EU Rejects Mediation in Hungary and Slovakia's Dispute Over Ukraine's Lukoil Sanctions

The European Commission declined Hungary and Slovakia's request to mediate in a consultation procedure over Ukraine's sanctions on Russian oil producer Lukoil. The Commission found no urgent need for consultation, as Ukraine's sanctions did not pose a risk to European energy supply given the uninterrupted flow of Russian oil through the Druzhba pipeline.

The European Commission has declined Hungary and Slovakia's request that it mediate a consultation procedure with Ukraine over sanctions imposed by Kyiv on Russian oil producer Lukoil (LKOH.MM), a Commission spokesperson said on Friday. "Commission services have preliminarily concluded that urgent consultations do not appear to be warranted," the spokesperson said.

The spokesperson said Brussels had no indication Ukraine's sanctions had caused a risk to European security of energy supplies, since Russian oil was still flowing through the Druzhba pipeline that links Russia, via Ukraine, to the Czech Republic, Slovakia and Hungary. "It appears that the sanctions imposed by Ukraine on Lukoil do not affect ongoing oil transit operations via Druzhba carried out by trading companies, as long as Lukoil is not the formal owner of the oil," the spokesperson said.

Slovakia and Hungary - two countries that have opposed western allies' military aid to Ukraine as it fights Russia's invasion - have complained to Brussels about Kyiv's move to put Lukoil on its sanctions list, saying it prevented them from buying Russian oil for their refineries, threatening security of supply. Hungarian Prime Minister Victor Orban's spokesperson did not immediately respond to a request for comment.

Hungary provided additional information on the issue to the Commission this week, which the Commission said it will now analyse. The Druzhba oil pipeline has remained functioning following Moscow's invasion of Ukraine in 2022, even as the EU weaned itself off most other sources of Russian energy.

The southern branch of the pipeline runs via Ukraine to the Czech Republic, Slovakia and Hungary, and has been the primary source of supply for their refineries for years.

(With inputs from agencies.)