Slovak Prime Minister Robert Fico has threatened to stop sending diesel fuel to Ukraine in response to the halting of Lukoil's crude oil transit through Ukraine, following Kyiv's imposition of sanctions on the Russian oil giant last month.   

“If the transit of Russian gas through Ukraine won’t be renewed shortly, Slovnaft [the country’s Slovnaft refinery, controlled by Hungary's MOL] won’t continue with fuel supplies to Ukraine which covers one-tenth of the Ukrainian consumption,” Fico said in a video message on his Facebook page.

Slovakia and Hungary – which are lukewarm in their backing for Ukraine and call for immediate peace talks with Russia – have protested to the EU over Kyiv's move but have so far received a cool response, given that other countries have already taken painful steps to cut their dependence on Russian oil supplies.

Hungary, Slovakia, and Czechia were exempted from EU sanctions on Russian crude oil pipeline imports until the end of this year due to their high dependency on it but were expected to use that time to reduce their dependence; instead Hungary has actually increased its dependence on Russian oil imports.

As bne Intellinews reported, the European Commission is not rushing to settle the dispute as the Ukrainian move did not cause an “immediate problem”, given that it only affects Lukoil imports – which amount to 2mn tonnes a year – and both countries have alternative routes to import oil, as well as stocks put aside. All oil flows through Druzhba are due to end at the end of this year anyway unless Ukraine  agrees to continue the transit contract with Russia.

Hungarian Minister of Foreign Affairs Peter Szijjarto has described the situation as an “oil security risk”, stating that Hungary will continue to block the disbursement of funds from the European Peace Facility (EPF) for Ukraine to pressure Kyiv into renewing the transit.

In his Facebook video, Fico also reiterated that “the war in Ukraine needs to be ended with an immediate ceasefire,” and that  “a technical solution” is on the table involving several countries which could renew the Lukoil transit.

Fico concluded by saying that he “refuses the politics of a new iron curtain between Russia and the EU” and that the EU “if it wants to get out of total influence of the USA, it will have to think about forms of cooperation with the Russian Federation which should include cooperation in the area of strategic goods”.

He also used the opportunity to attack opposition parties and domestic media for critical reporting on his left-right cabinet. This comes as Fico's cabinet faces criticism over the restructuring of the public broadcaster RTVS into STVR, which is widely seen as aimed at tightening government control over the public media.

“For us Slovakia and the interests of its people are in the first place,” Fico highlighted, adding that opposition parties, the centrist Progressive Slovakia (PS) and neoliberal SaS, “prioritise foreign interests”.

Fico said that is why he “talks openly about a barrier against progressivism and liberalism” which would otherwise bring Slovakia to bankruptcy “within months”.

Fico pointed out he called in the Ukrainian ambassador Myroslav Kastran for a meeting in which he said he reminded him that “the Slovak public, not [liberal media] SME, DennikN, or Aktuality.sk, very negatively assesses the step of the Ukrainian president” against Lukoil.  

At the end of the video message, in which he accused PS and SaS of “lies” about the looming end of the exemption from EU sanctions on Russian oil imports, Fico claimed that “nothing prevents Slovakia from importing Russian oil in the upcoming years, Slovnaft just won’t have the possibility to export products from this to other countries”. 

SME published an article in response to Fico’s video message highlighting that Fico and other politicians are attending to the issues of a private company (Slovnaft), which does not appear to have been adequately preparing for the end of the exemption on Russian oil imports at the end of this year.

In a separate development earlier this month, Slovnaft said it won’t pay the €180mn windfall tax aimed at excessive profits, claiming it is not obliged to pay the money, which is part of the projected state budget income. This year Slovnaft paid a mere €2mn in additional payment for 2022, STVR reported.  Slovakia faces action from the EU over its high budget deficit.

Slovnaft “processes about a quarter of oil which is not Russian,” Jozef Badida, an analyst at an online portal energieprevas.sk, told STVR last week. “About 75% is still Russian oil, which it [Slovnaft] processes and which comes through Druzhba [Friendship pipeline]. Out of this, some 40% is Lukoil which it will miss,” Badida explained.

Economist of the Natland investment group Petr Barton, who was also surveyed by STVR, projects that as a result of Ukraine's tightened sanctions only the “importer will change”, noting that Lukoil will sell less oil to the West, “but all the more of it will be sold by other companies allowed to trade with West such as Rosneft and others”.

Analysts also pointed to alternate routes including the Adria pipeline running to Slovakia through Croatia and Hungary, where transit fees are expensive, and the TAL pipeline, which connects Czechia to Germany. Czechia can then reverse the flow of oil to Slovakia.

“The pipeline running from Czechia to the West is strong enough to supply Czechia while maintaining some capacity for Slovakia,” Barton was quoted as saying by STVR.  

While the halt in oil does not represent a problem for Slovakia, an economist at Globsec, Vladimir Vano, points out that a drop in income from oil can affect the Russian war industry, highlighting that “more than 40% of Russian state budget is directed to [finance] … the production linked to war and to financing operations in Ukraine”.