Hungary Found Way to Resume Russian Pipeline Oil Deliveries

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Ekaterina Blinova

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Hungary appears to have found a simple way to again receive Russian oil via the Druzhba pipeline, the traditional route running through Ukraine.

«What the European company, in particular the Hungarian MOL, is proposing, is the transfer of ownership at the Russia-Ukraine border. This could lead to Russia not paying for the transit of oil through Ukrainian territory,» Vladimir Demidov, an independent expert on oil and gas markets, told Sputnik.

The Druzhba oil pipeline runs from Russia to Belarus and then splits into two branches: the northern one goes to Poland and Germany, and the southern one runs through Ukraine to the Czech Republic, Slovakia, Hungary and Croatia.

Under the contract, Lukoil must deliver oil to the territory of Hungary. If the point of acceptance is moved to the Russia-Belarus border or the Belarus-Ukraine border, then the oil that goes through the territory of Ukraine would de facto be the property of Hungary’s MOL, not Lukoil.

An oil processing facility of the Lukoil company near the city of Pokachi. - Sputnik International, 1920, 03.08.2024

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«Thus, this may lead to Russia not paying for the transit of oil through Ukrainian territory. Also, Russia will not take on the risks of transporting oil through Ukrainian territory,» Demidov explained.

He believes that this initiative is quite realistic. He does not rule out that this may even lead to a full-capacity operation of the oil pipeline.

Demidov suggested that in the wake of the transfer of ownership to the Hungarian energy company, the oil running through the Druzhba pipeline may be supplied not only to Hungary, Slovakia, and the Czech Republic, but also to other countries possibly, where it was delivered prior to Western sanctions.

«This is beneficial for Russia, because the West will not be able to blame Russia for any delays in deliveries because Russia will be able to deliver oil across its territory without problems,» the pundit pointed out.

He does not think that this initiative will have any impact on the European oil market.

«Most likely, this initiative will have a fairly large impact on the market of several Eastern European countries, such as Hungary, Slovakia, and the Czech Republic. Most likely, this market will be more stable because the supplies will be provided by a European company, and most likely, prices will not rise during the season as it usually happens on the oil market,» Demidov concluded.