BRUSSELS, May 27 (Reuters) - EU countries scrambled on
Friday to reach a deal that would embargo seaborne deliveries of
Russian oil but still allow deliveries by pipeline, a
compromise to win over Hungary and unblock new sanctions against
Moscow, officials said.
An agreement could be reached by envoys of European Union
governments in Brussels on Sunday, in time for their leaders to
endorse it at their May 30-31 summit, officials said, noting the
urgency after almost a month of negotiations had failed.
Hungary has held up the EU's sixth package of sanctions
against Russia over its invasion of Ukraine, It says halting
Russian oil imports would be a body blow to its economy because
the landlocked country cannot easily get oil from elsewhere.
That has delayed implementaton of other elements of the
sanctions package: disconnecting Russia's biggest bank, Sberbank
, from the SWIFT messaging system, banning Russian
broadcasters from the EU and adding more people to a list of
individuals whose assets are frozen and who cannot enter the EU.
Hungary's opposition to an oil embargo has threatened to
turn next week's summit into a public relations disaster,
exposing disunity within the EU, officials said.
"It would be humiliating not to discuss the sanctions at all
because there is no agreement, or to remove the oil embargo part
of the package completely only to push through the other
elements," one EU official said.
"So the idea is to have an embargo on Russian oil and exempt
the Russian Druzhba pipeline supplying Hungary only for some
time, to give the (European) Commission and Hungary time to
solve the problem," the official said, underlining that an
agreement before the summit was far from guaranteed.
Hungary says it needs up to four years to shift away from
Russian crude, requiring investments of about 750 million euros
($804 million) to upgrade refineries and expand a pipeline
bringing oil from Croatia.
It says the longer-term conversion of its economy away from
Russian oil could cost as much as 18 billion euros, and it is
looking to the EU to provide the funds for such a transition.
The Druzhba pipeline runs through Slovakia, the Czech
Republic and Hungary, the three landlocked EU countries that
would have the biggest problem finding alternative oil supplies
and which have voiced objections to an oil embargo.
According to the Brussels-based Bruegel think-tank, only a
quarter of Russian oil bought by the 27-nation bloc, Russia's
biggest oil customer, is delivered by pipeline.
Three-quarters of the Russian oil for Europe is delivered by
tankers, so an embargo on seaborne deliveries would still have a
massive impact on Russia's revenues from oil, reducing its
ability to finance its war in Ukraine.
But it would also create competition problems in the EU,
because Hungary, Slovakia and Czechia would get cheaper Russian
oil for their refineries - which can sell their products all
over the EU - while other countries' refineries would have to
pay more for imported Brent crude.
Officials had no immediate solution to that problem yet.
($1 = 0.9327 euros)
(Reporting by Kate Abnett and Jan Strupczewski; Writing by John