MOL in final negotiations on Russian oil supply

Hungarian oil and gas company MOL Group is nearing the end of negotiations to establish a scheme that would ensure the flow of crude oil from Russia after Ukraine banned the company’s main partner, LUKOIL , from transporting through its pipelines.

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According to Minister of the Prime Minister’s Office Gergely Gulyas, the new scheme is expected to be more expensive for MOL compared to the one in place before Ukraine’s ban, and the Hungarian company will bear the financial risk of transporting Russian crude oil through Ukraine.

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Although this oil supply route will be more expensive and despite the fact that MOL will bear the risks of transportation from the Russian-Ukrainian border, there is a legal solution that can be long-term, Gulyas explained, adding that MOL will become the legal owner of the oil at the Ukrainian-Russian border and will bear the risk of its flow through the country, which has been at war with Russia since February 2022.

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According to government estimates, this would mean an additional insurance cost of 1.5 dollars per barrel for MOL.

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Gulyas said that negotiations are expected to conclude in early autumn, without specifying a more concrete timeframe.

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At the end of June, Ukraine banned the Russian oil exporter Lukoil from using the Druzhba pipeline, which runs through Ukrainian territory and partly supplies Hungarian and Slovak refineries. The two landlocked countries have warned of potential fuel shortages from September if a solution is not found.

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