EU, Hungary split over money to refineries in talks on Russia oil ban - sources

The European Union and Hungary are negotiating financial support to Budapest so that it lifts its veto on the bloc's planned embargo on Russian oil, but they remain split over funds for refineries, sources told Reuters on Tuesday. The EU commission this month proposed a new package of sanctions against Russia for its invasion of Ukraine, which would include a total ban on oil imports in six months' time, but the measures have not yet been adopted, with Hungary being among the most vocal critics of the plan.

The European Union and Hungary are negotiating financial support to Budapest so that it lifts its veto on the bloc's planned embargo on Russian oil, but they remain split over funds for refineries, sources told Reuters on Tuesday.

The EU commission this month proposed a new package of sanctions against Russia for its invasion of Ukraine, which would include a total ban on oil imports in six months' time, but the measures have not yet been adopted, with Hungary being among the most vocal critics of the plan. Hungary's Foreign Minister Peter Szijjarto said on Monday that the total cost for Hungary to wean itself off Russian energy would be up to 18 billion euros.

But in talks with the EU, Budapest has indicated that a much smaller figure could be enough in the short-term to address its concerns. It has demanded about 750 million euros ($790.4 million) to be invested in expanding an oil pipeline that connects the country to Croatia, and to convert refineries that run on Russian oil to different types of crude, Szijjarto and sources said.

Of these funds, up to 550 million euros ($579.6 million)would be needed to upgrade two refineries run by Hungarian energy group MOL in Hungary and Slovakia which can currently only process Russian oil. MOL had said the cost for the upgrade will be between $500 million and $700 million.

The EU has repeatedly shown its backing to the expansion of the Croatian pipeline, but is dithering about offering Hungary full support to convert private refineries, as that could be an unfair aid in breach of the bloc's competition rules, one official familiar with the talks told Reuters, adding that talks were under way about how much could be offered. The official also said that Hungary's alternative request to fully exempt piped oil from sanctions against Russia was "a complete no go". Hungary receives 65% of its oil from a Russian pipeline.

Talks were still under way on Tuesday to break the deadlock, with one diplomat saying Hungary was expecting some funds in a package of measures to wean the EU off Russian energy and make the bloc's economy greener, which the Commission will unveil on Wednesday. ($1 = 0.9489 euros)

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