EUROPE: MOL is even slower to disengage from Russian oil
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Hungarian oil group MOL expects its refineries to also be able to process non-Russian crude by the end of 2026, a year later than planned, as some adjustment projects have been delayed, an MOL official said. writes Reuters.
Following Russia’s invasion of Ukraine in 2022, the European Union banned its member states from importing Russian oil, but exempted Hungary, Slovakia and the Czech Republic to allow them to find alternative routes and supplies.
However, some in the bloc’s leadership, most recently European Commission President Ursula von der Leyen, have said Hungary has not done enough to divest itself of Russian oil and gas.
MOL has two refineries, in Slovakia and Hungary, which are supplied with Russian crude via the southern branch of the Druzhba pipeline. The company said it has invested in the technology needed to diversify beyond just processing Urals oil, but progress has been slower than expected.
Viktor Sverla, MOL’s vice president for strategy and sustainability, told Reuters on Thursday that MOL can currently refine up to 30%-40% of non-Russian crude at its refineries in Slovakia and Hungary. “There are ongoing investments through which we could increase this percentage to 100% by the end of 2026,” Sverla said. MOL’s executive chairman, Zsolt Hernadi, had told Reuters in April 2023 that MOL would be able to choose between Russian and non-Russian crude -Russian for its refineries until late 2025 or early 2026.
Sverla said the delays were due to unforeseen complexity in executing the 24 planned refinery upgrade projects and the need for additional logistical investment in storage and blending capabilities. He added that MOL could complete the projects in the next two years at a cost of $500 million, the lower end of the $500-700 million investment range it gave in 2023.
Sverla also said MOL was in talks with Croatia’s oil pipeline operator Janaf about a long-term contract to transport crude through the Adriatic pipeline, but declined to comment on planned volumes or detail transit charges, which MOL criticized them for being too big.
“We are not very satisfied with the current transit fees and we are confident that we will be able to reduce these fees in the future, but an even more important aspect for us is that we should have a long-term contract,” he stated. “However, the Druzhba pipeline is vital to us, and our goal is to have a diversified crude supply, relying on both Russian and non-Russian oil.”
Asked if MOL was prepared for the December 5 expiration of the exemption the European Union granted Slovakia to export fuel produced from Russian oil, Sverla said MOL could increase the share of non-Russian crude at its Slovakian refinery to 50% if necessary.
