A presidential decree from Ukraine to tighten sanctions against Russia came into force on June 26, banning Lukoil from exporting its products via Ukraine, directly impacting Hungary’s massive energy giant, MOL.
Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó confirmed on Tuesday evening after talks with Russian Foreign Minister Sergei Lavrov in New York that Lukoil is not delivering crude oil to Hungary through Ukraine via the “Friendship” pipeline. He added that they are looking for a legal solution to the issue, as “Russian oil is very important for our energy security.”
The supply concerns are real, as two-thirds of MOL’s crude oil imports come from Russia. Portfolio.hu cited one source that said Lukoil alone has so far accounted for about half of MOL’s Russian crude oil imports, around 6-6.2 million tons a year, while other market sources say Lukoil’s share of Hungarian oil imports is around 30 percent.
Portfolio noted that Fitch Ratings’ had just earlier this year suggested that MOL could fully replace Russian crude imports from 2025. MOL itself has said it should be free to import from anywhere in 2026 when it will have the infrastructure in place to process any crude it receives.
The southern branch of the Friendship pipeline carries Russian crude oil to Slovakia and the Czech Republic as well, meaning that if Lukoil has a live transit contract with these two countries, then their supplies have also been interrupted since the end of June. This would include MOL’s own subsidiary in Slovakia, which also exports to Czechia, although the company reported back in February it had already increased non-Russian input to this plant to 30 percent.
Due to EU sanctions, this share will have to be at 60 percent by the end of 2024.
