Ukraine-Hungary oil pipeline row threatens EU loan

A bitter dispute pitting Hungary and Slovakia against Ukraine is holding up a crucial €90bn (£77.95bn) EU loan to Ukraine.

No oil has flowed through the Druzhba (Friendship) pipeline, from Russia to Hungary and Slovakia across Ukraine, since the major oil hub at Brody, in western Ukraine, was damaged in a Russian attack on 27 January.

While Ukraine argues that it will need six more weeks to repair the damage and restore the oil flow, Budapest accuses Kyiv of stalling, as revenge for Hungary's pro-Russian and anti-Ukrainian position.

The dispute underlines the ability of one or two countries to block EU decision making. It also shows Hungary and Slovakia facing fuel problems, because they refused to follow the lead of others and wean themselves off Russian oil since 2022.

The Brody pumping station in Ukraine's western Lviv region is crucially important for the transit of Russian oil to Hungary and Slovakia.

Satellite images obtained by the BBC suggest that the Russian strike on 27 January damaged its key part - a huge tank used to store oil necessary to keep the pipeline pressurised and functioning.

The photos appear to show the tank smouldering after the attack and suggest that a fire raged there for days.

This is the biggest oil tank in Ukraine, with a capacity of 75,000 cu.m.

Ukrainian energy expert Henadiy Ryabtsev says damage caused to the pumping station at Brody is severe, and is possibly not just limited to the oil tank.

According to him, the extreme heat resulting from the fire may have also damaged other systems at Brody, such as pumps and the pipeline itself.

"The oil was on fire for about a week, which means that during that time everything around it was affected by the high temperature," he told the BBC.

The government in Kyiv says the damage caused to Brody is severe and Ukraine does not have the resources to repair it more quickly.

"This is a technical issue," Ukrainian Foreign Ministry spokesman Heorhy Tykhy told the BBC.

"Our infrastructure is being damaged every day... Ukraine repairs all of that, but we do not have unlimited resources. We are in a full-scale war, which Hungary decides to ignore for some reason," Mr Tykhy said.

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

President Volodymyr Zelensky had earlier signalled reluctance to repair the pipeline.

"I'll be honest, I wouldn't restore it... because it's Russian oil," he told journalists on 5 March.

The Hungarian government has accused Ukraine of delaying the restoration of the oil flow through the pipeline for political reasons. Hungarian Prime Minister Viktor Orban maintains close economic and political relations with Moscow, and makes no secret of his dislike of Volodymyr Zelensky. Hostility to Ukraine is a central plank of the governing Fidesz party's re-election campaign, ahead of the 12 April 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 has not been damaged," Zsolt Hernadi, the CEO of the Hungarian energy company MOL told the ATV channel on 2 March.

"Ukrainian colleagues …asked us to quickly take over this crude [from the tank] to prevent further escalation and avoid an even larger fire. We took over 35,000 tons of Ukrainian-origin crude, which flowed through the Druzhba pipeline without issue. 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 the restart. And the absence of a decision can hardly be described as a technical issue."

A study commissioned by MOL from a US company, extracts of which have been seen by the BBC, concluded that the pumping of oil from the burning tank would be "unlikely" to harm the underground pipeline, which by its nature is robust and used to extremes of temperature.

The opposite view is offered by András Rácz, a security analyst at the German Council on Foreign Relations.

"The superheated oil (from the burning tanks) cooked the system from inside, damaging the sensors, the valves, all the 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 operated safely because everything inside needs to be replaced or at least double checked to assess the extent of the damage."

Ukrainian engineers working to repair the facility can only work during the day, because of nightly air-raids, and there is also a shortage of experts because of the constant damage from Russian attacks on the Ukrainian energy grid.

"I think its very promising that the Ukrainian side is now showing more transparency," said András Rácz.

In the meantime, Hungary has begun receiving non-Russian seaborne Brent crude from Norway, Saudi Arabia and Libya through the Adria pipeline from Croatia. But the MOL refineries lack equipment to refine non-Russian oil, which has a lower sulphur content.