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EU stumbles over plans to ban Russian oil


Europe Oil embargo


Discussions among the EU-27 states starting on 4 May had by 9 May still failed to reach a consensus on banning Russian oil. Although the G7 group of leading economies has undertaken to phase out their member states’ energy reliance on Moscow, the EU is still in a stalemate, with Hungary blocking any agreement on a sixth package of sanctions that would stop imports of Russian fossil fuels. The Commission proposed on 4 May to ban Russian crude oil imports within six months, and refined products by the end of the year. Provisions had been made to offer one-year exemptions to Hungary and Slovakia, which are landlocked and largely dependent on supplies from Russia. These were then extended to the Czech Republic and pushed back to the end of 2024. But these exemptions didn’t go far enough, and as the discussions progressed,


other member countries (Bulgaria, Greece, Cyprus, and Malta) pointed out their own difficulties.


European Council members appear still to be united on the principle of further sanctions, and that solidarity remains key. They may be nearing a conclusion if an accommodation with some member states can be reached. Security of supply for all, including those who are landlocked and dependent on a Russian pipeline, is the primary concern. Drafting a new document may help overcome the reluctance of Viktor Orban, the Hungarian prime minister. On 6 May, he was reported as saying that the Commission’s proposal of 4 May ‘undermined the unity of the EU’ and that it crossed a ‘red line’ comparing it to ‘an atomic bomb’. Diplomats in Brussels were hoping for a more accommodating attitude from his representatives in Brussels, but this


German government charters four FSRUs via Uniper and RWE


Germany Gas supply In the effort to free Germany from its dependency on Russian gas, a significant milestone has been reached: on behalf of, and in the name of the German government, RWE and Uniper have each chartered two Floating Storage and Regasification Units. FSRUs are specialised vessels that can offer a rapid interim solution for importing liquefied natural gas, LNG, until the first LNG terminals on the German mainland are completed. For the time being, the operational responsibility for its two floating facilities will lie with RWE, which will make all commercial decisions concerning the use of the ships and optimise these assets in the interest of the German government. RWE will have the technical operation handled by Höegh LNG. Both RWE vessels are owned by Höegh LNG, which is the operator of the world’s largest FSRU fleet. Each of the ships is capable of receiving up to 170 000 cubic metres of LNG via tankers in one unloading, converting it to the gaseous state on board and then feeding it into the gas grid. With the two 300-metre-long FSRUs, between 10 and 14 billion cubic metres of natural gas can be made available to the German gas market annually. By comparison, the throughput of a land-based LNG terminal is between 8 and 10 billion cubic metres per year.


The plan is for these two FSRU platforms to start operating by next winter. The framework conditions for the procurement


4 | May 2022 | www.modernpowersystems.com


of liquefied natural gas on the world market remain the responsibility of the German government.


The next step is to determine which unloading sites are suitable for the four FSRUs. Wilhelmshaven, Brunsbüttel, Rostock and Stade have been mooted. A first decision has been announced to make Wilhelmshaven an FSRU location. Uniper has also facilitated the charter of two FSRUs to the German government to diversify and strengthen the security of the country’s gas supply. These are managed by Dynagas Ltd. The two FSRUs, Transgas Forceand Transgas Power, both built in 2021, are said to be among the most modern, safe and environmentally friendly of their kind with a total natural gas-send-out capacity of up to 7.5 bcm/annum and an LNG storage capacity of 174 000 m³ each. The combined capacity is equivalent to approximately 30% of Russian gas imports into Germany. The FSRUs will commence their service early 2023 with first gas send-out depending on the completion of the onshore installations at the sites selected by the German government.


Currently, there are 48 FSRUs in operation worldwide. The technology is well proven, with many years of operational experience. In Europe, similar installations are already in operation in Lithuania, Italy, Croatia and Turkey with several additional locations around Europe currently under preparation.


hope evaporated on 8 May, Sunday, when the Hungarian government confirmed its veto and demanded a complete exemption – having initially called for a five-year exemption – and Bulgaria, in turn, demanded its own exemption. The EU gets about 27 % of its crude oil imports from Russia and a higher share of its oil products, paying billions of dollars a month that have in turn allowed Moscow to build up its military.


The EU banned Russian coal in April, but has so far stopped short of banning its natural gas, which most EU countries rely on for heating and electricity. However it made plans to gradually wean itself off Russian gas in the coming years. The embargo would be a landmark moment in the European bloc’s support of Ukraine – it represents a serious economic hardship that many EU countries are resisting.


Gazprom refuses payments in Euros from German firm Germany Gas trading


On 3 May Russia’s Gazprom bank for the first time refused to accept a payment in euros from a German gas trader. Trading company and former Gazprom subsidiary Gazprom Marketing & Trading, which was placed under German trusteeship in March after Gazprom pulled out, tried to pay for gas deliveries in April and May by using a roubles account but the payment was not accepted, according to a report in the German newspaper Der Tagesspiegel. The federal economy and climate ministry confirmed the rejection and told news magazine Der Spiegel that there are ‘ambiguities in the processing of the payments’. The ministry stated that the payments concerned only marginal gas quantities of about 0.2 % of the Russian import volumes to Europe which would be replaced by purchases on the market and did not endanger supply security in Germany, adding that payments are not to be made in roubles, but in euros, as contractually agreed.


Refusing the payments constitutes a further escalation in the Russian-European energy conflict. It follows shortly after Russia’s announcement to end gas supplies to Poland and Bulgaria. The German government has said that it is ready to impose an embargo on Russian oil imports.


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