EU aims to phase out Russian oil purchases

The European Union is moving toward phasing out Russia oil imports by the end of this year after Germany changed its mind but warned of major blowback on EU economies.

The move came after an EU decision last month to ban Russian coal imports starting in August.

German Vice-Chancellor and Economic Affairs Minister Robert Habeck said on Monday that Germany would be able to cope if Russian oil supplies were cut off by an embargo or a decision by Moscow to switch off the tap.

Habeck's comment, ahead of an EU energy ministers meeting on Monday in Brussels, marked a major shift in the German government's stance. Previously, German leaders had opposed the idea and said a ban on Russian oil and gas would cause an economic recession, massive unemployment and poverty at home. Germany is the largest EU importer of Russian oil, gas and coal, for which it paid more than 40 billion euros ($42 billion) last year.

Its change of attitude came after the European Commission indicated that it is not pushing for an immediate total ban, but rather a phaseout by the end of the year, to address Germany's concern and to minimize the negative impact on global oil markets.

The energy ministers also discussed on Monday the EU's sixth round of sanctions on Russia being drafted by the European Commission. Ambassadors from EU member states meeting on Wednesday would have to unanimously approve any plan for it to become effective.

The European Commission is expected to publish later this month plans to end the EU's dependence on Russian fossil fuels by 2027, including expanding the renewable energy sector.

While expressing Germany's willingness to move toward cutting off Russian oil, Habeck warned of higher energy prices for EU consumers and a blow to EU economies.

Referring to the ban, he said, "We will be harming ourselves－that much is clear."

The EU receives about 40 percent of its gas imports and 26 percent of its oil imports from Russia.

Habeck, a former co-leader of Germany's Green party, said that the country has made "great progress "in finding alternatives to Russian coal and oil, "but other countries may need more time".

He cautioned that an embargo on Russian oil was an ambiguous weapon that could result in steep rises in energy prices, ultimately benefiting Moscow.

Reuters quoted two EU officials as saying that the EU may spare Hungary and Slovakia from an embargo on Russian oil. Both rely heavily on Russian fossil fuels.

Hungary has repeatedly voiced opposition to sanctions on Russian energy, emphasizing its concerns were economic, not political. Meanwhile, Poland and the Baltic states have been pushing for an immediate ban on Russian oil imports.

The EU energy ministers also discussed on Monday Russia's decision to cut gas supplies to Poland and Bulgaria after the two countries failed to comply with Moscow's order to settle payments in roubles via Russia's Gazprombank.

The EU warned its member states on Monday that to use the system set up by Russia would breach EU sanctions. Several EU companies have said that they would comply with Russia's demand because a cutoff would damage the economy and many member states expressed they were not sure of the exact guidelines on the issue.

Kadri Simon, the European commissioner for energy and an Estonian politician, said at a news conference on Monday after the energy ministers' meeting that Russia's decision constitutes "an unjustified breach of existing contracts and a warning that any member state could be next".

Agencies contributed to the story.