No threat to oil supply security in Hungary, Slovakia, EU Commission says
Adds more detail, background
By Jan Strupczewski
BRUSSELS, Aug 1 (Reuters) -There seems to be no immediate risk to the security of oil supply to Hungary and Slovakia as sanctions imposed by Ukraine on Russian oil producer Lukoil LKOH.MM do not affect the transit of oil via Ukraine to Hungary, the European Commission said on Thursday.
In a letter addressed to foreign ministers of Hungary and Slovakia, European Commission Vice President for Trade Valdis Dombrovskis said that according to information received from Hungary's MOL MOLB.BU, the importer of the Russian oil, the oil becomes property of the trading companies at the Russian-Ukrainian border, and is therefore not subject to sanctions.
"Commission services have preliminarily concluded that urgent consultations do not appear to be warranted as there is no current indication of an immediate risk to the security of supply," the letter, seen by Reuters, said.
Slovakia and Hungary - two countries that have opposed western allies' military aid to Ukraine as it fights Russia's invasion - have been complaining about Kyiv's move to put Lukoil on its sanctions list last month, saying it prevented them from buying Russian oil for their refineries, threatening security of supply.
Sanctions against Lukoil began to take effect at the end of June, but Hungary and Slovakia did not report supply problems until mid-July.
The Druzhba, or "friendship", oil pipeline linking Russia to eastern Europe has remained functioning through more than two years of war, even as the EU weaned itself off most other sources of Russian energy supplies.
The southern branch of the pipeline runs via Ukraine to the Czech Republic, Slovakia and Hungary, and has been the primary source of supply for their refineries for years. Rosneft ROSN.MM, Lukoil and Tatneft TATN.MM have been the main Russian exporters via the route.
The Commission said that a significant number of EU governments have asked why Hungary and Slovakia have not yet diversified away from Russian oil, two years after Moscow invaded Ukraine and the European Union decided to stop buying Russian crude so as not to finance Russia's war effort.
The Commission said that according to its analysis, there was enough spare capacity on the JANAF Adriatic pipeline to supply both countries with oil bought elsewhere than in Russia.
"The objective of diversification away from Russian fossil fuels should be actively pursued," the Commission letter said.
Reporting by Jan Strupczewski, editing by Bart Meijer and Benoit Van Overstraeten
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