Despite the fact that EU pipeline crude imports from Russia are not banned by the embargo, Russia is not delivering crude oil to Hungary at present after Ukraine imposed stricter sanctions on Russian oil giant Lukoil, effectively banning it from using Ukraine as a transit for oil exports.
Lukoil was supplying Hungary with crude via the southern leg of the Druzhba oil pipeline which crosses Ukraine. With the toughened sanctions Kyiv imposed on Lukoil in June, Russian oil does not reach Hungary now.
However, Hungary - whose Prime Minister Viktor Orban is seeking ties with Vladimir Putin and even visited Moscow earlier this month - is currently working with Russia to restore Lukoil's oil deliveries to the central EU country, which has tried to keep "friendly" ties with Russia despite EU objections.
Hungarian energy firm MOL and Lukoil are working on a solution to the issue, trying to restore Russian crude flows to Hungary, Hungarian Foreign Minister Peter Szijjarto said.
Szijjarto met on Tuesday with Russian Foreign Minister Sergey Lavrov on the sidelines of a United Nations meeting in New York.
"There's now a legal situation in Ukraine based on which Lukoil is not currently delivering to Hungary," Szijjarto was quoted by Bloomberg as saying after the meeting.
Russia's TASS news agency reported that Szijjarto said following the meeting with Lavrov, "As for oil supplies, there is a new legal situation in Ukraine now, on the basis of which Lukoil is currently not making deliveries to Hungary." [if !supportLineBreakNewLine] [endif]
"We are now working on a legal solution that will enable us to resume supplies, because Russian oil is important from the perspective of our energy security," the Hungarian official added.
In May this year, Fitch Ratings said that MOL could see a risk of supply mainly from the Druzhba pipeline. MOL plans to use around 40% of non-Russian crude oil this year and estimates full replacement will be possible from 2026, Fitch said.
"However, the company does not rule out the possibility of continuing to purchase Russian crude, depending on market and regulatory conditions," the rating agency noted.
By Charles Kennedy for Oilprice.com
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