Hungary and Slovakia ask EU to mediate with Ukraine over Lukoil

reuters_tickers

BUDAPEST (Reuters) -Hungary and Slovakia have asked the European Commission to mediate a consultation procedure with Ukraine, Hungary’s foreign minister said on Monday, after Kyiv placed Russian group Lukoil on a sanctions list, stopping its supplies to the two countries.

Slovakia and Hungary have increased pressure on Kyiv after they said last week they had stopped receiving oil from Lukoil via Ukraine. Hungary receives 2 million metric tons of oil from the Russian group annually, around a third of its total oil imports, Peter Szijjarto said.

“I spoke with the Ukrainian foreign minister yesterday. He said they allow every oil transfer through, but it’s not true,” Szijjarto told reporters while in Brussels.

The two countries have initiated a consultation with the European Commission, he said, adding the Commission had three days to respond.

If the consultation procedure did not yield results, Hungary and Slovakia would take the issue to an international court of their choosing instead, he said.

A spokesperson for the European Commission said it had received the request from Hungary and Slovakia and was studying it.

The Ukrainian foreign ministry did not immediately respond to a request for comment, though the head of Ukrainian energy firm Naftogaz acknowledged a lack of oil from Lukoil.

“The volumes of the transited oil in July are the same as in the previous periods. There are no Lukoil volumes but volumes are the same,” Naftogaz CEO Oleksiy Chernyshov said.

Lukoil’s supplies via the Druzhba pipeline’s southern spur account for some 50% of its flows and MOL’s refineries in Slovakia and Hungary totally depend on shipments from Lukoil.

In an attempt to sell oil not sent to Hungary and Slovakia, Lukoil has added some 140,000 metric tonnes of crude oil to its original lifting plan for the Black Sea port of Novorossiisk for July, market sources said.

OTHER SUPPLIERS

The second largest supplier via the route is Tatneft, which also delivers oil to MOL, while Gazprom Neft, Russneft and some other small independent producers provide the rest.

As an alternative, Hungary may import oil from Croatia’s Omisalj sea port via the Adria pipeline, while Slovakia is only able to get oil via Hungary.

Since April, oil imports via Omisalj were around 500,000 metric tons each month, including the grades Basrah, Azeri BTC and CPC Blend.

Russia continues to supply natural gas and oil to landlocked Hungary and Slovakia via Ukraine despite the war in the country and EU sanctions on Russian crude.

The countries have exemptions from oil sanctions to give them more time to transition to alternative sources of supply.

Both Slovakia and Hungary also supply energy to Ukraine.

Szijjarto said Hungary provided 42% of Ukrainian electricity imports last month.

Slovakia’s Prime Minister Robert Fico said over the weekend that his country helped to supply diesel to Ukraine, in comments in which he criticised the sanctions and said Slovakia would not be held hostage to Ukraine-Russia relations.

On Monday, Slovak Foreign Minister Juraj Blanar reiterated some of Fico’s comments, saying that the sanctions had a bigger impact on the Slovakia and the EU than on Russia.

Ukraine’s ban does not affect other Russian oil exporters whose oil was allowed to transit through Ukraine.

(Reporting by Boldizsar Gyori, Editing by Jason Hovet, Jan Harvey and Barbara Lewis)