Severe oil shortage hitting Hungary soon?

Last week the southern branch of the Druzhba pipeline, which carries oil to Hungary, faced disruption once again. Minister of Foreign Affairs and Trade, Péter Szijjártó stated it was likely that Russian attacks damaged the Ukrainian electrical systems responsible for powering the pipeline. Although operations continued much faster than was initially expected, the question arises as to whether it is possible that another similar occurrence will lead up to a long-term shortage of Russian oil.

The events of August already showed us that relying on the Druzhba pipeline in the midst of the war can lead to great uncertainty. Back then, the disruptions were also due to the newly imposed economic sanctions against Russia. Hungarian companies expect further incidents as well as possible delays regarding the Ukrainian energy grids. They reason that even the Ukrainian companies operating the energy grids have not scheduled a date to repair the previous damage due to their scarce resources and lack of workforce.

Read more: Hungary could be given exemption from EU’s oil price cap

Increased transit fee

What worsens the situation is that Ukrainian transit companies are planning to increase the transit fees Russia has to pay, which Putin will likely not accept eagerly. G7.hu said, one possible solution could be to dump the additional costs on the consumers. A similar incident occurred in August when Russia was unable to pay the transit fees to Ukraine due to the economic sanctions, and as a result, Ukrtransnafta shut down its oil transportation. The Hungarian oil and gas company, Mol offered to cover the expenses, hence, the oil flow continued uninterruptedly.

According to G7.hu, Ukrainian companies might also suggest to Mol and Hungary that they should solve the transportation issues by themselves if they insist on purchasing Russian oil. At the end of the day, cheaper oil may not be worth it in the long run if transportation is so unpredictable and problematic. Apart from Hungary, other countries (e.g. Slovakia, Czechia) are also dealing with the same issue.

The burning question

But with all that uncertainty, why do Hungarian companies keep on relying on Russian oil? According to Mol’s earlier statement issued in spring, it would require several hundreds of millions of dollars and two to four years in order to make the Százhalombatta refinery become independent from Russian crude oil and be able to process other kinds of oil. Besides, Mol is currently facing more urgent issues, concerning its Pozsony refinery. They export oil abroad but the recently introduced Slovakian regulations will make that impossible, as of next year. Although the changeover of the Százhalombatta refinery is not an urgent matter at the moment, experts believe that Hungary must find a prompt solution to prevent the potential exhaustion of its oil reserves.

Read more: Hungary has not received Russian oil deliveries for 3 days!

Author: Hanga Kiss

Source: g7.hu, atlatszo.hu