MOL weighs crude supply contingencies

Ukraine Crisis

Russian-language sign with words "Druzhba oil pipeline" in the Carpathian region of Ukraine, May 2021.

Photo by Dmytro Falkowskyi / Shutterstock.com

Hungary's MOL is "working on a number of scenarios" regarding the supply of its refineries in Hungary and Slovakia in case of an embargo on Russian crude, the oil and gas company said on Thursday, according to a report by state news wire MTI.

"MOL's primary goal is ensuring Central Europe's secure supply through the group's refineries," the company told state news wire MTI.

MOL noted that its Hungarian refinery, in Százhalombatta, south of Budapest, was built for Russian Export Blend (REB), and the ratio of alternative blends it can refine is limited to "at most 35%".

An embargo on Russian crude and crude products would have a "significant impact" on the operation of the refinery and its secure supply, while using crude blends of varying quality would result in "consequences affecting quality, quantity, and operation that could lead to a reduction in performance and refinery malfunctions", MOL added.

Raising the rate of alternative crude at the Hungarian refinery to 100% would take "as long as 2-4 years" and cost "several hundred million dollars", MOL said.

Using alternative sources of crude would also impact the product mix of the refinery and "could cause supply problems in the case of some products in the short and mid-term", it added.

If deliveries of Russian crude through the Druzhba pipeline are no longer possible, MOL could supply the refinery in Hungary as well as the one in Bratislava from the Adria pipeline, MOL said.

The company noted it has spent USD 170 million, so far, on reducing the ratio of REB at its Hungarian refinery and increasing the volume of deliveries it can take through the Adria pipeline.

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