In Quest of Russian Gas Exit: EU’s Proposed Phased Embargo at Risk of Being Undermined

Written by | Friday, May 6th, 2022

The European Union plans to end Russian gas imports by “the end of the decade,” EU Energy Commissioner Kadri Simson told MEPs during a plenary debate in Strasbourg on Tuesday (3 May), referring to the EU executive’s plan to be unveiled in mid-May. This plan builds on an ambitious strategy — RepowerEU, presented in March — that foresees a cut of Russian gas imports by two-thirds before the end of this year.
This followed a meeting of EU energy ministers on Monday (2 May) to discuss Russia’s decision to cut off gas supplies to Bulgaria and Poland — amid growing pressure to impose stricter sanctions on Moscow. Russia halted supplies there last week after both eastern European countries failed to meet Moscow’s demands for gas payments in rubles. In response to the Kremlin-controlled Russian gas giant Gazprom’s turning off the taps, lawmakers and Simson also debated rising energy costs and scrambled to find a long-term fix to deal with the possible future Russian ‘gas blackmail’. Some MEPs called on the EU energy commissioner to set up a pandemic-type emergency fund to battle exploding electricity bills and speed up renewable projects.
European Commission President Ursula von der Leyen unveiled the 6th package of sanctions against Russia on Wednesday (4 May), including a “complete ban on all Russian oil” and refined petroleum products within the next six months and more sanctions against banks. But the EU’s proposed phased embargo of Russian oil may be tricky to implement, given Europe’s complex distribution network and challenges in tracking crude once it is blended or refined. Experts warn that the plan, if agreed by member states, would take effect in six months for crude, and in eight months for diesel and other oil products. Under the proposal, Hungary and Slovakia would be granted a longer period – until the end of 2023 – to adapt to the embargo. This means that countries in the EU would still be able to purchase Russian oil via Hungary and Slovakia, unless the plan is ratified to prevent both countries from buying more oil than they need. Moreover, European countries might still continue buying Russian cargoes from other third countries without being aware of its origin.
Meanwhile, as Russia’s war continues, the German government has been frantically looking for alternatives to Russian pipeline gas and mobile floating tankers repurposed to process LNG from around the world have become the government’s solution. To ship gas long-distance, it needs to be cooled down to -160° Celsius and compressed into liquid form, reducing its volume by 1/600th, thus turning it into liquefied natural gas (LNG) in a process called liquefaction. To become usable for energy purposes, it needs to undergo re-gasification which requires a special terminal, taking around five years to build. Presented with the pressing need to find alternatives to Russian energy, the German government is betting on more flexible floating terminals and onshore sites. “On the way out of the grip of Russian gas supplies, we in Lower Saxony are ready to take responsibility,” explained Olaf Lief, Energy Minister of Lower Saxony. The state will be home to at least one onshore and one floating LNG terminal. “As early as next year, it will thus be possible to replace part of the Russian gas,” explained Andree Stracke, chairman of RWE’s trading and supply arm.

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