EU Weighs Aid to Fix Ukraine Oil Link at Center of Loan Delay

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(Bloomberg) — The European Union is considering providing Ukraine with financial help to repair the Druzhba oil facility as Hungary and Slovakia block support for Kyiv and sanctions on Russia until supplies through the pipeline resume.

Financial Post

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The European Commission, the bloc’s executive arm, could release the support through the budgetary assistance that it provides Ukraine, according to people familiar with the matter. The EU is also prepared to provide expertise, said the people, who spoke on condition of anonymity. The commission didn’t immediately respond to a request for comment. 

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Russia attacked the facility in January, causing a storage tank fire that took 10 days to extinguish and damaged equipment, power cables, transformers and a leak detection system, Ukrainian state energy company Naftogaz Chief Executive Sergii Koretskyi told Bloomberg in an interview last month.

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Given the destruction’s magnitude, Kyiv has not yet been able to provide a timeline for the repairs.

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Hungary and Slovakia have accused Ukraine of withholding supplies, while questioning the extent of the damage. Neither nation has acknowledged the January Russian attack.

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Hungarian Prime Minister Viktor Orban, who is facing an election in April in which he’s behind in the polls, said he’ll block vital support to Kyiv, including €90 billion ($106 billion) in EU loans, until flows are restored. Slovakia has halted emergency electricity supplies to the war-torn country.

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The two nations, which maintain close ties with the Kremlin, have also blocked the EU’s latest round of sanctions against Moscow.

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The Druzhba facility has been hit nearly two dozen times since the start of Russia’s full-scale war against Ukraine, said the people. Repairs have often taken place under Russian attacks, endangering workers, and Moscow would likely target the pipeline again once it’s repaired, the people added.

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Hungary’s aid blockade has irked the EU and several capitals, which have accused Budapest of breaching its pledge in December to allow the Ukraine loan.

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Hungary has also refused to consider alternatives to Russian energy supplies, such as deliveries through Croatia, arguing that Moscow’s oil is cheaper. EU ambassadors discussed the issue at a meeting on Wednesday. 

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The bloc’s executive arm is in talks with Kyiv about the possibility of sending a fact-finding mission to verify the damage at the Druzhba facility, the people said. Those discussions are ongoing, they added.

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Orban said in a Feb. 26 letter to the European Council president, who convenes EU leaders, that he supports the idea of a mission with delegates from Hungary and Slovakia, and would accept its findings.

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—With assistance from Daryna Krasnolutska and Ewa Krukowska.

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