EC: No impediment to paying oil transit via Ukraine, delay linked to compliance

MOSCOW. Aug 26 (Interfax) - There are no impediments to paying oil transit via Ukraine, a European Commission spokesperson told Interfax.

"We have been in close contact with both the interested Member States and Ukraine over the past days to clarify the situation, which now appears to have originated from a moderate delay in the necessary due diligence checks to comply with EU sanctions by the banks authorizing the payment of the transit fees," the spokesperson said.

"Our sanctions framework does not constitute an impediment to the payment of oil supplies via pipeline," the person said.

The sanctions adopted by the European Union foresee an exemption allowing transactions with certain state-owned enterprises, if they are strictly necessary for the direct or indirect purchase, import or transport of oil, including refined petroleum products, from or through Russia, unless otherwise prohibited by the sanctions themselves. Transneft is one of the state companies with which transactions are allowed, the spokesperson said.

"In any case, due diligence is essential to an effective application of our sanctions against Russia," the spokesperson said.

The southern branch of the Druzhba oil pipeline passing through Ukraine carries oil to European refineries in Hungary, Slovakia and the Czech Republic on the basis of a long-term agreement between Transneft and Ukrtransnafta for the provision of oil transportation services with full prepayment. Services are provided in paid volumes. Last year, the branch transported 12 million tonnes of Russian oil, including 3.4 million tonnes to the Czech Republic, 5.2 million tonnes to Slovakia, and 3.4 million tonnes to Hungary.

Ukrtransnafta stopped transit of Russian oil through Ukraine on August 4 due to failure to pay transit fees. It was noted that the funds paid on July 22 for transit in August were returned to Transneft's account on July 28 as EU regulation 2022/1269 came into force. Hungary's MOL and Slovakia's Slovnaft, also part of the MOL group, initiated discussions with the Ukrainian and Russian sides on the possibility of MOL or Slovnaft paying the transit fee, which allowed oil supplies to be restored after a week.