messaging platform. That is estimated to be Russia's cost of extraction, leaving it no profit margin to help it prosecute wars. Russia partly circumvented the oil cap by purchasing a 'shadow fleet' of tankers not insured in EU and G7 countries. On Tuesday, the UK sanctioned 20 tankers in addition to 100 last month. The next day, Australia imposed restrictions on 60 vessels, its first targeted sanctions strike on the shadow fleet. On Friday, US Republican Senator Lindsey Graham said he and Democrat Richard Blumenthal were working with the Trump administration to finalise a sanctions package that would impose secondary sanctions on countries that still import Russian energy. 'We now have more than 84 co-sponsors in the Senate and 70 co-sponsors in the House of Representatives on a bill to impose severe sanctions and tariffs on Russia and its financial backers,' Graham wrote in a column. That figure was up from 50 senators on April 1. Trump has opposed sanctions, preferring to cajole rather than confront Putin. Zelenskyy decried that approach in an interview with US outlet Newsmax on Saturday. 'Today, America's dialogue with the Russians resembles a warm conversation,' he said. 'Let's be frank: this will not stop Putin. A change of tone is needed. Putin must clearly understand that America will stand by Ukraine, including by imposing sanctions and supporting our army.' Politico reported on Thursday that the EU was also considering transferring about 200 billion euros in frozen Russian assets from the Euroclear system in Belgium to a 'special purpose fund'. Currently, Euroclear can only invest through the Belgian central bank, which is safe but offers low returns. The new fund would be allowed to make riskier investments, potentially increasing income that could be directed to support Ukraine. Russia has continued to assault Ukrainian positions over the past week, making tiny gains. Zelenskyy told Bild last week that Ukrainian and Russian forces were in day 18 or 19 of a Russian offensive designed to create a breakthrough. The Ukrainian side had defeated a key section of the Russian advance, preventing Russian units from coming together, he said. Russian troops seized the village of Horikhove in Ukraine's eastern Donetsk region on Saturday. That, and other Russian incremental gains, have come at a great cost to life. Britain's Defence Intelligence on June 12 estimated that Russia had suffered a million casualties in the war, of whom 40-50 percent were likely irrecoverable losses – killed, missing and presumed dead or irrevocably wounded. Some 200,000 of those casualties were estimated to have been inflicted in the first five months of this year, suggesting that Russia's casualty rate is rising. The Institute for the Study of War, a Washington-based think tank, broke down Russian casualties and found they have roughly doubled each year of the war. Based on Ukrainian General Staff figures, it estimated that in 2022, Russian forces sustained 340 casualties a day, rising to 693 casualties a day in 2023 and 1,177 casualties a day in 2024. This year, Russian daily casualties have averaged 1,286.
Malay Mail
18-05-2025
- Business
- Malay Mail
Sanctions, tariffs and transparency measures: How the EU plans to phase out Russian gas and LNG by 2027
BRUSSELS, May 18 — The European Commission will next month propose legal measures to fully phase out the EU's Russian gas imports by the end of 2027, and ban spot contracts with Russia by the end of this year. Here's how that could work. How will the EU ban Russian gas? Sanctions are legally the easiest route for the EU to ban Russian gas and liquefied gas imports. However, they require unanimous approval from all 27 EU countries. Hungary and Slovakia, who want to maintain close political ties with Russia, have vowed to block gas sanctions. The two countries import it via the Turkstream pipeline, and say switching to alternatives would increase energy prices. As a workaround, the European Commission will in June propose alternative measures that can be approved by a reinforced majority of countries — and which can only be blocked by a group of at least four countries. In a closed-door meeting of EU countries' ambassadors last week, all bar Hungary and Slovakia welcomed the plan to ban Russian gas, EU diplomats said. Still, some raised concerns about the legal certainty of the EU plan, and its impact on energy prices. If not sanctions, then how? The Commission has declined to specify the type of legal tools it's working on. EU diplomats point to a few options. One would be to impose tariffs on Russian gas and LNG imports. While not an outright ban, tariffs would aim to make new Russian gas deals economically unfeasible. EU tariffs on Russian fertilisers offer an example of how this could work. There, the EU plans to impose a tariff that rises to 430 euros (US$481.21) per ton within three years — a 'prohibitive' level designed to effectively cut off imports. Such tariffs could also allow European companies with long-term Russian gas contracts to argue that EU regulation has changed to such an extent that the terms of their contracts are unsustainable, and invoke 'force majeure' to exit these deals. Lawyers have warned, however, that companies could face financial penalties for doing this. How can a ban be enforced? Governments say more transparency on Russian gas trades will be crucial. To achieve this, the EU could use the 'Union Database', a European Commission platform which tracks EU imports of biofuels. That tool could be re-purposed to track Russian gas and reveal which companies are trading it, allowing officials to target suppliers or traders