Sanctions loophole lets Russian oil into Britain through back door

A LOOPHOLE in British sanctions on Russian oil allows imports through the back door, campaigners have claimed – threatening to undermine efforts to squeeze the Kremlin’s vast fossil fuel revenues.

Campaigners Global Witness said sanctions threaten to be “nothing more than a press release”, as it emerged that refined products made from Russian crude may still be allowed into the country.

Global Witness, which has been working with the Ukrainian government, argued the UK’s sanctions have “prioritised the fossil fuel industry” over efforts to punish Moscow after the terms of the ban emerged.

Kwasi Kwarteng, the then-business secretary, announced in March that the UK would ban imports of Russian oil by the end of the year, arguing the government was sending “a clear message to Putin’s regime”. The embargo was announced weeks after Russia’s invasion of Ukraine.

The ban came into force on Dec 5 after it was brought forward to align with an EU ban on crude imports. It covers the import of all oil and oil products that come from Russia, including crude oil and refined products.

However, the rules say that the product will “have the origin of the last country in which substantial processing has taken place that is economically justified”.

The policy states: “For example, if crude oil from the United Arab Emirates is refined in Sweden to produce diesel, these would be deemed to originate in Sweden. Another example is Russian intermediate feedstocks or products imported into Sweden and then processed to make a new UK-specification finished product would be deemed to originate in Sweden.”

Campaigners fear the loophole could see countries that have not banned Russian crude imports used as a backdoor for Russian oil exports into the UK, denting the impact of sanctions.

Louis Wilson, senior campaigner at Global Witness, said: “The UK’s energy sanctions have sadly prioritised the fossil fuel industry over the Ukrainian people. Allowing Russian oil into the UK, so long as it’s been refined elsewhere on its journey, threatens to reduce our embargo to nothing more than a press release’’.

While the EU has banned Russian crude imports, it is not set to ban all Russian oil imports until Feb 5. Countries including Turkey and India have not introduced bans at all.

Before the invasion of Ukraine, the UK bought about 8pc of its oil products from Russia, including roughly one fifth of its diesel, making the UK an important source of funds for the Kremlin.

Britain’s rules are clear that any processing to change the product must be done for normal commercial purposes, not to avoid the sanctions regime.

“Processing is not economically justified where a person causes the goods to be processed to obtain a different origin with the purpose of avoiding a prohibition on import,” the government

‘The UK energy sanctions have sadly prioritised the fossil fuel industry over the Ukrainian people’

terms state. Western countries have been stepping up efforts to restrict Russia’s revenues from oil. Many companies also have self-imposed sanctions on trading Russian oil.

As well as bans on imports, G7 countries have introduced a price cap which prohibits shipping, insurance and reinsurance companies from handling cargoes of Russian crude, unless it is sold for less than $60 (£49).

Experts note that restrictions, as well as the reputational risk associated with buying Russian fuel, are likely to limit volumes finding their way into Europe in practice.

The Government has been approached for comment.