Hungary will block the payment of €6.5 billion from the European Peace Facility (EPF) until Kyiv allows Lukoil to resume uninterrupted oil supplies to Hungary and Slovakia via Ukraine. The announcement was made by Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó, according to Reuters.
‘As long as this issue is not resolved by Ukraine, everyone should forget about the payment of the €6.5 billion European Peace Facility compensation for arms transfers,’ Szijjártó underlined.
As reported by Hungarian Conservative, Ukraine has imposed sanctions on Lukoil, Russia’s second-largest oil producer, halting oil shipments to Hungary and Slovakia via Ukraine.
‘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.
The Hungarian FM, along with his Slovak counterpart,
at Monday’s meeting of the EU Foreign Affairs Council. Under the EU–Ukraine Association Agreement, the European Commission is obliged to represent the Member States. According to the agreement, if no solution is found, an arbitration tribunal can be established, and a procedure can be initiated within forty days. If no resolution is reached, the EU has the right to suspend certain treaty obligations, such as duty-free access.
‘Today, together with Slovakia, we have initiated the pre-arbitration consultation with the European Commission. This is an urgent matter, as the security of energy supply is a critical issue. The European Commission has three days to hold this consultation with Ukraine, and if it is unsuccessful, the arbitration procedure will be launched,’ Szijjártó emphasized on Monday.
Also in response to the situation on Tuesday, Hungary’s energy ministry convened a working group concerning the security of supply, which ‘reviewed the steps taken so far and possible next steps,’ according to a statement by the ministry.
Lukoil currently accounts for one-third of Hungarian oil imports and around 45 per cent of Slovakian oil imports, making the Ukrainian ban a fundamental threat to the energy security of both countries. For the time being, the situation has been stabilised with temporary solutions, but in the medium term, the security of oil supplies to Hungary and Slovakia cannot be ensured without Lukoil’s shipments.
Szijjártó described the Ukrainian decision as unfriendly and unexpected, especially considering that the neighbouring country imported most of its electricity from Hungary in June, accounting for 42 per cent of its total imports. ‘Moreover, the company that operates the Hungarian electricity grid has made significant efforts to connect Ukraine to the European grid,’ he added. He further noted that at the beginning of July, Slovakia and Hungary, along with Poland, provided Ukraine with emergency aid to help it maintain its energy system.
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