that breach the ban. The Commission's June proposals will also include obligations for companies to disclose information on their Russian gas deals. Who will be most affected? Around two-thirds of Europe's Russian gas imports are under long-term contracts, which the EU plans to ban by end-2027. The rest is spot trades. Russia supplied 19 per cent of EU gas imports last year, through LNG and via the TurkStream pipeline supplying Hungary and Slovakia. That is far below the roughly 45 per cent of Europe's gas that Russia supplied before its full-scale invasion of Ukraine in 2022. Russia's share is expected to fall further, to 13 per cent this year, after deliveries to Europe via Ukrainian pipelines stopped at the end of 2024. Most EU countries that previously received Russian pipeline supplies have switched to alternatives. Austria, which received Russian gas via Ukraine until late 2024, now imports gas from routes including via Germany and Italy, typically from a mix of suppliers. For Hungary and Slovakia, moving to alternatives will cost. Russian pipeline gas was sold at a 13-15 per cent discount to other options last year, according to analysis by the Center for the Study of Democracy. For LNG, the picture is different. Belgium, France and Spain import most of the Russian LNG entering Europe, and can more easily replace this with other supplies from other sources, such as the US, which the EU is under pressure from President Donald Trump to do. However, some Russian LNG is under long-term contracts that, unless interrupted, would run until as late as 2041. Companies with these contracts include TotalEnergies, SEFE and Naturgy. — Reuters
Reuters
16-05-2025
- Business
- Reuters
Explainer: How could the EU ban Russian gas?
BRUSSELS, May 16 (Reuters) - The European Commission will next month propose legal measures to fully phase out the EU's Russian gas imports by the end of 2027, and ban spot contracts with Russia by the end of this year. Here's how that could work. Sanctions are legally the easiest route for the EU to ban Russian gas and liquefied gas imports. However, they require unanimous approval from all 27 EU countries. Hungary and Slovakia, who want to maintain close political ties with Russia, have vowed to block gas sanctions. The two countries import it via the Turkstream pipeline, and say switching to alternatives would increase energy prices. As a workaround, the European Commission will in June propose alternative measures that can be approved by a reinforced majority of countries - and which can only be blocked by a group of at least four countries. In a closed-door meeting of EU countries' ambassadors last week, all bar Hungary and Slovakia welcomed the plan to ban Russian gas, EU diplomats said. Still, some raised concerns about the legal certainty of the EU plan, and its impact on energy prices. The Commission has declined to specify the type of legal tools it's working on. EU diplomats point to a few options. One would be to impose tariffs on Russian gas and LNG imports. While not an outright ban, tariffs would aim to make new Russian gas deals economically unfeasible. EU tariffs on Russian fertilisers offer an example of how this could work. There, the EU plans to impose a tariff that rises to 430 euros ($481.21) per ton within three years - a "prohibitive" level designed to effectively cut off imports. Such tariffs could also allow European companies with long-term Russian gas contracts to argue that EU regulation has changed to such an extent that the terms of their contracts are unsustainable, and invoke "force majeure" to exit these deals. Lawyers have warned, however, that companies could face financial penalties for doing this. Governments say more transparency on Russian gas trades will be crucial. To achieve this, the EU could use the "Union Database", a European Commission platform which tracks EU imports of biofuels. That tool could be re-purposed to track Russian gas and reveal which companies are trading it, allowing officials to target suppliers or traders that breach the ban. The Commission's June proposals will also include obligations for companies to disclose information on their Russian gas deals. Around two-thirds of Europe's Russian gas imports are under long-term contracts, which the EU plans to ban by end-2027. The rest is spot trades. Russia supplied 19% of EU gas imports last year, through LNG and via the TurkStream pipeline supplying Hungary and Slovakia. That is far below the roughly 45% of Europe's gas that Russia supplied before its full-scale invasion of Ukraine in 2022. Russia's share is expected to fall further, to 13% this year, after deliveries to Europe via Ukrainian pipelines stopped at the end of 2024. Most EU countries that previously received Russian pipeline supplies have switched to alternatives. Austria, which received Russian gas via Ukraine until late 2024, now imports gas from routes including via Germany and Italy, typically from a mix of suppliers. For Hungary and Slovakia, moving to alternatives will cost. Russian pipeline gas was sold at a 13-15% discount to other options last year, according to analysis by the Center for the Study of Democracy. For LNG, the picture is different. Belgium, France and Spain import most of the Russian LNG entering Europe, and can more easily replace this with other supplies from other sources, such as the U.S., which the EU is under pressure from President Donald Trump to do. However, some Russian LNG is under long-term contracts that, unless interrupted, would run until as late as 2041. Companies with these contracts include TotalEnergies, SEFE and Naturgy. ($1 = 0.8936 euros)
