The EU’s plans to move away from Russian fuel do not pose a risk to the energy security of Hungary and Slovakia, but these Russia-friendly countries could lose hundreds of millions in profits, according to a new study by the Centre for the Study of Democracy and the Centre for Research on Energy and Clean Air (CREA), which advocate for the EU to move away from Russian energy, on Wednesday, the 14th of May, reports Politico.
The study found that both countries have ample alternatives to Moscow’s oil and gas, but refuse to use them. Instead, they have used special exemptions from EU sanctions to rely even more on Russian energy.
This has brought Russia a lot of money. Since Russia’s full-scale invasion of Ukraine, Hungary and Slovakia have paid Russia 5.4 billion euros in taxes on crude oil alone. This is enough to buy 1 800 Iskander-M missiles, the study says.
The researchers concluded that Hungary and Slovakia are not taking real steps to move away from Russian crude oil, even though the EU has made it clear that the purpose of the sanctions exemptions is to help them reduce their dependence on it.
“HUNGARY’S DEPENDENCE ON RUSSIAN CRUDE OIL INCREASED FROM 61% BEFORE THE INVASION TO 86% IN 2024, AND SLOVAKIA HAS MAINTAINED ALMOST 100% DEPENDENCE ON MOSCOW SUPPLIES.”
The assessment comes at a time when the EU is preparing to completely cut energy ties with Russia. Hungary and Slovakia strongly oppose the move, insisting it will raise prices for consumers and threaten both countries’ energy supplies.
On Wednesday, the two countries issued a joint statement expressing “serious concerns” about the proposals, citing logistical obstacles and warning of “higher and more volatile energy prices”.
The study underlines that the countries’ arguments are not well-founded. It says that both countries can import non-Russian oil from Croatia via the Adria pipeline. And it points out that the Hungarian energy company MOL has the capacity to process crude oil imported from elsewhere. Meanwhile, natural gas from countries such as the US and Qatar is widely available on the Central European market.
“The fact that Hungary and Slovakia continue to import Russian oil and gas is not due to technical or infrastructure constraints,” said Martin Vladimirov, Director of the Energy and Climate Programme at the Centre for the Study of Democracy. The real reason they are still using Russian oil is the network that helps Russian companies maintain control and make money, he said.
Both countries can still import Russian oil because of specific exemptions in the 2022 sanctions. These were supposed to help them find new sources of energy, but instead Hungary and Slovakia have pushed ahead with Russian oil and have made millions from the loopholes.
According to CREA energy analyst Luke Wickenden, consumers in the region are not getting any discounts because of their continued access to cheaper Russian fuel.
“Fuel prices at the pump remained 2-5% higher than the EU average in 2024,” he said. Meanwhile, MOL’s Hungarian revenues increased by 34%.
As well as Hungarian Prime Minister Viktor Orbán’s government has made a lot of money by using more than 500 million US dollars in extra taxes on Russian oil to help cover his country’s budget problems, Wickenden said.
The issue is likely to be raised in the coming months after the EU said it plans to phase out Russian gas contracts and wants all countries to draw up plans to stop using Russian energy.
The European Commission also plans to talk to Hungary and Slovakia to ease tensions on the issue.
But EU Energy Commissioner Dan Jørgensen said he was ready to push ahead with the law even if some countries opposed it. This has raised fears that Hungary and Slovakia could block EU sanctions against Russia in protest.