Hungary wants to buy Russian oil for another year to circumvent EU sanctions: what is Budapest planning

Hungary will ask the European Union for a one-year extension of the sanctions exemption against Russia, which allows MOL's Slovnaft (MOLB.BU) refinery to export products refined from Russian oil. Peter Szijjártó has said that Hungarian energy group MOL needs another year to complete investments in its Slovakian refinery, Slovnaft, which will allow it to switch to non-Russian oil.

He made this statement after a meeting with the Slovak Foreign Minister. This was reported by Reuters.

"We need one more year to transfer these investments, so we are asking the EU to extend the sanctions exemption for one year, which allows MOL and Slovnaft, which is part of the group, to export refined products of Russian oil to the Czech Republic," Szijjártó said.

MOL owns refineries in landlocked Hungary and Slovakia, which are fed by the southern branch of the Druzhba pipeline.

Slovakia receives almost all of its crude oil from Russia via the Druzhba pipeline, but plans to reduce this share this year.

MOL Chairman and CEO Zsolt Hernádi said in April that MOL plans to partially finance the $500-700 million in technology investments needed to diversify its Danube and Slovnaft refineries away from Urals crude with EU funds.

According to him, last year, only about 5% of the oil consumed by Slovnaft came from non-Russian companies, but by the end of 2023, this share will increase to about 30-35%, or 2 million tonnes.

As a reminder, Hungary did not support the allocation of the next tranche of the EU's military aid to Ukraine in the amount of about €500 million. The reason for the blocking was Ukraine's inclusion of the Hungarian OTP Bank in the list of international sponsors of the war.

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