Hungary's energy policy under fire amid Ukraine war

The article by Aura Sabadus, published by the Center for European Policy Analysis (CEPA), presents a critical analysis of Hungary's energy policies and geopolitical manoeuvres during the ongoing conflict between Russia and Ukraine. The piece highlights Hungarian Prime Minister Viktor Orbán's controversial stance, which has involved pro-Kremlin rhetoric and energy deals with Russia despite the broader European Union's sanctions and support for Ukraine.

Sabadu’s article delves into the complex dynamics surrounding Hungary's energy strategy, particularly focusing on its dealings with Russian oil through the Druzhba pipeline. The piece notes that while Hungary, along with Slovakia, received Russian crude oil from Lukoil—a company sanctioned by Ukraine—their response to Ukraine's partial ban on Lukoil's oil has been marked by frustration and demands for EU intervention. This situation is exacerbated by Hungary's recent blocking of €6 billion in EU military aid to Ukraine.

The analysis points to Hungary's failure to diversify its energy sources despite ample time and opportunities to do so. Hungary's choice to increase its Russian oil imports by 56% in the first half of 2024, compared to the same period in 2021, is seen as a deliberate defiance of EU commitments. The article suggests that Hungary's decision to stick with discounted Russian oil, rather than seeking alternative sources from Croatian or Italian ports, might be politically motivated. The discounted rates potentially enabled Hungary to keep fuel prices low, thereby securing political support.

Sabadus criticizes both Orbán and Slovakian Prime Minister Robert Fico for their inability to foresee and address the potential fallout from Ukraine’s decision. Despite the long-standing awareness of the issue, Orbán's visit to Ukraine in early July failed to resolve the problem. The piece questions why Hungary and Slovakia, which had the option to reduce their dependency on Russian oil, chose not to pursue alternative arrangements.

The article concludes with a critical outlook on Hungary and Slovakia's likely future actions. Given their significant support for extending the Russian gas transit contract via Ukraine post-2025, it is improbable that these countries will make substantial changes to their energy policies. Sabadus suggests that if Hungary and Slovakia genuinely wish to mitigate the effects of Russia’s aggression, they should prioritize energy security over discounted Russian oil, though this seems unlikely given their current trajectory.

Overall, Sabadus's analysis underscores the complexities and contradictions in Hungary’s energy policy and geopolitical positioning, revealing a tension between economic pragmatism and political alignment with Russia.

Aura Sabadus is an experienced energy journalist with Independent Commodity Intelligence Services (ICIS), a prominent London-based provider of global energy and petrochemicals news and market data. Additionally, she serves as a Non-resident Senior Fellow at the Center for European Policy Analysis (CEPA) within their Democratic Resilience Program.