EU may cut off Russian oil supplies to Hungary and Slovakia via Druzhba pipeline, says Bloomberg

The executive arm of the European Union is reviewing the future of Russian oil imports through the Druzhba pipeline, which supplies crude to Hungary and Slovakia.

Source: Bloomberg, as reported by enkorr.ua, a Ukrainian energy news portal

Details: Sources told Bloomberg that the measures under consideration would primarily target these supplies unless they are phased out. 

Budapest and Bratislava have so far been reluctant to reduce their reliance on Russian oil and have blocked steps they considered threatening to their energy security.

The measures are planned separately from a new sanctions package presented by the EU on Friday. Those proposed restrictions provide for a ban on Russian liquefied natural gas, initially applying to short-term contracts six months after entering into force and then extending to long-term agreements from 1 January 2027.

As part of the package, the EU has also proposed sanctioning over 100 tankers from Russia’s shadow fleet, which Moscow has used to circumvent Western restrictions on its energy sector imposed since its full-scale invasion of Ukraine in 2022, and introducing additional measures against companies facilitating energy trade, including in third countries. 

EU ambassadors were briefed on the proposals on Friday. The sources did not specify the timing or scale of possible trade measures.

Unlike sanctions, which require unanimous support from all member states, trade measures such as tariffs can be approved by a majority of capitals. 

Such steps would enable the EU to meet one of US President Donald Trump’s key demands, which he has set as a condition for US participation in allied pressure on Russia over its refusal to end the war against Ukraine. Trump has repeatedly said the EU must completely stop purchases of Russian oil and gas. While most EU states have stopped importing both pipeline and seaborne Russian oil, Hungary and Slovakia remain exceptions.

Most other EU countries have committed to phasing out all Russian fossil fuels by the end of 2027. If the governments in Budapest and Bratislava do not present their own exit plans, the application of trade measures could become an option, the sources said.

The US is also pressing G7 allies to impose tariffs of up to 100% on China and India for buying Russian oil in order to force Kremlin ruler Vladimir Putin to enter negotiations with Ukraine. This demand is likely to face resistance in EU capitals. 

G7 officials are currently working on a new sanctions package and plan to finalise a text by the end of this month.

Other EU measures also aim to hit Russia’s largest oil companies, as well as networks and vessels that enable Moscow to transport oil and profit from trade.

Background: 

• Hungary’s national oil and gas company, MOL Group, still imports around 5 million tonnes of Russian oil annually via the Druzhba pipeline through Ukrainian territory. Hungarian Prime Minister Viktor Orbán’s government maintains this position through a scheme of "cheap crude for refining – low transit costs – high selling price of refined products", despite the availability of alternatives.
• On 5 September, President Volodymyr Zelenskyy stated that Ukraine is prepared to supply gas and oil to Slovakia, provided that they are not of Russian origin.

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