Europeans will pay for the transit of Russian oil through Ukraine

Kyiv refused to take money for the transit of raw materials from sanctions banks

European consumers of Russian oil, who have not refused to purchase raw materials from our country, will now have to pay for the delivery themselves. Ukraine, through which transit to the EU is carried out, turned out to accept payments through Russian banks, citing sanctions against Moscow, and turned off the taps on the southern branch of the Druzhba pipeline. Thus, endangering consumers from Hungary, Slovakia and the Czech Republic.

The pumping of Russian oil through the southern branch of the Druzhba international pipeline, passing through the territory of Ukraine towards Hungary, the Czech Republic and Slovakia, was stopped on August 4. The point is not that Moscow did not have $150 million to pay off with Kyiv, but the anti-Russian sanctions that block the transfer of advance payments for supplies through the European banking system.

The state-owned company Transneft tried to pay off the Ukrainian transit countries on time, but Nezalezhnaya refused the Russian counterparty, citing the regulations of the seventh package of EU sanctions that slow down such payments.

Budapest and Bratislava reacted almost instantly – in a day – they solved the problem by paying for transportation on their own. The behavior of these European states is fully justified. Hungary depends on the supply of Russian oil through the Druzhba pipeline by more than 70%, and Slovakia almost completely closes the import of “black gold” through the international transport channel passing from our country through Ukraine. As stated in the Hungarian raw materials holding MOL, although the company has oil reserves to meet domestic demand before the start of the heating season, Budapest decided to pay Ukraine for transit from its own financial sources, as well as take on the commission due to intermediaries. In turn, the Slovak company Slovnaft confirmed that the transit of Russian oil through Ukraine via the Druzhba pipeline was also paid for.

Prague is choosing priorities for now: either pay for transit through alternative European routes, which will cost much more, or join Slovakia and Hungary, recognizing that economic factors are much more important than geopolitical disagreements with Moscow.

According to Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences, the difficulties in transferring funds from the customer’s account to the accounts of the service provider can be explained both by EU bureaucratic barriers and a lack of understanding on the part of European businesses on how to correctly implement the economic sanctions imposed by Brussels against Russia in order to do not please themselves under them. According to industry sources, domestic financial institutions, with the help of which Transneft, authorized to export Russian raw materials, tried to pay for deliveries through Nezalezhnaya, involved their European representative offices in Luxembourg in transnational operations. The latter had to seek the consent of domestic regulatory agencies. As a result, all these “paper” disagreements acquired the status of an interstate conflict. If the elimination of contradictions continues in the corporate plane, then their settlement will become the subject of bilateral negotiations between counterparties and will serve as a reason for introducing additional technical conditions into the agreements.

“The main problem is that European business cannot fully understand the procedure for enforcing anti-Russian restrictions. Entrepreneurs hesitate to take any step to the left or right for fear of being subjected to the claims of their own political leaders. Hungary and Slovakia took the simplest path and agreed to pay for transit through Ukraine on their own. Most likely, Russia will somehow reimburse the additional costs of its partners. The Czech Republic, in turn, may demand some preferences from Moscow,” believes Andrey Loboda, an economist and director of external relations at BitRiver. “However, any obstacles in the supply of Russian energy resources to Europe, created by Kyiv, have lately not only initiated criticism against Russia, but exacerbated the negative attitude of Europeans towards Ukraine.”