Hungarian oil and gas company MOL is close to finalizing negotiations for a new scheme to ensure the flow of crude oil from Russia, following Ukraine’s ban on its main partner, Lukoil, from transporting oil through its pipelines. According to Gergely Gulyas, Minister of the Prime Minister’s Office, the new scheme will be more costly for MOL than the previous arrangement and will place the financial risk of transporting Russian crude oil through Ukraine on the Hungarian company.
Under the new arrangement, MOL will assume ownership of the oil at the Ukrainian-Russian border and bear the risk of its transit through Ukraine, a country that has been in conflict with Russia since February 2022. Gulyas indicated that while this route will incur higher costs, it offers a potential long-term legal solution. The additional insurance cost for MOL is estimated to be $1.50 per barrel.
Gulyas noted that negotiations are expected to conclude by early autumn, though a specific timeframe has not been provided. This follows Ukraine’s decision in late June to ban Russian oil exporter Lukoil from using the Druzhba pipeline, which supplies oil to Hungarian and Slovak refineries. Both landlocked countries have expressed concerns about potential fuel shortages starting in September if a resolution is not reached.
