EU to agree on Russia oil ban in principle, but at odds over practice

© Reuters. FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, January 18, 2018. REUTERS/Francois Lenoir/File Photo

By Jan Strupczewski and John Chalmers

BRUSSELS (Reuters) - European Union leaders are set to agree in principle to ban oil imports from Russia at a summit on Monday and Tuesday in Brussels, but after weeks of haggling they will leave decisions on how it will work for later, diplomats said.

"We're going towards a deal on a sixth package of sanctions," French President Emmanuel Macron said as he arrived at a meeting of centrist leaders ahead of the summit.

According to a new draft of the summit conclusions, the 27 nations will agree that Russian oil imports into EU countries will be banned, though with a temporary exemption for crude delivered by pipeline.

The text seen by Reuters - which may still be revised again - would confirm an agreement on seaborne oil sanctions, with pipeline oil supplied to landlocked Hungary, Slovakia and the Czech Republic to be sanctioned at some later point.

However, the leaders gathering in Brussels in the afternoon will not finalise the terms for that temporary exception, the text suggested.

Instead, they will ask diplomats and ministers to find a solution that would also ensure fair competition between those still getting Russian oil and those cut off.

Some EU leaders poured cold water on Monday on any prospect for a comprehensive deal at the summit, with Estonia's Prime Minister Kaja Kallas saying it was more realistic to expect an agreement next month.

"I don't think we'll reach an agreement today. We'll try to reach an agreement by the summit in June, this is the realistic approach by now," Kallas said.

The next summit is scheduled for June 23-24.

Belgian Prime Minister Alexander De Croo said "these are not easy decisions," adding: "I have no doubts that within the next days, the next weeks, decisions will be taken."

SIXTH PACKAGE

An agreement in principle on the oil ban could help unlock the rest of a sixth package of EU sanctions, including cutting Russia's biggest bank, Sberbank, from the SWIFT messaging system, banning Russian broadcasters from the EU and adding more people to a list whose assets are frozen.

One tangible outcome of the summit will be agreement on a package of EU loans worth 9 billion euros ($9.7 billion), with a small component of grants to cover part of the interest, for Ukraine to keep its government going and pay wages for about two months. A decision on how to raise the money will be made later.

According to the draft summit conclusions, leaders will also back the creation of an international fund to rebuild Ukraine after the war, with details to be decided later, and will touch on the legally fraught question of confiscating frozen Russian assets for that purpose.

The leaders will pledge to accelerate work to help Ukraine move its grain out of the country to global buyers via rail and truck as the Russian navy is blocking the usual sea routes and to take steps to faster become independent of Russian energy.

The draft showed leaders would explore ways to curb rising energy prices, including the feasibility of introducing temporary price caps, to cut red tape on rolling out renewable sources of energy and invest in connecting national energy networks across borders to better help each other.

But in another sign of how EU leaders are struggling to agree on more sanctions, a planned ban on Russians acquiring property in the EU was dropped after Cyprus objected to it, one EU diplomat said. ($1 = 0.9296 euros)