Lukoil, the second-largest oil producer in Russia, was forced to halt its oil transports to the two Eastern European countries of Hungary and Slovakia after being sanctioned by the Ukrainian government. The sanction can be enforced because the company’s oil transport flows through the Druzhba pipeline, which goes through Ukraine.
Slovakia and Hungary were receiving oil from Lukoil, but now both governments have confirmed that those transports have been stopped.
Foreign Minister Péter Szijjártó of Hungary spoke to his Russian counterpart Sergey Lavrov about the issue while both were attending a UN session in New York City, New York on Wednesday, 17 July. After the meeting, Minister Szijjártó told the press that they looking for legal solutions to restart the transit. He informed that gas shipments from Russia to Hungary were flowing unobstructed through the TurkStream pipeline on the Black Sea, but crude oil was no longer transferred by Lukoil through Ukraine. He then went on to talk about the Russo-Ukrainian war in general as well, saying:
‘The situation on the battlefield has not turned out as the Europeans and the Americans had hoped, despite the arms deliveries and sanctions. Therefore a new strategy is needed. If there is no solution on the battlefield, the solution must be found at the negotiating table. However, this requires dialogue, and to do that, we need to reopen diplomatic channels, without which it will be extremely difficult to reach any kind of solution’,
the Minister said, adding that Hungary had drawn different conclusions from the situation than ‘our American and European friends’.
Gas prices have not been greatly affected by the new sanctions in Hungary so far.
There has been a slight uptick since the development, with the national average price for gas going from 612 HUF ($1.70) a litre to 616 HUF ($1.72) a litre. However, this month has seen some increase: a month ago, a litre of gasoline cost 602 HUF ($1.68) at the pumps. This is fairly typical, since increased travel in summer months leads to increased demands, which, in turn, tends to raise the price of gasoline in this season every year.
Slovakia’s Ministry of Economy has released a public statement on the blocking of the Lukoil imports, which is quoted by Reuters to say ‘According to data from [the Slovakian oil transporter] Transpetrol, deliveries of Russian oil to Slovakia were not stopped. The problem is, according to [the Slovakian refiner] Slovnaft, deliveries of a concrete supplier, Lukoil.’
Update:
‘Ukraine’s decision to halt the transit of Russian Lukoil oil to Hungary is both incomprehensible and unacceptable. Although temporary solutions have been implemented to stabilize Hungary’s oil supply, these measures will not suffice in the medium term. Therefore, a permanent solution must be found quickly,’ Péter Szijjártó stated on Friday, 19 July.
He recalled that, until now, there has been fair energy cooperation between Ukraine and Hungary: ‘In the recent past, Hungary has frequently helped Ukraine in various ways to maintain the security of energy supply despite the rather difficult circumstances,’ he pointed out.
Szijjártó said that Ukraine’s decision poses a serious threat to the long-term security of oil supplies to Hungary and Slovakia. ‘We have informed the Ukrainian authorities that this is an incomprehensible, unacceptable, and unfriendly decision on their part. Although they have shown willingness to rectify the situation, efforts have stalled somewhere along the line,’ the Hungarian FM shared.
Szijjártó also informed that the Slovak government has been contacted and that he will raise the issue at the EU Foreign Affairs Council on Monday. ‘It is strange that a country aspiring to join the European Union is seriously endangering the energy supply of two EU member states,’ he stressed. He added that it is particularly dangerous for this to happen in the summer when energy consumption is at its highest, making it especially challenging to compensate for the lost energy supplies.
‘We are working on a solution, even though we did not create this problem; it is up to the Ukrainians to resolve it, and I sincerely hope they will do so soon,’ he concluded.
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