Hungary needs EU cash to diversify energy supply, Poland says

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WARSAW, May 17 (Reuters) - Hungary needs European Union funds to be unlocked to diversify its energy supplies, Poland's president said on Tuesday, offering some support to a country that has blocked a proposed EU ban on Russian oil due to the economic pain it would face.

Andrzej Duda told a joint news conference with his Hungarian counterpart Katalin Novak that he hoped a proposed new package of EU sanctions on Russia - including the oil ban - could be approved with Hungary's assent, but also offered Poland's understanding over Budapest's close energy ties with Moscow.

Hungary says hundreds of millions of euros are needed to upgrade its refining and pipeline infrastructure so that it can cut out Russian oil, while a total modernisation of its energy system would cost billions of euros.

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Most other EU countries support banning Russian oil under the sixth package of sanctions designed to punish Moscow for waging war on Ukraine. Unanimity is required for such a decision, however, with Hungary being the most vocal critic.

"Please remember that it will be hard for the Hungarians to diversify if European recovery funds remain blocked," Duda said, adding Budapest's energy ties with Moscow are fundamental for the economy and can't be changed overnight.

The European Commission has held back pandemic recovery funds from Hungary and Poland in a dispute over the rule of law.

Hungarian President Katalin Novak told reporters that her country needed energy diversification along with the EU funds.

"It's in Hungary's best interest to have many energy sources, we need that for our sovereignty," Novak told a joint news conference with Duda. "For that we need the EU funds and we ask president Duda to support us."

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Reporting by Alan Charlish, Pawel Florkiewicz, Krisztina Than, Anna Koper Editing by Jason Neely and Mark Potter

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