EU prepares to mediate in escalating Hungary-Ukraine oil dispute
Hungary and Slovakia have recently threatened legal action against Ukraine. This is due to its decision to limit oil supplies from the Lukoil company. This move has intensified tensions between the countries. Both Hungary and Slovakia are urging the European Commission to mediate in the conflict. The Commission has expressed its readiness to mediate in this escalating dispute. The conflict centers around Ukraine’s decision to enforce stricter sanctions on Lukoil, a Moscow-based company. Thereby, the country aims to restrict the flow of Russian crude oil through Ukrainian territory. This decision, according to Kyiv, aims to cut the Kremlin’s energy revenues. These are sustaining its prolonged military invasion.
Economic Impact and Responses
Budapest and Bratislava have responded vehemently. Both capitals are arguing that the disruption in oil supplies poses a significant threat to their economies. The countries have submitted a joint letter to the European Commission, asking it to intervene and initiate a consultation process under the EU-Ukraine Association Agreement.
A spokesperson for the Commission stated on Tuesday, “We are currently studying the contents of this letter and gathering more information before taking any decision. At the moment, there is no immediate impact on the security of oil supply to the EU.” A meeting of the trade policy committee, requested by Hungary and Slovakia, is set to take place on Wednesday to further assess the situation.
Joint Letter and Diplomatic Efforts
The joint letter was dispatched on Monday, during a meeting of the bloc’s foreign affairs ministers. The Russian aggression was a key topic at the event. Hungary’s representative, Péter Szijjártó, highlighted the issue, calling Ukraine’s decision “incomprehensible, unacceptable, and unfriendly.” He criticized Ukraine for jeopardizing the energy supplies of two EU member states. They added this is unacceptable, because Ukraine is currently aspiring for EU integration.
Juraj Blanár, Slovakia’s representative, echoed these sentiments, describing the restrictions on Lukoil supplies as a “clear violation” of the Association Agreement. Blanár emphasized that Slovakia would defend itself using all available European legal avenues.
Potential Legal Actions
With tensions escalating, Hungary and Slovakia have warned that they may take Ukraine to court, if EU-led mediation fails to yield a satisfactory resolution. Both countries, along with Czechia, are exempted from the EU-wide ban on purchasing Russian crude oil. Viktor Orbán has secured this derogation. The exemption allows these landlocked states to receive oil through the Druzhba pipeline. Lukoil is the primary company that operates this infrastructure. But other companies like Tatneft, Gazprom Neft, and Russneft also make use of it.
The southern branch of the Druzhba pipeline carries approximately 250,000 barrels of Russian oil daily, with MOL Group being the top buyer. Blanár pointed out that EU sanctions allow Slovakia an exemption for oil imports until the end of the year, accusing Ukraine of hindering this exemption.
Broader Political Context
The dispute arises amidst Orbán’s “peace mission,” which included visits to Kyiv, Moscow, and Beijing to discuss ending the Ukraine war. His meeting with Vladimir Putin has sparked controversy and led to a growing boycott against Hungary’s six-month EU Council presidency.
The oil dispute has further complicated Hungary’s relations within the EU. In a recent interview, Szijjártó linked the dispute to Hungary’s veto on EU military assistance to Ukraine, which has blocked €6.5 billion in reimbursements to other member states. He stated, “As long as this issue is not resolved by Ukraine, everyone should forget about the payment of the €6.5 billion in compensation for arms transfers.”
As the European Commission deliberates on its next steps, the outcome of the mediation efforts will be crucial in determining the future of energy security and political stability in the region.
