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Tapping the Loophole

Czechia has spent five times more on Russian oil and gas than aid to Ukraine

Czechia along with Hungary and Slovakia have exploited their derogation from the EU ban on the import of Russian oil to maintain and even increase the purchase of Russian crude since the Russian invasion of Ukraine. The Czech Republic has spent over EUR 7 billion on Russian oil and gas — more than five times the EUR 1.29 billion it has provided in aid to Ukraine. Czechia’s oil imports have resulted in over EUR 2.3 billion in tax revenues for the Kremlin since the start of the invasion. In 2023, Czechia's reliance on Russian crude oil rose to 60%, despite government intentions to phase it out. The sole crude oil refiner in Czechia, the Polish company Orlen Unipetrol, utilised the exemption from the EU ban on Russian oil imports to purchase large volumes of discounted Russian crude, which was on average 21% cheaper than Azeri crude in 2023. This strategy contributed to surplus profits of around EUR 1.2 billion. However, during the periods of high reliance on Russian crude the savings from cheaper Russian oil were not reflected in lower consumer gasoline prices in Czechia.

The current assessment shows that Czechia can fully replace Russian crude oil supply by maximising the utilisation of the Trans-Alpine oil pipeline, increasing petroleum products imports from Germany and tapping into the country’s vast crude oil stocks. Similarly, Czechia can fully stop buying Russian gas as it has ample alternative non-Russian supply options from Norway and the global LNG market. The analysis reveals once again that to complete its strategic decoupling from Russian oil, the EU should close all sanctions gaps including the exemptions for the Druzhba pipeline and the refining loophole, which has allowed third countries to maximise Russian crude purchases and sell the surplus petroleum products back to the EU.

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