The EU has sanctioned China’s state-backed trading arm and two major refineries as part of a broad 19th Russian sanctions package, which mounts pressure on the Kremlin’s foreign trade partners and bans transactions with energy majors Rosneft and Gazprom Neft, as per Chemweek.
A statement on X from European Commission President Ursula von der Leyen confirmed that EU member states had approved the bloc’s 19th sanctions package against Russia, after a unanimous vote on new measures designed to squeeze the Kremlin’s oil and gas revenues.
A further Oct. 23 statement from the commission outlined sweeping new measures clamping down on major Russian oil traders, including Litasco Middle East DMCC, a subsidiary of state-owned energy company Lukoil, and Chinaoil, the trading arm of PetroChina. The parent company is China’s largest energy firm and marks the first major state-backed Chinese entity to be targeted by EU sanctions.
New measures also sanctioned two of China’s state-owned refineries, which are also major producers of petrochemicals: Yulong Petrochemical Co. and Liaoyang Petrochemical Co. They identify the companies as major consumers of Russian oil. The 400,/d Yulong, which was also recently sanctioned by the UK, sources millions of barrels of Russia’s Urals crude through the Eastern Siberia-Pacific Ocean oil pipeline, and PetroChina’s Liaoyang subsidiary is the only Chinese refinery running exclusively on Russian oil, the document said.
The full sanctions package designates 69 individual entities, including three in India and 12 in China. Additionally, the bloc listed a Tartarstani conglomerate active in the oil sector, five Russian banks and one crypto exchange.
The commission confirmed a decision to impose a full transaction ban on Russia’s state-owned oil companies Rosneft and Gazprom Neft, which were previously afforded energy-related exemptions. The move follows similar steps from the UK and US authorities, which recently sanctioned Rosneft and Lukoil, another energy heavyweight.
Rosneft and Gazprom Neft were already subject to partial restrictions, including sanctions on Rosneft’s shipping arm and the Vadinar refinery in India, but had so far avoided blanket transaction bans. The two companies are together responsible for supporting 2 million b/d of oil from Russian ports, according to S&P Global Commodities at Sea data.
Gazprom, Gazprom Neft and Rosneft own 20 Russian refineries in total with a combined crude processing capacity of about to 3 million b/d, although intensive Ukrainian drone attacks have recently hit operations across the country.The transaction ban may further complicate BP’s already stalled effort to sell its 19.75% stake in Rosneft, which has been subject to a Russian government veto. BP will also be unable to access dividends in the interim. BP declined to comment when contacted by Platts.
Rosneft Deutschland also still holds stakes in three German refineries under government trusteeship since 2022. It was last instructed to sell the assets before a deadline of March 10, 2026.
UK sanctions provided an exemption for Rosneft’s German subsidiary to preserve the country’s refining operations.
“While it is early days in the same way that the UK has provided exemptions, I expect the EU and US to have either designed their sanctions, or put in place appropriate permissions, to allow the Rosneft entities under German trusteeship to continue operating,” said Mark Hunting, a partner at energy law firm Bracewell.
A US announcement designating the two Russian energy companies on Oct. 22 triggered a rally in December Brent crude oil futures, which jumped to $65 per barrel during Asian trading hours after a week of languishing around five-month lows.Rosneft and Lukoil have not publicly responded to the US sanctions, which give companies until Nov. 21 to wind down operations. Lukoil postponed a board meeting scheduled to discuss dividends on Oct. 23, citing “the current circumstances.”
The Russian government also has yet to comment.In an effort to combat circumvention of existing measures, the commission also designated 117 new shadow tankers used to sell Russian oil above its price cap and maritime registries providing false flags. New listings add to an existing blacklist of 442 vessels from previous EU enforcement efforts.
“This is a major blow to Russia’s war machine,” Dan Jorgensen, the EU’s commissioner for energy, said in a statement.New regulations shift the focus to the Chinese refining sector after months of scrutiny of the Indian market by the US and Europe under its 18th sanctions package. Market sources call the new measures a major escalation from EU authorities but express uncertainty over future trade repercussions.
A Beijing-based energy expert, who was not permitted to comment publicly, said the sanctions could be unlikely to disrupt pipeline supplies delivered under government-to-government arrangements, despite new restrictions on Rosneft and its buyers. Traders agreed that pipeline flows could prove difficult to monitor for EU officials.
Responding to the announcement, a spokesman with China’s Ministry of Foreign Affairs said, “China expresses strong dissatisfaction with this and firmly opposes it, having already made stern representations to the European side.” Petrochina was not immediately available for comment. Meanwhile, EU ministers said the bloc is already working on its next round of sanctions. In an Oct. 21 speech at the EU’s Foreign Affairs Council, commission vice president Kaja Kallas said lawmakers were discussing additional measures, including a tougher stance on shadow tankers and additional restrictions targeting third countries.
Future measures may include stronger permissions for authorities to board suspected shadow tanker vessels, as well as a more robust EU-wide approach to combat the growing shipping network, she said. “After the 19th package, we should also work on the next package,” she said.
Source: Reuters
