site.btaCzechia Spends Five Times More on Russian Oil, Gas than Aid to Ukraine - Center for the Study of Democracy

Czechia, along with Hungary and Slovakia have exploited their exemption 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 Sofia-based Center for the Study of Democracy says in an analysis titled "Tapping the Loophole", which was made public Monday. According to the report, Czechia 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.

Since the start of the Russian invasion of Ukraine, Czechia’s oil imports have resulted in over EUR 2.3 billion in tax revenues for the Kremlin. In 2023, Czechia's reliance on Russian crude oil reached 60%, despite government intentions to phase it out. The sole crude oil refinery in Czechia, the Polish company Orlen Unipetrol, utilized 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 analysts say.

Current assessment shows that Czechia can fully replace Russian crude oil supply by maximizing the utilization 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 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 maximize Russian crude purchases and sell the surplus petroleum products back to the EU.

The report says, "The Russian oil and gas sector is the most important revenue source for the Kremlin, and accounted for 32% (EUR 97 billion) of the country’s federal budget revenues in 2023. An important component of this revenue stream is pipeline flows to Hungary, Slovakia and the Czech Republic, who were granted an exemption from the EU’s ban on Russian oil imports. The intention of the derogation was to allow these EU Member States more time to reduce their reliance on Russian oil. In reality, Russian oil purchases have barely changed. Pipeline oil exports contributed EUR 2.5 billion to Russian export revenues in the first half of 2024 alone, around a fifth of that coming from the Czech Republic.

"While supportive of Ukraine in defending against the Russian aggression, the Czech Republic has, ironically, sent over five times more money to the Kremlin via fossil fuel purchases (EUR 7 billion) than it provided in aid to Ukraine (EUR 1.29 billion) since the start of the invasion."

The authors of the report are Luke Wickenden, an Energy Analyst in the Europe-Russia Policy & Energy Analysis Team of the Centre for Research on Energy and Clean Air (CREA), Martin Vladimirov, Director Energy and Climate Program at the Center for the Study of Democracy (CSD), and Isaac Levi of the Europe-Russia Policy & Energy Analysis Team at CREA.