EU decides on key €90bn Ukraine loan after pipeline deadlock ends

European Union ambassadors are meeting in Cyprus with expectations high that a €90bn (£78bn) EU loan seen as vital support for Ukraine can finally be paid out after months of deadlock.

The funding was agreed last December, but Hungary's Viktor Orbán slapped a veto on the payment in February in a row over supplies of Russian oil that came to a halt through a pipeline in Ukraine.

Ukraine said an oil hub on the Druzhba pipeline was damaged in Russian strikes, but Orbán demanded the oil start flowing again before the loan could be paid out.

The EU believes the deadlock is about to end as Ukraine says the pipeline has been repaired.

Orbán's election defeat last Sunday has also cleared the air for the EU, bringing to an end his 16-year era as Hungarian prime minister. Hungary's next leader, Péter Magyar, has prioritised a reset in Budapest's poor relations with Brussels.

"We expect some positive decisions... on the €90bn loan," EU foreign policy chief Kaja Kallas said ahead of the ambassadors' meeting. "Ukraine really needs this loan and it's also a sign that Russia cannot outlast Ukraine."

The EU funding has been described by Ukrainian Deputy Prime Minister Taras Kachka as "a matter of life and death" for Kyiv, and two-thirds of it will be spent on bolstering Ukraine's defence needs while the rest will go on broader financial assistance.

Hungarian energy firm Mol said it had been told by its Ukrainian partners that Russian oil supplies would start flowing again through the Druzhba pipeline on Wednesday to both Hungary and Slovakia for the first time since 27 January.

Orbán, who is acting as caretaker leader until early next month, made clear at the weekend that as soon as oil deliveries through the pipeline were restored "we will no longer stand in the way of approving the loan".

In the run-up to Hungary's bitterly contested election this month, he had accused Ukraine of imposing an "oil blockade" on his country and neighbouring Slovakia, claiming that the EU was working with Kyiv against him.

Satellite images at the time suggested substantial damage to a major oil tank at Brody in western Ukraine in late January and Kyiv had insisted that repairs would take some time, adding that its engineers had come under Russian attack.

Meanwhile, Ukraine has also targeted oil facilities inside Russia, including a pumping station in Samara region linked to the Druzhba pipeline this week.

Orbán's decision to renege on last December's agreement to provide Ukraine with a €90bn loan had infuriated EU leaders, who had agreed to give Hungary, Slovakia and the Czech Republic an opt-out from the scheme.

The Hungarian leader, long seen as the EU's closest partner to Russia's Vladimir Putin, made hostility towards both Ukraine's Volodymyr Zelensky and the EU central to his failed election campaign. Campaign posters across Hungary portrayed Zelensky alongside Magyar with the message: "They are dangerous!"