Ukraine-Hungary oil pipeline row threatens EU loan

A bitter conflict between Hungary and Slovakia with Ukraine is blocking a crucial €90 billion (£77.95 billion) EU loan to Ukraine.

No oil has passed through the Druzhba (Friendship) pipeline, linking Russia to Hungary and Slovakia through Ukraine, since the main oil center of Brody in western Ukraine was damaged in a Russian attack on January 27.

While Ukraine says it will take six more weeks to repair the damage and restore oil supplies, Budapest accuses kyiv of stagnating, as revenge for Hungary’s pro-Russian and anti-Ukrainian stance.

This dispute highlights the ability of one or two countries to block the EU’s decision-making process. It also shows Hungary and Slovakia facing fuel problems, as they have refused to follow the example of others and wean themselves off Russian oil since 2022.

The Brody pumping station in the Lviv region of western Ukraine is of crucial importance for the transit of Russian oil to Hungary and Slovakia.

Satellite images obtained by the BBC suggest that the Russian strike on January 27 damaged a key component: a huge tank used to store oil needed to maintain pressure and operate the pipeline.

Photos appear to show the tank on fire after the attack and suggest a fire raged there for days.

It is the largest oil reservoir in Ukraine, with a capacity of 75,000 m3.

Ukrainian energy expert Henadiy Ryabtsev says the damage to the Brody pumping station is serious and may not be limited to the oil reservoir.

He said the extreme heat resulting from the fire may also have damaged other systems in Brody, such as the pumps and the pipeline itself.

“The oil burned for about a week, which means that during this time everything around was affected by the high temperature,” he told the BBC.

The kyiv government says the damage to Brody is serious and Ukraine does not have the resources to repair it more quickly.

“This is a technical problem,” Ukrainian Foreign Ministry spokesperson Heorhy Tykhy told the BBC.

“Our infrastructure is being damaged every day… Ukraine is repairing all this, but we don’t have unlimited resources. We are in a full-scale war that Hungary decides to ignore for some reason,” Tykhy said.

To speed up repairs, the EU offered Ukraine “technical support” and funding, European Commission President Ursula von der Leyen said. “The Ukrainians welcomed and accepted this offer. European experts are available immediately,” she said in a message on X.

President Volodymyr Zelensky had already expressed his reluctance to repair the pipeline.

“I’ll be honest, I wouldn’t restore it… because it’s Russian oil,” he told reporters on March 5.

The Hungarian government has accused Ukraine of delaying the restoration of oil flow through the pipeline for political reasons. Hungarian Prime Minister Viktor Orban maintains close economic and political relations with Moscow and does not hide his dislike for Volodymyr Zelensky. Hostility towards Ukraine is a central element of the ruling Fidesz party’s re-election campaign ahead of the April 12 vote.

The Hungarian government bases its argument that the pipeline is intact on several pillars.

“We can say this with a clear conscience: the pipeline itself was not damaged,” Zsolt Hernadi, CEO of Hungarian energy company MOL, told ATV channel on March 2.

“Ukrainian colleagues… asked us to quickly resume this crude [from the tank] to avoid further escalation and avoid an even larger fire. We recovered 35,000 tonnes of crude oil of Ukrainian origin, which passed through the Druzhba pipeline without problems. Oil continued to arrive through the pipeline for at least two to three days.

“Later, when we asked why the pipeline had still not restarted, we were told that no decision had yet been made regarding restarting. And the lack of a decision can hardly be called a technical problem.”

A study commissioned by MOL from a US company, extracts of which were seen by the BBC, concluded that pumping oil from the burning tank would be “unlikely” to damage the underground pipeline, which by nature is robust and accustomed to extreme temperatures.

The opposing view is that of András Rácz, security analyst at the German Council on Foreign Relations.

“The overheated oil (from the burning tanks) cooked the system from the inside, damaging sensors, valves and all safety systems inside the pipeline,” he told the BBC. His information is based on conversations with Hungarian and Ukrainian pipeline engineers.

“The pipe itself is intact, but it cannot be used safely because everything inside needs to be replaced or at least rechecked to assess the extent of the damage.”

Ukrainian engineers working to repair the facility can only work during the day, due to nighttime air raids, and there is also a shortage of experts due to the constant damage caused by Russian attacks on Ukraine’s energy grid.

“I find it very promising that the Ukrainian side is now showing more transparency,” said András Rácz.

Meanwhile, Hungary has started receiving non-Russian Brent crude from Norway, Saudi Arabia and Libya via the Adria pipeline from Croatia. But MOL refineries lack equipment to refine non-Russian oil, which has lower sulfur content.