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Russian oil flows to Hungary, Slovakia and the Czech Republic halted

Russian oil deliveries through the Southern Druzhba pipeline supplying Hungary, Slovakia and the Czech Republic have been halted since 4 August due to issues relating to transit fees, said Russian state-pipeline transport company Transneft in a statement issued on Tuesday and seen by international media.

The Southern leg of the Druzhba oil pipeline passing through Ukraine carries oil to European refineries in Hungary, Slovakia and the Czech Republic on the basis of a long-term agreement between Transneft and Ukrtransnafta for the provision of oil transportation services with full prepayment.

The contract between Russia’s Transneft and Ukrtransnafta requires 100 per cent prepayment for transit flows. While the Russian oil pipeline operator paid the August transit fee on July 22, it received the money back on July 28. Transneft said that Gazprombank, which handled the payment, couldn’t perform the payment because of EU sanctions. As a repose, Ukrtransnafta stopped the transit of oil from Russia through the pipeline.

The Northern route serving Poland and Germany remains uninterrupted, however the suspension of oil flows on the Southern route will hit hard Hungary, Slovakia and the Czech Republic, which rely heavily on Russian crude.

Hungary, which imports 65 per cent of its oil from Russia was the most vocal opponent of the EU embargo arguing the cost of phasing out Russian crude imports is unacceptable for Hungary. Finally, pipeline oil was granted exemption from wider EU sanctions on Moscow.

Hungarian energy company MOL and Slovak pipeline operator Transpetrol confirmed flows have been halted for a few days over the payment of transit fees. It is not yet known how long the suspension of pipeline deliveries will last to the three countries.

Russia provides 27 per cent of the EU’s oil, 40 per cent of its gas and 46 per cent of coal imports which cost 99 billion euros last year.

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