Extension of Ukrainian sanctions on Lukoil
Lukoil has been under sanctions in Ukraine since 2018although they were limited in scope. So far, these restrictions have only included the need to withdraw Lukoil’s capital from Ukraine, trade restrictions and a ban on the company’s participation in the privatization and leasing of Ukrainian state property – writes money.pl.
In June 2024, the National Security and Defense Council of Ukraine (NSDC) significantly expanded these sanctions, adding a ban on transit through Ukrainian territory. As a result Russian oil transported via the southern branch of the Druzhba (Friendship) pipeline cannot be delivered to Hungary. It is worth noting that these supplies were exempt from Western sanctions and accounted for two-thirds of the total supplies of this raw material to Hungary.
How dependent is Hungary on Russian oil?
Russian oil is of critical importance to Hungary’s energy system, and Lukoil’s raw material accounts for two-thirds of all supplies to the country. Russian Foreign Minister Sergei Lavrov and Hungarian Foreign Minister Peter Szijjarto have previously discussed a possible shutdown by Kiev, so Budapest should make some preparations for the situation after the oil supply is cut off. Hungary’s dependence on Russian raw materials is high – in 2023, Russia supplied Hungary with 3.3 million tons of crude oil and 4.2 billion cubic meters of natural gas. Lukoil is also the largest supplier of oil to the Hungarian concern MOL.
As money.pl writes, Hungary has long benefited from being exempt from EU sanctions banning the import of oil from Russia via pipelines to the Community countries. However, it has not taken care of the appropriate diversification of energy sources. Despite this, petrol prices on the Hungarian market are currently about 10 percent lower than the EU average.
How long will Hungary endure Russian oil?
The question arises here – How big a problem is the cut-off from gas flowing from Russia for Hungary? The first key issue is the capacity of the Dróżba pipeline. It can deliver 160,000 barrels of oil per day. According to JODI, which includes organizations such as OPEC and IEA, at the end of the year, Hungarian reserves amounted to over 11 million barrels – this nearly 80 days of operation of Hungarian refineries.
Is Hungary facing problems with fuel shortages at gas stations? Much depends on whether society will panic when informed that the tap has been turned off. If not, then there should be no problems of this type.
