Czech Republic given temporary exemption on pipeline oil deliveries as EU agrees on new sanctions against Russia

Druzba pipeline

After hours of struggling to resolve their differences, EU leaders on Monday agreed to block more than two-thirds of Russian oil imports to member states in a deal that will cut off a huge source of financing for Russia’s war machine. The Czech Republic, Slovakia and Hungary received a temporary exemption for pipeline oil until they can completely cut their dependency on oil imports from Russia.

Cutting Europe’s dependence on Russian oil fast in order to stop financing Putin’s war machine is not proving easy and for a while it seemed that this issue could break up the unity that the 27-member alliance has shown in the face of Russia’s aggression.

However, late on Monday, European Council chief Charles Michel was able to announce a break through – agreement in principle on a 6th package of measures directed against the Putin regime. These include a ban on all Russian oil being transported to the EU over sea, which amounts to two-thirds of the total oil imports to the EU, cutting off Russia’s largest bank Sberbank from the Swift international payment system and more restrictions on individuals responsible for the war crimes in Ukraine.

Petr Fiala | Photo: Office of Czech Government

Under a compromise that opened the way to an agreement, landlocked countries, such as the Czech Republic, Slovakia and Hungary, will be given a temporary exemption for pipeline oil imports until they can secure alternative sources.

Czech Prime Minister Petr Fiala, welcomed the outcome of the talks, praising the fact that the EU’s unity had not been broken in the face of severe economic pressure and that the solidarity principle in helping individual states to overcome the crisis was being implemented.

It is not yet clear how it will be employed with regard to those states which will have to start paying more for overseas imports of oil from other sources than Russia. Importing Russian oil via the Druzba pipeline will eventually be banned as well. No deadline for that has been set, but according to European Commission President Ursula von der Leyen, the ban on pipeline oil deliveries should happen "as soon as possible". In practice, this could mean several years.

The Czech Republic was granted one more exemption - for imports of diesel made from Russian oil. Around 30 percent of diesel consumed in this country is imported, mainly from the Slovnaft refinery in Slovakia. For this reason the Fiala government opposed Poland’s demand for a ban on imports from one EU country to another so that some countries would not benefit from the re-export of Russian oil.  In the end, the Czech Republic was granted an exemption - it will be able to import diesel from other EU states for another two years.

I asked Pavel Havlíček from the Association for International Affairs whether this scenario is doable for the Czech Republic.

Pavel Havlíček | Photo: Archive of Pavel Havlíček

“I would say that this is more than doable actually. The conditions that were negotiated by the Czech prime minister and his team were, I think, quite favourable for the Czech Republic. The government of Petr Fiala presented a five-year plan to completely cut the country off from Russian energy supplies –this does not refer only to oil, but more importantly to gas deliveries which are the reason why Czechia is still quite dependent on Russia. These two commodities are creating a lot of problems. My rough estimate is that we can cut our dependency much earlier than this. We know that the country will do its absolute best to align with the sanctions –specifically on oil – within a shorter period of time. I know there were negotiations for a two-year exemption period for gas, but we know how much more difficult the issue of Russian gas is for many other European countries so my assumption is that breaking this dependency will take longer than the two year period.”

Prime Minister Petr Fiala said recently that the Czech Republic’s dependence on Russian fuels is one of the country's "greatest security risks", adding that the energy sector needs to change “completely.” The Czech Republic is more than 90 per cent dependent on Russian gas, and its dependence on Russian oil supplies is near 50 percent.

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