EditCentral Europe can make do without Russian energy
Hungary and Slovakia have leveraged their exemption to weaken the EU unity on sanctions
Europe keeps dragging its feet on phasing out Russian oil and gas, writes Tsvetomir Nikolov, analyst for the Energy and Climate Program and Geoeconomics
Program at the Center for the Study of Democracy (CSD).
Glaring loopholes in the EU ban on Russian oil mean that member states still send around EUR 20 billion per year to the Kremlin.
Landlocked countries in Central Europe received an exemption from the embargo to give them more time to diversify their energy supply. Two and a half years later, only Czechia has stopped buying Russian crude – at least for now.
Hungary has increased its dependence on Russian oil from 61% in 2021 to 86% in 2024. Slovakia has maintained near-total dependence. Together, the two countries imported 27 million tonnes of Russian oil worth EUR 13 billion since December 2022. These imports generated an estimated EUR 5.4 billion in tax revenues for the Kremlin – enough to finance 1,800 Iskander-M missiles used against Ukraine. A loophole in the sanctions allowed Slovakia to increase imports and export Russian-derived products to Czechia worth EUR 520 million in 2024.
There are no technical or economic reasons to maintain this dependence. The Adria pipeline, which connects Croatia’s Omišalj terminal to Central Europe, has a capacity of 14.4 million tonnes per year – expandable to 16.4 million. This exceeds the combined oil needs of Hungary and Slovakia. Refineries controlled by the Hungarian oil company MOL, in Bratislava and Dunaújváros, have Nelson Complexity Indices of 11.5 and 10.6, indicating their ability to process a wide variety of crude types. Past disruptions to the Druzhba pipeline have shown MOL can operate without Russian crude.
The economic argument against diversification similarly falls apart under scrutiny. While Russian oil has been heavily discounted (by up to 23%) compared to market prices in 2023, the benefit has not been passed on to consumers. In Hungary, fuel prices remained about 5 percent above the EU average (without taxes) in 2024. Diesel in Slovakia was nearly 3% more expensive than in other EU countries. MOL captured the difference, boosting its revenues by 34% in 2022 to $26.4 billion.
The Hungarian government imposed a windfall tax on MOL’s surplus profits, collecting $521 million in 2022. However, budget revenues dropped to just 2 and 15 million in 2023 and 2024, respectively. The reduction reflects the lowering of taxes and not a fall in profitability.
Over the past two decades, MOL has evolved into a major enabler of Russian economic and political influence in Europe. It has facilitated the transfer of public wealth into oligarchic networks close to the Hungarian government, including through a joint public trust set up in 2021. MOL’s regional growth has closely tracked that of Russia’s Lukoil, its largest crude supplier.
There is a similar pattern in the gas sector. While the EU has cut Russian pipeline gas imports by 81% between 2021 and 2024, Hungary and Slovakia’s reliance on Russian pipeline gas supply increased to 70% up from 57% in 2021. Hungary has signed new agreements to increase Russian gas imports and aims to become a re-export hub for Gazprom including to Slovakia, Austria and Ukraine. Much of this gas arrives via the TurkStream pipeline, which has become the Kremlin’s preferred route into the EU after the shutdown of the Ukrainian transit corridor.
Hungary and Slovakia have leveraged their exemption to weaken the EU unity on sanctions. In January 2025, Hungary and Slovakia threatened to veto the renewal of sanctions and halt military aid to Ukraine unless Russian oil and gas transit continued.
The EU should call their bluff.
The EU must end the exemption for Russian crude pipeline imports under Regulation 833/2014. MOL should also allow its long-term agreement with Lukoil for the delivery of crude oil via the Druzhba pipeline to expire at the end of June 2025. Any extension of the supply contract should be viewed as a hostile strategy to lock the region into long-term dependence on volatile Russian fossil fuels that undermines the EU’s Roadmap for phasing out Russian energy imports.
Europe can phase out Russian gas without jeopardising supply. The EU should set a legal deadline to end all Russian pipeline gas imports by end-2025. This must include halting flows through TurkStream and enforcing the Roadmap.
Beyond oil and gas, Hungary and Slovakia have deepened their dependency on Russian nuclear technology and fuel. Imports of Russian nuclear fuel rose by 105 percent compared to pre-invasion levels. The EU should sanction Rosatom and all of its subsidiaries to fast-track the process of reactor fuel diversification.
To end Central Europe’s role as a backdoor for the Kremlin’s energy revenues, the EU must take urgent regulatory, financial, and diplomatic measures at both the national and EU level. Whatever the outcome of the peace talks between Russia and Ukraine, if Europe is to regain its economic security and strategic autonomy, there is no alternative to the strategic decoupling from the Kremlin.
Caption: Some 150 Extinction Rebellion climate movement supporters stage a ‘Let’s Be Fossil Free’ civil disobedience action in Brussels, Belgium, 02 March 2024. The demonstrators took to the streets to demand an end to fossil fuel and energy subsidies, to prioritize ecology, and to stop buying Russian gas. [EPA-EFE/OLIVIER MATTHYS]
Updated: June 2, 2025 - 14:32
