Hungary and Slovakia say they need Russian oil despite embargo calls

European Council chief remains confident a sixth sanctions package will be passed

Slovakia says its refineries would need years to make the switch away from Russian crude. AFP

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Hungary and Slovakia said on Tuesday they were not willing to cut off Russian oil imports, raising the question of nations opting out if the EU sought an embargo against Moscow.

EU leaders are under pressure from Ukraine and member states such as Poland to include an oil ban in a sixth round of sanctions, to cut off a lucrative source of funding for Moscow and take a geopolitical weapon out of Russian President Vladimir Putin's hands.

The bloc's foreign policy chief, Josep Borrell, said the sixth package due to be presented shortly would aim to "tackle oil imports" as well as penalising more Russian banks and imposing sanctions on people accused of peddling disinformation.

But while Germany and Austria have warmed to an oil embargo after initially opposing it, Hungary and Slovakia say their economies are too reliant on Russian crude to take part in such a ban.

“It is currently physically impossible for Hungary and its economy to function without Russian oil,” Foreign Minister Peter Szijjarto said on a visit to Kazakhstan on Tuesday.

“No one can expect us to allow the price of the war to be paid by Hungarians.” He said Hungary would not vote for any sanctions that make oil shipments from Russia impossible.

Slovakia’s Economy Minister Richard Sulik said he would seek an opt-out from any embargo because the country’s only refiner, Slovnaft, would need years to make the switch from Russian crude to another kind of oil.

Despite the potential roadblocks, European Council chief Charles Michel said on Tuesday he was “confident that the council will imminently impose further sanctions, notably on Russian oil”. Prices hovered above $100 a barrel as markets braced for a potential import ban.

Any deal on Russian oil would require the consent of all 27 EU members, meaning it could not pass without Hungary and Slovakia’s approval. The bloc agreed on an embargo on Russian coal in the fifth package last month, while it has not yet ventured into gas.

Ministers from other EU states have spoken of sympathising with oil-reliant neighbours but urged unity during the crisis. Hungary and its Russia-friendly leader Viktor Orban have irked Ukraine with an equivocal stance on the war.

As countries seek to find alternative suppliers, Mr Michel toured an import terminal for liquefied natural gas which is under construction in northern Greece and is aimed at weakening Russia’s grip on the energy market.

Supporters of an oil and gas purge say it would weaken Mr Putin’s ability to use energy as a tool of blackmail, after gas supplier Gazprom cut off supplies to Poland and Bulgaria last week.

Poland, one of the strongest supporters of an energy embargo, has proposed a system similar to carbon emissions trading in which countries that continue to buy Russian fossil fuels must pay a levy towards energy reforms.

Italian Prime Minister Mario Draghi, meanwhile, used a speech to the European Parliament on Tuesday to urge reforms which would eliminate the right of individual countries to veto such measures.

Although many matters before the European Council can be decided by a so-called qualified majority, sanctions are in the basket of issues that can be blocked by a single vote against.

This does not stop countries such as Hungary and Slovakia from negotiating special treatment. Spain and Portugal were given approval to intervene in their electricity markets at a European Council summit last month.

“The institutions set up by our predecessors in previous decades have served well European citizens, but are inadequate to the current reality we are now facing,” Mr Draghi said.

The EU is preparing for potential further disruptions by urging members to review their contingency plans and proposing a mandatory minimum level of gas storage before next winter.

Mr Putin threatened to create further chaos on Tuesday by signing a decree on tit-for-tat sanctions, banning trade with unfriendly parties on a list to be drawn in the next 10 days.

The decree prevents Russian companies from fulfilling obligations or concluding deals with the parties under sanction or exporting raw materials for their benefit, Russian news agency Tass said.