BUDAPEST (Realist English). The Hungarian authorities has said that their support for the ban on oil imports from Russia depends on the payment of hundreds of millions of dollars in compensation by the European Union. This is reported by Reuters.
According to Hungarian Foreign Minister Péter Szijjártó, Brussels has not yet put forward an acceptable proposal:
“We expect such a proposal not only for the conversion of our refineries, which costs hundreds of millions of dollars, not only for increasing of the capacity of the Croatian pipeline, which will cost several hundred million dollars, but also for the future of the Hungarian economy.”
Budapest demands that Russian pipeline supplies be exempt from the oil embargo, which should only apply to shipments by sea. This will benefit the Hungarian corporation MOL, which makes huge profits because its refineries use cheap Russian Urals crude.
Last year, the Hungarian government directive limited the increase in fuel prices, which helped Prime Minister Viktor Orban win the elections in April. Now the Cabinet of Ministers is haggling with Brussels for compensation to cover the losses of MOL.
“MOL and the government are playing in tandem. The game is to use Russian oil as long as possible, which is much more profitable, given the price difference.” said Wojciech Kononchuk, deputy head of the Polish Center for Oriental Studies OSW.
MOL’s refining business model is based on Russian oil transported via the Druzhba pipeline, which covers about 65% of Hungary’s raw material needs. The company stated that it will take up to 4 years and about $700 million to fully convert its two refineries in Slovakia and Hungary to the processing of an alternative grade of crude oil.