Once more on the Lukoil sanction case: much ado about nothing (or very little at most)

HUNGARY - In Brief 24 Aug 2024 by Istvan Racz

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The first news on the Ukrainian government sanctioning Lukoil's transit shipments of Russian crude oil and oil products to Hungary, Slovakia and Czechia, through the southern branch of the Druzhba pipeline that crosses the territory of Ukraine, around mid-July sounded quite dramatic. Then a series of aggressively worded statements from Slovakia, Ukraine and Hungary followed, stressing how outrageous and irresponsible the behaviour of the other side was, and how much harm this or that country could cause to the other(s) if it actually wanted. Then finally a rather low-key statement came from the European Commission that there was actually nothing to see here, as the Ukrainian sanction did not affect any oil transit by Lukoil if the ownership of the oil had been passed on to anyone else, e.g. to one of the many existing oil trading companies. There has been hardly any related news in terms of official statements from any side over the last two weeks, which we think is actually a good sign. The other day, Hungary's foreign minister Mr. Szijjártó said that negotiations on a new technique of Lukoil passing oil through Ukraine are now close to a positive conclusion, suggesting that in the future, Hungary may take over the ownership of the oil transited by Lukoil once it reaches Ukraine's territory. This will be somewhat more risky and more expensive for Hungary than the method used so far (no information for now how much more expensive), but it may affect only 15-35% of Hungary's total oil imports from Russia, or up to roughly 25% of the country's total use of crude oil, at least in short term. Source: ExPro Weekly Crude Oil & Condensate, August 23, 20024 Even more recently,...