MOL-leader: Hungary cannot replace Russian crude oil overnight – UPDATED

Central Europe and Hungary are not in a position to replace Russian crude oil overnight, as doing so would cause a very serious disruption to the whole region, the chairman and CEO of Hungarian oil and gas company Mol said on Thursday.

Zsolt Hernádi told the company’s general assembly that several oil refineries in central Europe, including in Hungary and Slovakia, have been designed to process Russian crude oil. At a regional level, these refineries receive 120 million litres of Russian crude oil daily and they use this to produce diesel, petrol and other vitally important products for the economy, he said. To replace such a volume would require a considerable length of time and amount of money, he added.

Hernádi said that Mol was acting in full compliance with the European Union’s system of sanctions aimed at bringing an end to the Russian-Ukrainian war as soon as possible.

• Read also: Is there a way for Hungary to reduce its dependency on Russian energy?

Commenting on the petrol price cap, he said it was necessary to react to the sudden increase in energy prices at the government level but temporary measures would have to be withdrawn in the medium term. They cannot be maintained for long because resources will run out, he added.

Government: Hungary’s energy supply secure

Hungary’s energy supply remains secure and gas deliveries are continuing in line with the contract with Russia, the foreign ministry state secretary for communications told public current affairs channel M1 on Thursday. Tamás Menczer said that though Russia has halted gas supplies to Bulgaria, transit deliveries were still continuing, adding that Bulgaria and Serbia’s energy ministers had confirmed as such to Hungarian Foreign Minister Péter Szijjártó.

Because some 85 percent of Hungary’s gas supply come from Russia and 90 percent of Hungarian homes rely on gas heating, the government maintains that Hungarians cannot be made to pay the price of war, Menczer said. But Hungary is not the only country that is dependent on Russian gas, the state secretary said, citing remarks from German, Austrian, Czech, Slovak and Romanian officials that sanctions on Russian energy would hurt Europe more than they would Russia.

Energy prices are “extremely high” but Hungary has a long-term gas supply contract with Russia, which, along with the government’s scheme reducing utility bills, is necessary in order for Hungarians to receive gas at acceptable prices, Menczer said.

• Read also: Zelenskiy: Hungary makes money from other people’s blood!

Hungary’s gas storage facilities were filled to a significantly higher level than the European Union average ahead of the previous heating cycle, he said, adding that all conditions were in place for the facilities to be filled to the necessary level again.

Menczer also expressed Hungary’s support for peace talks between Russia and Ukraine, adding Hungary believed that the United Nations could use its peacebuilding capabilities to aid the process.

Speaking to public broadcaster Kossuth Rádió, Menczer said Hungary receives an annual 10 billion cubic metres of gas from Russia. Hungary produces 1.5 billion cubic metres of its own gas, receives 1 billion cubic metres from Croatia and buys the rest from market players whose main gas source is also Russia, he said.

UPDATE (04.28. 5.12 pm)

The global crisis sparked by the war in Ukraine has highlighted the fragility of European supply security and MOL’s obligation to ensure energy sovereignty, Hernádi said. The company has already taken steps: in the past eight years, it has invested 170 million dollars in raising the ratio of non-Russian type crude mixed into products to 30 percent, he said.

Should Russian crude stop flowing into the country from one day to the next, it would take 2-4 years and some 500-700 million dollars to ramp up refineries to satisfy demand in the region,

he said. Russia also delivers about half of Europe’s diesel imports, he added. Hungary has done “more than other countries” to enhance regional energy security, setting up a strategic gas reserve and linking its pipelines to those of its neighbours, Hernádi said.

Meanwhile, growing demand and the war have caused energy prices to skyrocket, he noted.

High prices will prevail this year, and it will take at least two years before prices consolidate once again,

he said. Companies will also have to bear the costs of developments necessary to ensure energy security, he said.

Read alsoHungarian government will not vote for any curbs on Russian oil and gas imports