Ukraine addresses Russian oil supply issues amid pipeline blockage

Amid growing concerns over energy security, Ukraine has responded to the recent partial blockage of the pipeline transporting Russian oil to Hungary and Slovakia.

The Ukrainian government has recently addressed public concerns regarding the partial blockage of the Friendship pipeline, which plays a crucial role in transporting Russian oil to Hungary and Slovakia. Both the Slovak and Hungarian governments have expressed strong criticism over Ukraine’s decision to suspend a significant portion of Russian oil supplies. Reports from international media suggest that this dispute between Ukraine and Hungary over oil could potentially lead to serious energy shortages and a dramatic rise in prices within Hungary, according to Világgazdaság.

Since last week, the flow of Russian oil into Hungary has been significantly reduced due to Ukraine’s decision to block the Friendship pipeline, which is operated by the Russian company Lukoil. Russian sources estimate that this blockage has resulted in a loss of approximately 1.1 million barrels of oil per month. This reduction is impacting not just Hungary but also Slovakia. The Friendship pipeline terminates at two key refineries: the Danube Refinery (DuFi) in Hungary and the Bratislava Refinery in Slovakia. Historically, about two-thirds of the oil processed at these refineries originated from Russia.

Although some Russian oil continues to reach Hungary, a substantial portion of this supply has come from Lukoil. Official reports indicate that Lukoil was responsible for handling half of the pipeline imports to the east, with Hungary and Slovakia collectively purchasing around two million tonnes of oil from the company each year. According to public records, the Hungarian oil company Mol has an ongoing contract with Lukoil to deliver 4 million tonnes of oil annually until 2025, which represents about 5% of Lukoil’s total yearly production.

Ukraine’s response regarding Russian oil

In response to the unfolding oil crisis, Ukrainian media, including Forbes Ukraine, have reported a statement from the Ukrainian energy company Ukrtransnafta. The company aims to address the concerns by clarifying that oil transportation to the European Union via Ukraine is continuing as scheduled and that the restrictions currently only apply to Lukoil.

Ukrtransnafta has highlighted that oil supplies to European nations are being delivered as requested by their customers. An important detail in resolving the current situation is that Lukoil, which is under international sanctions, does not own the oil being supplied to the Hungarian energy company Mol Plc through Ukraine. This detail was reportedly confirmed to Ukrtransnafta by Mol in a letter addressed to the National Security and Defence Council. The letter dates back to when Ukraine initially blacklisted Lukoil.

This situation suggests that other Russian suppliers, who are not subject to sanctions, could potentially step in to cover the oil supply shortage. This implies that the Ukrainian-Hungarian oil crisis could be mitigated if the restrictions are specifically targeted at Lukoil, allowing non-sanctioned Russian companies to fill the gap in the oil supply chain.

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