Expert: Fuel prices will increase significantly in Hungary after hurtful deal

József Balogh, a Hungarian energy expert, said that the MOL Group signed a disadvantageous oil delivery agreement out of necessity. However, the result will be higher fuel prices soon.

According to index.hu, the Janaf Croatian crude oil pipeline operator and the Hungarian gas and oil giant, MOL, signed an agreement about the shipment of 2.9 million tonnes of crude oil. Mr Balogh believes MOL did not have a choice but to accept the new deal. But it is very disadvantageous for the company.

The Hungarian company will pay several times any reasonable current market benchmark for the Croatian firm. Balogh told ATV that the agreement was much more important for the Hungarians than for the Croatians. That is why the price had to be accepted.

Fuel prices will soar again

MOL has to produce fuels from non-Russian crude oil in their Bratislava refinery in Slovakia due to EU sanctions. That is how they can satisfy needs in the nearby markets. However, non-Russian oil can be delivered only through the Adriatic Sea and via a pipeline running through Croatia. That is the Hungarian company’s only alternative. The other reason is that it is one of the strategic aims of MOL to diversify its supply since the Druzhba pipeline crosses Ukraine, and a possible sabotage or attack is always imaginable. That is what Ukrainian President Volodimir Zelenskyy suggested.

Eszter Bujdos, the CEO of holtankoljak.hu, thinks that the unfavourable deal will cause increasing fuel prices in Hungary. We do not see MOL’s expenditure structure or how the changing cost of the raw material modified, she added. “But such a high fee will raise prices”, Mrs Bujdos highlighted.

Index did not share the price MOL will pay for the Croatian crude. Reuters wrote MOL and Janaf did not disclose the transit fees. The news outlet added “Janaf and MOL have been in drawn-out talks over transit fees. MOL’s chairman said last month that the Croatian company wanted to raise fees on the Adriatic pipeline to four times the benchmark fee charged on the Baku Tbilisi Ceyhan (BTC) Pipeline.”

The view from MOL’s new skyscraper headquarters in Budapest: