By Francesco Guarascio

BRUSSELS, (Reuters) – The European Commission may offer landlocked countries in the eastern European Union more money for oil infrastructure upgrades to try to persuade them to accept an oil embargo.

These measures form part of a larger package of sanctions on Russia in response to its invasion of Ukraine. However, the text must still be approved on the amount of investment. Another sticking point is Cyprus’s concern about the proposed ban on Russian real estate sales.

The Commission’s original sanction document on horse trading was presented last week. This delayed its approval.

The source claimed that a new draft is being prepared and will likely drop the ban on EU-bound tankers transporting Russian oil. This was in response to pressure from Greece, Cyprus, and Malta.

EU-based companies wouldn’t be allowed to provide insurance or financial services for Russian oil transport worldwide. However, this source said. Noting that the original proposal will remain unaffected.

While most EU countries will need to implement the Russian oil embargo fully by the end the year, Hungary, one of the strongest critics, has been granted an exemption up until 2024. Slovakia and the Czech Republic could also get this exemption through mid-2024.

These three states are the eastern EU’s only ones without access to the ocean and could be subject to a greater economic hit from the ban on Russian oil.

EU officials claim their concerns are justified and now consider spending more to extend and upgrade the pipelines which would transport oil from EU members.

Although the source refused to discuss the amount of the investment, he noted that it wasn’t to be calculated in billions, and was much less.

Over concerns over the rule of law and fears about Hungary’s legal system, the EU has withheld 7.2 billion euros ($7.5billion) from Hungary in EU post COVID recovery funds. Diplomats believe that Budapest might be trying to connect the oil embargo negotiations with the disbursement the block funds.

The source denied this and said that additional funds would be made for investment in pipelines. There was also a discussion about whether the money could be used to improve oil refineries located in Eastern European countries. Many of these oil processing plants can only handle Russian oil.

CYPRUS

Another issue was Cyprus. Many Russians invested in Cyprus property. The EU is trying to prohibit this investment under its new proposals.

According to a source, talks are ongoing on legal issues which would permit a compromise.

Although the ban on financial and insurance services to tankers transporting Russian oil to China is seen as a serious obstacle to Russian oil exports, it remains to be determined how effective.

“Nations with less rigorous sanctions protocols may be in a position to import Russian oil using their own flagged shipping and their own national insurance arrangements,” said Marcus Baker, global head of marine & cargo for insurance broker Marsh.

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