Hungary demands ‘solution’ to cost of backing oil sanctions

The Hungarian government has spelled out how much money it would need to make ditching Russian oil imports viable, as officials in Brussels draw up funding options to convince Budapest to support a new round of sanctions.

Foreign Minister Péter Szijjártó said Hungary could not back the EU proposal to ban all imports of Russian crude and refined fuels without a “solution” to the costs of adapting its energy supply and infrastructure.

His comments are the closest Hungary has come to naming its price for supporting the EU’s sixth sanctions package. There is still no guarantee that Budapest will sign up or that other EU countries will back a deal to provide financial assistance to Prime Minister Viktor Orbán’s government.

Hungary has been holding out against the proposed oil ban, warning the impact on its economy would be dire. Winning the support of Orbán is key to getting the latest sanctions through.

In an interview with the Spanish newspaper El País, Szijjártó argued the different national energy situations within the EU should be taken into account. Not only is Hungary a landlocked country, the country is also dependent on Russian oil and gas because of its historically build infrastructure, he stressed.

“This Commission proposal creates a huge problem for us,” Szijjártó said. “Our refinery is designed for Russian oil. To refine other types of oil, we would have to invest between €500 and €550 million — that would take about four years. To replace the oil pipeline from Russia, we would have to expand the capacity of the Adriatic Sea pipeline, which would mean €200 million, and we don’t know how much time that would take. The price of gas in Hungary would increase by 55 percent.”

Szijjártó stressed Hungary cannot support the current sanctions package unless Brussels offers a solution. “What we told the president of the Commission on Monday was that her proposal creates a problem for us. We cannot vote in favor unless we are offered a solution.”

He reiterated Hungary’s proposal to exempt pipeline deliveries from the oil ban and to focus the embargo on deliveries by ship.

Brussel is mulling whether to provide Hungary with more funding via the bloc’s new energy strategy, which will be announced next week. But at a meeting on Wednesday, several EU countries raised concerns about offering compensation for Hungary.

Officials have denied any link between the discussions on the oil ban and the dispute between the Commission and Budapest about cutting funding to Hungary for eroding the bloc’s rule-of-law standards. Szijjártó also said there is no connection. “In the event of an oil ban, our energy system would have to be completely overhauled, and that would cost money. But that has nothing to do with other issues.”

Sarah Anne Aarup and Zosia Wanat contributed reporting.