EU sanctions state-linked Chinese oil companies over Russia war support

view original post

The European Union has sanctioned two mainland Chinese oil refineries and one Hong Kong-based oil trader as part of its latest efforts to hobble Russia’s war economy, drawing a stern rebuke from Beijing.

The companies were listed in a broader package of sanctions agreed by the EU’s 27 member states on Thursday morning, punishing in total 15 mainland Chinese or Hong Kong-registered entities over what Brussels considers illicit trade with Russia.

China’s foreign ministry hit back immediately, reiterating its stance that it “has never provided lethal weapons to any party to the conflict and exercises strict export control over dual-use articles”.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

“Most countries in the world, including those in Europe and the United States, continue to trade with Russia,” the ministry said in a statement on Thursday.

“The EU and the US are in no position to point fingers at normal exchanges and cooperation between Chinese and Russian companies,” it added.

Refineries Liaoyang Petrochemical Company – a subsidiary of state-owned China National Petroleum Corporation (CNPC) – and Shandong Yulong Petrochemical, as well as oil trader Chinaoil (Hong Kong) Corporation – another CNPC subsidiary – have been placed under full sanctions, as was Tianjin Xishanfusheng International Trading Company, a trading firm.

Two subsidiaries of state-owned China National Petroleum Corporation were sanctioned. Photo: Reuters alt=Two subsidiaries of state-owned China National Petroleum Corporation were sanctioned. Photo: Reuters>

This means any EU-held assets will be frozen and that there is a full trade and investment ban with EU firms.

The refineries are accused of refining and processing “crude oil, including Russian-origin crude … which provides a substantial source of revenue to the government of the Russian Federation, thereby supporting Russia’s war of aggression against Ukraine”.

The move comes despite the fact that two EU member states – Hungary and Slovakia – continue to buy Russian oil. The EU allows Hungary and Slovakia to keep importing Russian oil under a temporary legal exemption for landlocked states that still rely on pipeline deliveries for domestic use.

Eleven other companies are listed under an export blacklist known as Annex IV, meaning European firms cannot sell to, buy from or provide technical help for them for any goods listed as dual use under EU law.

These companies are primarily electronics, logistics and trading firms accused of supplying or easing the transfer of dual-use goods to Russia’s defence sector.

They include component distributors and manufacturers in mainland China and Hong Kong, as well as traders and intermediaries that re-export chips, fibre-optic parts and precision machinery.

The latest sanctions package is designed to choke off the remaining lifelines to the Russian economy, as Europe and the United States seek to exert greater pressure on Russian President Vladimir Putin.

It expands controls on advanced semiconductors, navigation systems and industrial machinery used in Russian weapons production.

It also blacklists dozens of shipping firms and tankers moving Russian crude outside an oil price cap agreed by the G7 group of major advanced economies in December 2022.

The sanctions package was formally agreed after Slovakian Prime Minister Robert Fico dropped his veto on Wednesday evening, and it comes on the heels of new sanctions from the United States targeting Russian oil giants Lukoil and Rosneft.

The EU sanctions could further fray Brussels’ ties with Beijing, which are already in dire straits from the geopolitical fallout of China’s close ties with Russia and frustration in Europe over its trade practices.

Beijing’s recently expanded export controls on rare earth elements and magnets were likely to be discussed by EU leaders during a meeting of the European Council on Thursday.

Powerful member states France, Germany and Poland are expected to broach the restrictions, which have seen some European production lines grind to a halt.

In draft written conclusions to the summit, the bloc’s leaders are poised to back stronger action on trade but stop short of naming China.

“In order to deter and counter unfair trade practices, the European Council invites the Commission to make effective use of all EU economic instruments,” the draft stated on Thursday afternoon.

German Chancellor Friedrich Marz believed the Chinese leadership “must understand that we cannot accept what is currently happening”.

“Nevertheless, we are striving to find a mutual resolution and do not wish to escalate the conflict,” Merz said on Thursday, Agence France-Presse reported.

While the discussion was unlikely to result in concrete measures taken against China, European Commission leaders have said that action is on the way.

“We are examining possible countermeasures if conditions do not improve. We have not yet named any specific instruments, but the discussion is ongoing,” EU economy commissioner Valdis Dombrovskis told German newspaper Handelsblatt.

On Tuesday, EU trade chief Maros Sefcovic spoke with Chinese Minister of Commerce Wang Wentao, with the latter accepting an invitation to “urgent” talks in Brussels to break the rare earths deadlock.

However, the South China Morning Post understood that Wang was likely to send a senior delegation below the ministerial level, with the meeting earmarked for next week.

In a speech at the European Parliament on Wednesday, European Commission President Ursula von der Leyen hinted that further action was coming.

“In the coming days, I will also engage very closely with European leaders and international partners, as a crisis in the supply of critical raw materials is no longer a distant risk. It is on our doorstep,” von der Leyen said.

“We have already taken important steps. But now, we must accelerate decisively and urgently. We need a faster, more reliable supply of critical raw materials, both here in Europe and with trusted partners.”

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.