* Sanctions on gas technology likely to be excluded
* Sanctions likely to apply only to future contracts,
* EU aims for final agreement by Tuesday
* EU targets top Russian officials in new sanctions
(Updates with new EU sanctions list)
By Adrian Croft and Barbara Lewis
BRUSSELS, July 25 The European Union reached
outline agreement on Friday to impose the first economic
sanctions on Russia over its behaviour in Ukraine but scaled
back their scope to exclude technology for the crucial gas
The EU also imposed travel bans and asset freezes on the
chiefs of Russia's FSB security service and foreign intelligence
service and a number of other top Russian officials, saying they
had helped shape Russian government policy that threatened
Ukraine's sovereignty and national integrity.
FSB director Alexander Bortnikov and Mikhail Fradkov, a
former prime minister who now heads the foreign intelligence
service, were among 15 Russians or Ukrainians and 18 companies
and other organisations named in the EU's latest sanctions list.
Also sanctioned were the secretary of Russia's Security
Council, Nikolai Patrushev, Chechen leader Ramzan Kadyrov, who
the EU said had made statements supporting Russia's annexation
of Ukraine's Crimea region and the insurgency in eastern
Ukraine, and several Ukrainian separatist leaders.
After months of hesitation, the EU is set to go beyond asset
freezes by imposing sanctions on sectors of the Russian economy.
The 28-nation EU toughened its stance towards Moscow
following last week's downing of a Malaysian airliner, killing
298 people, in an area of eastern Ukraine held by Russian-backed
EU ambassadors reached a preliminary agreement on Friday.
European Council President Herman Van Rompuy wrote to EU
leaders asking them to authorise their ambassadors to complete
an agreement by Tuesday. That would avoid the need for leaders
to hold a special summit to approve the sanctions.
Van Rompuy said the proposed sanctions package "strikes the
right balance" in terms of costs and benefits to the EU and in
its flexibility to ramp up sanctions or reverse them over time.
"It should have a strong impact on Russia's economy while
keeping a moderate effect on EU economies," he wrote in the
letter, seen by Reuters.
But Van Rompuy said the sanctions on access to capital
markets, arms and hi-tech goods were likely to apply only to
future contracts, leaving France free to go ahead with the
controversial delivery of Mistral helicopter carriers being
built for Russia.
The narrowing of the proposed measures highlighted the
difficulty of agreeing to tough sanctions among countries which
have widely different economic interests and rely to varying
degrees on Russian gas.
European Commission President Jose Manuel Barroso said late
on Friday that following the ambassador's discussions the
Commission had adopted a draft legal text for the Russia
"The final decision now lies with the EU's member states,
but I believe that this is an effective, well-targeted and
balanced package providing the flexibility to adjust our
reaction to changes on the ground. I hope that member states
will agree on this package of restrictive measures next week,"
he said in a statement.
The measures are not an end in themselves, "but a means to
achieve a negotiated and political solution to the crisis ... I
call on Russia to take decisive steps to stop the violence and
genuinely engage in peace plan discussions," he said.
EU ambassadors will try to reach a final deal at a meeting
Key measures include closing EU capital markets to
state-owned Russian banks, an embargo on arms sales to Moscow
and restrictions on the supply of dual-use and energy
technologies. They would not affect current supplies of oil, gas
and other commodities from Russia.
Van Rompuy said there was an "emerging consensus" among EU
governments that "the measures in the field of sensitive
technologies will only affect the oil sector in view of the need
to preserve EU energy security."
The Commission had proposed restricting equipment for
deep-sea drilling, shale oil and Arctic energy exploration.
If the sanctions had applied to gas technology, they could
have affected Gazprom's huge South Stream pipeline
project to Europe and Novatek's Arctic Yamal liquefied
natural gas (LNG) facility.
That in turn would have hit large EU energy suppliers and
manufacturers with an interest in the project, including in
Germany, Austria and Italy. The prospect of EU sanctions sent
shares in French energy services firm Technip plunging
8 percent on Thursday.
Gazprom's main partners in South Stream are Italy's Eni
, France's EDF, Austria's OMV and
Germany's Wintershall, a subsidiary of German chemical
Van Rompuy said EU governments also agreed that the
sanctions should not be applied retroactively, particularly in
the area of arms trade and restrictions on access to capital
France was determined to uphold existing contracts with
Russia to preserve a 1.2 billion euro ($1.6 billion) 2011 deal
to supply two Mistral helicopter carriers.
EU governments also agreed that a ban on exports of dual-use
technology - that can be used in both military and civilian
products - would be limited at this stage to military users, Van
The EU's latest list brought the number of people under EU
sanctions to 87 and the number of companies and other
organisations to 20.
FURTHER SANCTIONS LIST
A further sanctions list could be agreed as early as Monday
under new criteria targeting companies and people who support
Russian decision-makers responsible for annexing Crimea or
destabilising eastern Ukraine, Van Rompuy said. New restrictions
on trade and investment in Crimea could also be agreed on
Monday, he said.
Dutch Prime Minister Mark Rutte, whose country is seen as
having a key role in shaping the EU response because it lost 194
citizens in the plane crash, said he would back sanctions unless
Moscow halts weapons supplies to the rebels.
"We want as a country that has acquired a certain moral
obligation as a result of this tragedy to promote Europe taking
a common line on this," he told parliament in The Hague.
(1 = 0.7436 euros)
(Additional reporting by Thomas Escritt in Amsterdam, Alexandra
Hudson in Berlin, Justyna Pawlak, Martin Santa, Paul Taylor and
Julia Fioretti; Editing by Paul Taylor, Mohammad Zargham and Ron