Hungary’s largest oil and gas company, MOL, has announced a deal with Lukoil to resume the transit of Russian oil to Hungary through Ukraine. By purchasing Russian oil at the Belarus-Ukraine border, MOL effectively takes legal ownership of the oil before it reaches Ukrainian territory. While this allows MOL to avoid sanctions imposed by Ukraine on the Russian oil producer, it undermines Europe’s collective action against Russia’s aggression in Ukraine. The European Union and Ukraine must act decisively to prevent such flagrant violations of the spirit of the sanctions regime, both now and in the future.
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The gaping hole in European sanctions
In June 2022, in response to Russia’s full-scale invasion of Ukraine, the European Commission imposed an embargo on Russian crude oil and refined oil products. However, Brussels granted a temporary exemption to some European Union (EU) member states due to their unique challenges in securing alternatives to Russian oil imports, including Hungary, Slovakia, and the Czech Republic. The exemption was intended to provide time to establish new sources of supply. Since then, about 14 million tons of Russian oil per year have been transited via Ukraine to these three countries, unchanged from pre-war levels, bringing approximately $6 billion to Russia’s war chest.
Central Europe’s oil diversification laggards
The EU should have closed this Druzhba pipeline loophole long ago. Despite the temporary nature of the exemption, Hungary and Slovakia have done little to develop alternative supplies. By contrast, the Czech Republic announced that it will eliminate its dependence on Russian crude by next year and aims to request its exemption be canceled once the Italian TAL pipeline’s expansion is completed, which will make more seaborne oil supplies available to the landlocked country.
Hungary’s inertia has not been for lack of help. Croatia constantly offers to expand the Adria pipeline, capable of importing non-Russian oil from its shores to Hungary. In August 2024, Croatian pipeline operator JANAF tested and confirmed that the pipeline can transport 14.3 million tons of oil, exceeding the annual needs of MOL’s refineries in Hungary and Slovakia.
However, MOL has contracted only 2.2 million tons for 2024. Hungarian officials have expressed skepticism about depending on Croatia—an EU and NATO ally—for oil. “Croatia is simply not a reliable country for transit,” claimed Péter Szijjártó, Hungary’s foreign minister. Instead, Hungary relies on Russia’s oil, as Moscow continues its military aggression against Ukraine and poses a threat to the NATO alliance.
Undermining solidarity
Hungary, the Czech Republic, and Slovakia paid Moscow €557 million for crude oil in April 2024, funding the Kremlin’s war and raising concerns within the EU about the precedent it sets for other member states. For example, although Germany halted its imports along the northern Druzhba pipeline, it could consider a similar deal at the Belarus-Poland border to resume imports of cheaper Russian oil. After the left-wing populist BSW party finished third with 14 percent of the vote in Brandenburg’s recent state elections, party leader Sara Wagenknecht said she would try to lift the embargo on Russian oil if her party entered the state government.
Allowing individual member states to circumvent the spirit of sanctions could play into Russia’s strategy to weaken EU solidarity, in line with the Kremlin’s historical “divide and conquer” tactics to exploit intra-European divisions. The EU’s sanctions aim to diminish Russia’s ability to finance its military operations. Hungary’s disinterest in developing alternative supplies—creating a workaround to continue importing Russian oil instead—undermines these collective efforts.
Given these developments, it is crucial for the European Commission to reassess the current sanctions on Russian pipeline oil. Closing loopholes that permit Hungary and Slovakia to continue importing Russian oil is essential for maintaining the integrity of the EU’s sanctions regime and the unity of its members. Implementing mandatory changes over a six-to-nine-month period would allow affected countries reasonable time to secure alternative supplies through existing infrastructure, such as the Adria pipeline.
Hungary’s actions present a critical test for EU unity and the effectiveness of its sanctions regime. By exploiting legal loopholes, Hungary risks undermining not only the collective response to Russia’s aggression, but also the foundational principles of EU solidarity.
The situation highlights the delicate balance that the EU must strike between respecting individual member states’ interests and upholding collective commitments to international security. A decisive response from the European Commission by cancelling exemptions for Russian pipeline oil would reinforce the EU’s dedication to solidarity and its resolve in confronting global challenges. Failure to act now could not only weaken the effectiveness of sanctions against Russia—it risks setting a concerning precedent for EU unity in future crises.
Sergiy Makogon is an energy expert who served as the chief executive officer of GasTSO of Ukraine from 2019-22.
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Image: A flame burns from a tower at Hungarian MOL Group’s Danube Refinery in Szazhalombatta, Hungary, May 18, 2022. Picture taken May 18, 2022. REUTERS/Bernadett Szabo