Eni Suspends the Purchase of Oil from Russia

MILAN (Reuters) — Italian energy group Eni has suspended the purchase of oil from Russia following its invasion of Ukraine and is watching developments closely with regards to gas procurement.

"Eni has suspended the stipulation of new contracts related to the procurement of oil and oil products from Russia," the company said.

Western sanctions imposed after the invasion of Ukraine have already cut off Russia from international trade and financial markets. Until this week its energy exports were exempted from the sanction’s regime.

But on Tuesday, U.S. President Joe Biden announced a broad ban on oil and other energy imports from Russia which is the world's biggest exporter of oil and natural gas. 

Eni, which had already frozen joint ventures with Russian oil group Rosneft following sanctions imposed in 2014, also has long-term take-or-pay gas contracts with Gazprom.

Earlier on Wednesday, when asked what it would do with these contracts if sanctions on Russia's energy sector tightened, it said it would fully "honor every decision taken by the European and Italian institutions".

This week European Union leaders are set to try and phase out the EU's dependency on Russian energy sources, including Russian gas which accounts for 45% of the bloc's import requirement. 

Eni, in which the biggest shareholder is the Italian state, bought 22.5 billion cubic meters (Bcm) of Russian gas in 2020 out of a total of around 62 Bcm.

Last week it said it would sell its stake in the Blue Stream pipeline carrying Russian gas to Turkey co-owned with Russian gas giant Gazprom.

Italy, which uses gas to generate some 40% of electricity, imports more than 90% of its gas needs, with Russian piped flows accounting for around 40%.

Since Russia invaded Ukraine, Italy has ramped up efforts to secure alternative gas sources in producer countries like Algeria, Qatar and Azerbaijan.

Eni, which has extensive gas resources in Africa, has strategic long-term gas contracts with Algerian state energy giant Sonatrach.

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