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UPDATE - MOL, Slovnaft undertake €80m pipeline modernization

Hungarian oil and gas company MOL and its Slovakian unit Slovnaft will spend about €80m to modernize the stretch of the Adria oil pipeline that runs between the two countries, Slovnaft said on Tuesday.

The investment will significantly boost the crude pipeline capacity that runs between Slovakia and Hungary and will finally give Slovakia an alternative source of supply, said Slovnaft spokesman Anton Molnar in Bratislava. With the investment, Slovakia's dependence on the Druzhba pipeline, which delivers crude from Russia, will finally end, he explained.

The cost of the project will come mainly from private capital, he added.

The stretch of the pipeline which runs between MOL's refinery in Százhalombatta, just south of Budapest, and Sahy, in Slovakia, is about 50 years old. The pipeline runs further south from Százhalombatta, connecting MOL's refinery with the port of Omisalj in Croatia. After the renovation is completed, the pipeline will deliver some 6m tons of crude to Slovakia a year, about the same as Slovnaft's refining capacity.

The Adria pipeline was built in 1976-1979.

Slovnaft on Tuesday signed a €60m three-year contract with Transpetrol for the delivery of 17m tons of crude through the Adria pipeline in 2011-2013.