Hungary's MOL Negotiates New Scheme for Russian Crude Oil Amid Kyiv's Pipeline Ban

Hungary's MOL is nearing an agreement to secure the flow of Russian crude oil after Kyiv banned transportation by Lukoil, its main partner. The new scheme, expected to be more costly for MOL, will have the company bear the financial risk and become the legal owner of the oil at the Ukrainian-Russian border.

Hungary's MOL is in the final stages of setting up a scheme to ensure the flow of crude oil from Russia, following Kyiv's ban on its main partner Lukoil's transport through Ukrainian pipelines, a government official disclosed on Thursday.

The new arrangement is anticipated to be more expensive for MOL compared to the previous scheme, with the company shouldering the financial risk of Russian crude oil transit through Ukraine. Prime Minister Viktor Orban's chief of staff, Gergely Gulyas, indicated that Hungary aims for this solution to remain in place until at least the end of the ongoing war, though no specific timeline was provided.

According to Gulyas, the arrangement involves MOL becoming the legal owner of the oil at the Ukrainian-Russian border, bearing an additional insurance cost of $1.5 per barrel. The discussions are expected to wrap up by early autumn. Hungary and Slovakia have cautioned about potential fuel shortages from September if a resolution is not reached. Hungary's pragmatic stance with Moscow has caused friction with EU allies seeking a firmer stance against Russia.

(With inputs from agencies.)