Hungary to block EU funds until Ukraine resumes oil transit

Hungary will block European Union funds for member states that have sent ammunition to Ukraine as long as Kyiv does not allow oil from the Russian company Lukoil to pass through the pipeline on its territory.

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Earlier this month, Slovakia and Hungary said they had stopped receiving oil from Lukoil via the Druzhba pipeline after Ukraine imposed a ban on the transit of products from the Russian company last month.

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In response to the situation, the Hungarian Ministry of Energy formed a task force related to supply security, which reviewed the steps taken so far and possible next steps. Minister of Foreign Affairs and Trade Peter Szijjarto said that, as long as Ukraine does not resolve this issue, EU member states can forget about the payment of 6.5 billion euros from the European Peace Facility (EPF) as compensation for arms shipments.

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Ukraine claims it has blocked Lukoil’s oil but that the overall flow through the pipeline, used by other suppliers, has not decreased. The Druzhba pipeline, which connects Russia with former socialist bloc countries in Eastern Europe, has continued to operate for more than two years during the war in Ukraine, even as the European Union has moved away from other sources of energy from Russia. Hungary has remained particularly dependent on Russian oil and claims that it cannot supply its refineries without it.

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Earlier this week, Hungary and Slovakia asked the European Commission to mediate in the consultation process with Ukraine. The process would allow a court to decide on the issue unless the Union's executive body reacts within three days.

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The EPF, created in 2021, acts as a reimbursement instrument for EU member states that have sent ammunition to other countries. Since the Russian invasion of Ukraine in 2022, member states that have sent weapons to Ukraine can claim compensation from this fund. However, Hungary has been blocking the payment of the next tranche of money from the EPF for over a year, citing various difficulties as the reason.

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