Slovakia, Hungary rebuff EU call to replace lost Russian oil via Croatia

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BUDAPEST (Reuters) -Slovakia and Hungary on Friday rebuffed a European Commission suggestion that they could replace lost Russian oil supplies via an alternative route through Croatia, saying it would be too costly.

Supplies from Russia’s biggest oil exporter Lukoil through Ukraine were halted in July following a ban by Ukrainian authorities on Lukoil using the Druzhba pipeline, which links Russia to eastern Europe.

Hungary and Slovakia earlier this month asked the European Commission to step in and mediate as the threatened their security of supply.

But they are rejecting the European Commission’s proposal to use spare capacity on the JANAF Adriatic pipeline in Croatia to supply both countries with oil not sourced in Russia.

“Croatia is simply not a reliable country for transit,” Hungary’s Foreign Minister Peter Szijjarto said. “Oil transit prices were raised fivefold since the outbreak of the (Ukraine) war by Croatia.”

“It is a politically deeply offensive statement that we did not expect from the representative of the country to which ill-intentioned moves we have long responded with extreme restraint and moderation,” Croatia’s Foreign Minister Gordan Grlic Radman said.

Slovakia, whose Hungarian-owned Slovnaft refinery already takes some oil via JANAF, also known as Adria, said on Friday it received a letter from the Croatian government offering to secure supplies.

“But for what price? What capacity? No one knows that today,” Slovak Foreign Minister Juraj Blanar said in a statement.

Slovakia wants the Commission to get Ukraine to fully reinstate flows from Russia, but he said it will also search for another solution in case the Commission does not act.

Following Russia’s 2022 invasion, European Union prohibited oil imports to its member states in an attempt to wean itself off from Russian fossil fuels, but gave an exemption to Hungary, Slovakia and the Czech Republic to find alternative routes and supplies.

Flows from Russian suppliers other than Lukoil via Druzhba have continued.

EU commissioner Valdis Dombrovskis said Ukraine had confirmed that Lukoil oil flowing through Ukraine was at that point of its journey already owned by other entities and thus sanctions do not apply to it, raising questions about the cause of the interruption to the flow.

Despite drawn-out talks over transit fees, Croatia’s JANAF and Hungary’s MOL managed to sign a one-year contract in May 2023, on a transport and storage deal for 2.9 million tonnes of crude on the Adriatic pipeline to MOL’s Hungarian and Slovak refineries.

Hungary on Friday also complained that Croatia has failed to invest in capacity building, and has never proved the figure it has given for the maximum transit capacity of its pipeline.

Janaf dismissed the allegations in a statement, saying that it has been continuously investing into its transport-storage system.

It said it has tested its transport capacities on the section towards Hungary along with MOL and proved it can transport 1.2 million tonnes of crude oil monthly.

“It is totally untrue that Janaf raised its fees in the past three years,” it said in the statement.

“Janaf is ready both technically and organisationally to supply the central European refineries with enough quantities of oil for the full capacity work. That is why we hope that we would find a satisfying solution for the continuation of long-term partnership through open talks and cooperation,” it said.

(Reporting by Boldizsar Gyori, Jan Lopatka in Prague, Bart Meier in Amsterdam, additional reporting by Daria Sito-Sucic; editing by Mark Heinrich, Conor Humphries and David Gregorio)