European Commission Rejects Hungary and Slovakia’s Complaints Over Ukraine’s Ban on Russian Oil Transit

The European Commission has rejected a request by Hungary and Slovakia for urgent consultations on Ukraine's decision to ban the transit of crude oil from a major Russian supplier. The bloc's analysis shows no immediate security of supply risk for the two countries, and that it is now waiting for further details from Hungary and Slovakia.

European Commission Vice President Valdis Dombrovskis informed Hungary and Slovakia on Thursday that preliminary analysis shows that sanctions imposed by Ukraine on Russia's Lukoil in June do not affect transit operations carried out by trading companies through the Druzhba pipeline as long as Lukoil does not formally own the oil.

The traders involved in the transactions as consignees of the oil are considered to be the owners of the oil in Ukraine. One such company is Litasco SA, which is owned by Lukoil. Others are Tatneft-Europe AG, Blackford Corporation Ltd. and Normeston Trading SA.  Litasco is not under Ukrainian sanctions, Taras Kachka, Ukraine's deputy economy minister, told Bloomberg.

In July, the Russian side cancelled planned shipments to Hungary and Slovakia, where Litasco was listed as the consignee.

According to Eurostat, Budapest's dependence on Russian crude oil increased last year compared to 2021, and should have decreased in accordance with EU policy. 

Earlier, Slovakia and Hungary said they had stopped receiving oil from their key supplier Lukoil after Ukraine banned the Russian energy company's resources from transiting through its territory via the Druzhba pipeline last month. 

The move angered some officials in Slovakia and Hungary, who argued that blocking the supply would jeopardise their energy security. Last week, the European Commission received a letter from the Hungarian and Slovak foreign ministers complaining about Ukraine's sanctions against Lukoil.