POLITICO: The price MOL would accept to abandon Russian oil in Hungary

MOL faces a pivotal crossroads as Hungary’s oil company navigates EU sanctions, costly refinery upgrades, and a race against time to end reliance on Russian crude—if Brussels agrees to help foot the bill.

Is MOL ready to give up on Russian oil?

As Politico writes, Hungary is willing to end its reliance on Russian oil by late 2026, provided the European Union contributes financial support, according to MOL Group, the country’s leading oil and gas company. György Bacsa, MOL‘s executive vice president for strategic operations, highlighted the USD 500 million (EUR 474 million) cost of adapting its refineries, including Hungary’s sole facility processing Russian crude, to handle alternative supplies.

While the EU has set an informal 2027 deadline for phasing out Russian oil, the Hungarian oil company is seeking “a couple of hundred million” in EU funding to accelerate the transition. The Hungarian oil company also operates refineries in Slovakia that process Russian crude, underscoring the broader regional impact of diversification efforts.

The MOL Tower in Budapest. Photo: FB/MOL Campus

Lack of EU financial support

Hungary’s reliance on Russian oil persists, with MOL continuing imports under a long-term contract with Russia’s Lukoil, set to expire in mid-2024. György Bacsa, the company’s executive vice president, emphasised that Hungary’s refining sector currently receives no EU financial support for transitioning away from Russian crude, despite the EU’s focus on energy security. While Hungary remains one of the few EU countries exempt from the 2022 ban on seaborne Russian oil imports, its dependence has increased, even as other Central European nations reduce theirs.

Bacsa expressed concern over potential EU sanctions tightening without accounting for Hungary and Slovakia’s reliance on Russian oil. He warned that new policies, like the roadmap of incoming EU energy chief Dan Jørgensen, must address regional disparities, as Western Europe’s energy transition pace does not reflect Hungary’s challenges. Meanwhile, the Hungarian oil company continues sourcing discounted Russian crude and negotiating future supply deals if legally permissible.

Photo: PrtScr/MOL Group Video Facebook

Trouble with navigating sanctions

The Hungarian oil giant, partially owned by the government, has faced challenges navigating EU sanctions and geopolitical tensions. While windfall taxes imposed by Budapest on MOL generate significant revenue for the state, the firm’s reliance on Russian oil remains under scrutiny. In July, the Hungarian oil company resolved a crisis when Ukraine sanctioned Lukoil by agreeing to reclassify Russian oil as Hungarian once it crossed into Ukraine, securing supply continuity. However, this workaround may face opposition from the EU, as briefing documents for incoming energy commissioner Dan Jørgensen suggest MOL’s imports through Ukraine could still be classified as Russian oil, potentially complicating Hungary’s energy strategy.

Read also:

• Good news: MOL extracts more oil in Hungary than previously hoped for
• Hungary’s dependence on Russian oil is problematic, according to analyst – Here’s why