Hungarian refiner MOL says it will not be ready to operate without Russian crude oil until at least 2026, despite recent agitation from Ukraine exposing precarious energy supply links with Russia.
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MOL, the sole refiner operating in landlocked Hungary and Slovakia, had so far hung on to its Russian crude supply chains, benefitting from watered-down EU sanctions that banned only seaborne crude imports from Dec. 2022 and kept Russian pipeline deliveries legal.
In June, a Ukrainian crackdown on pipeline flows dealt another curveball, targeting deliveries from key Russian supplier Lukoil via the Druzhba pipeline, which runs through its territory. The restriction threatened some 40,000 b/d that had flowed to Slovakia and Hungary from the supplier, according to Hungary’s Foreign Minister.
Despite warnings of fuel shortages associated with the move, MOL avoided making the painful switch from Druzhba supplies by striking a new crude supply deal Sept. 9 involving taking over crude ownership at the Belarus-Ukraine border.
MOL declined to comment on the suppliers now feeding its Danube and Bratislava refineries through the pipeline, however Hungary’s Foreign Minister Peter Szjijarto told reporters Oct. 10 that Lukoil deliveries have resumed under the new contract. Russia’s foreign ministry previously reported that rival Russian supplier Tatneft also scaled up its supplies to compensate for lost Lukoil volumes.
Nonetheless, the incident exposed the group’s delicate supply links, and has accelerated an existing push to diversify feedstock sources for its operations.
“We don’t have a crystal ball, but we know that in the current situation, there are definitely supply risks,” said Viktor Sverla, Group Strategy and Sustainability Director at MOL.
According to Sverla, MOL had already spent $170 million on improving its flexibility in supply before 2022, allowing its inland refineries to process up to 30-40% non-Russian crude.
Now, the refiner is investing in making its Danube and Bratislava refineries capable of operating independently of Russian crude by 2026.
The company has not committed to excluding Russian material and instead stressed that the project was part of a wider diversification drive. “Two pipelines are definitely better than one for security of supply,” said Sverla.
Adria pipeline option
For MOL, the main alternative to Russian supply is via the Adria pipeline, which feeds the southern Druzhba from the Croatian port of Omisalj. Theoretically, the connection could supply 80% of MOL’s crude requirements in Slovakia and Hungary today, however such operations would be unstable and present significant logistics and processing constraints, Sverla said.
“We have never tried to import oil only via the Adriatic. Although there are some promising short-term tests of the pipeline’s capacity, these tests have run for about a few hours,” said Sverla.
Beyond logistics costs, preparing to run entirely on Adria supply involves developing new cocktails of crude grades to mimic heavy Russian Urals crude that MOL’s inland refineries, particularly Hungary’s Danube, are set up to run.
“Instead of changing the refinery configuration, which would be an extremely huge and a very, very lengthy investment, we would like to blend for ourselves something similar to the Russian crude, which we can then easily process,” Sverla said.
MOL has tested more than ten crudes in its inland refineries and has earmarked grades from the Caspian and Middle East region as the most suitable candidates for future blends.
According to S&P Global Commodities at Sea data, Azeri Light crude oil has represented around 44% of imports to the Croatian port of Omisalj in 2024, followed by 14% CPC Blend, another light sweet grade. Some 8.4 million barrels of medium sour grades similar to Urals, including Basrah Medium, Johan Sverdrup and Kazakhstan Export Blend Crude Oil (KEBCO) have been delivered to the port in 2024.
The company plans to keep its upstream production levels stable at 90,000 boe/d to support its downstream operations. MOL currently processes most of its Azeri crude entitlement from its 9.57% stake in Azerbaijan’s ACG complex in its European refineries, Sverla said, and continues to eye new opportunities in both the Caspian region and further afield.
Future exposure
Beyond immediate supply concerns for its inland refineries, MOL has pressed ahead with decarbonization plans to align with upcoming climate targets.
In September, it started a 10-MW electrolyzer at its Danube refinery, which will produce 1,600 metric tons per year of green hydrogen for consumption in its refining process, cutting CO2 emissions by 25,000 t/y.
Sverla called the start-up a “pilot project” for the group, which has also planned to build green hydrogen capacity at its other two refineries. In Rijeka, a 10 MW electrolyzer is expected to be online by 2026, while a similar project in Bratislava is still in planning phases.
“It’s not the majority of our hydrogen need,” Sverla said, though the projects should help manage the risk of rising emissions costs in years to come. By substituting natural gas use in the refinery with hydrogen, MOL can cubs its emissions, while the company is also interested in future prospects for green hydrogen mobility.
With many of its decarbonization plans hinging on green electricity, MOL remains exposed to future price fluctuations in the power market
According to Sverla, the current decarbonization plans would double its power consumption by the end of the decade, making green electricity another strategic resource. “This is an area where we don’t want to be fully exposed to the market,” he said, hinting at plans by MOL to cover part of its expected 2.5-terawatt hours per year of consumption by 2030.
Platts, part of S&P Global Commodity Insights, assessed the cost of producing hydrogen via alkaline electrolysis in Europe at Eur6.82/kg ($7.46/kg) Oct. 10 (Netherlands, including capex), based on month-ahead power prices, around double the cost of natural gas-based hydrogen produced in the refining process, Sverla said.