Page 5 - bne IntelliNews monthly magazine September 2024

bne September 2024 Companies & Markets I 5
In addition to Radman, Croatia’s economy ministry also issued a statement criticising Szijjártó.
A ministry statement accused the Hungarian foreign minister of making “insane and utterly meaningless” accusations,
and added: “These situations remind us of Hungary's unpredictable and contradictory behaviour in matters of energy cooperation.”
The statement concluded: “We call on Hungary to refrain from further baseless accusations and untruths and to return to constructive dialogue in the interest of mutual prosperity and energy security, and ultimately energy independence.”
JANAF has also defended its operations, saying on August 2 it has invested in its transport-storage system and proved its capability to transport 1.2mn tonnes of crude oil monthly. “Accordingly, JANAF can fully meet the crude oil needs of the MOL Group refineries in Bratislava and Budapest,” the company added.
Following Russia's 2022 invasion of Ukraine, the European Union banned oil imports from Russia but granted exemptions to Czechia, Hungary and Slovakia to find alternative supplies.
However, in July, Kyiv barred Lukoil from using Ukraine for transit, affecting both Hungary and Slovakia, which together receive 2mn tonnes per year (tpy) of crude oil from Lukoil.
After Ukraine imposed a ban on Lukoil shipments via the Druzhba pipeline, Budapest and Bratislava sought assistance from Brussels.
Hungary also threatened to block European Peace Facility funds for Ukraine, while Slovakia's Prime Minister Robert Fico warned of halting diesel fuel deliveries to Ukraine.
However, the European Commission stated that there was no indication of decreased oil flow or shortages, as other suppliers, including Hungary's MOL, were still able to use the pipeline. Despite the Lukoil ban, other Russian suppliers continued to use the Druzhba pipeline.
The European Commission has encouraged Hungary and Slovakia to reduce their reliance on Russian oil, despite their complaints about Ukraine's sanctions on Lukoil. The Commission reassured them that their oil supply was not immediately endangered by Ukraine's actions. In a letter quoted by the Financial Times, Dombrovskis advised the governments of Bratislava and Budapest to actively pursue diversification away from Russian fossil fuels.
Meanwhile, head of Hungary’s leading oil company MOL, Zsolt Hernadi, also weighed in on the issue. Speaking at the MCC Fest on August 2, he said that statements by government officials that the transit ban by Ukraine would lead to fuel shortages were overly exaggerated.
"If oil supplies were to come to a complete halt on the Friendship 2 pipeline, the company would still be able to source Russian oil through maritime routes, albeit at a much higher cost," he said.
The transition from Russian-type Ural oil to alternative sources would cost MOL approximately $700mn, according to Hernadi, who claimed that despite an initial promise, the EU confirmed in writing that it will not provide funding for that project.
Hernadi criticised the alleged high transit fees imposed by Croatia on the transport of the Adriatic pipeline, leading to higher prices in Europe. He made the case that the Adriatic pipeline was not operating at full capacity and that the Croats had already raised the transit fees and "could do it at any time”.
There is something fishy about the Ukraine sanctions on Lukoil's deliveries to Hungary and Slovakia
Ben Aris in Berlin
Ukraine's recent partial restriction on the operation of the Russian Druzhba oil pipeline has sparked a big row between the war-torn country and Hungary and Slovakia, who say they have been cut off from their Russian oil supplies, which were permitted by the EU as an exception to the twin oil embargos imposed on December 5, 2022 and February 5, 2023.
The row has escalated as some partners are questioning
whether Kyiv's actions are driven by commercial rather than state interests.
Despite the ongoing war, many Ukrainians were surprised to learn that Russian oil continues to be transported across Ukrainian territory to the EU, inadvertently funding Russia's war machine.
The new Ukrainian sanctions only affect the supply of oil to
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