Hungary settles Russia’s bill with Ukraine to restore the flow of oil

BERLIN – Hungary’s main oil group said on Wednesday it will pay an unpaid bill that the Russian oil pipeline operator owes the Ukrainian authorities, clearing the way for Russian oil deliveries to resume. customary. to three Central European countries.

Analysts describe the financing deal as an unexpected boomerang effect of sanctions imposed on Moscow.

The consortium, MOL Group, a manager of the Hungarian branch of the Druzhba pipeline, aka Friendship, said on Wednesday that it had “transferred fees due to the use of the pipeline in Ukraine.”

Ukraine has pledged to continue supplying Russian crude oil to Hungary, Slovakia and the Czech Republic, “within a few days”, MOL said.

Authorities in those three countries said on Tuesday that shipments of Russian oil from the pipeline stopped last week because of “technical” banking problems related to sanctions that Europe has imposed imposed on Russia to punish Russia for invading Ukraine in February.

“This seems to be just another example of ‘friendly flames’ from sanctions that will hurt some European countries, in this case Hungary,” said Vitaly Yermakov, a senior researcher at Oxford Energy, said in an email. “Sanctions on economic activity are a blunt weapon that can have unintended consequences.”

Under the leadership of Hungarian Prime Minister Viktor Orban, three countries lobbied for oil supplies by pipeline, not by tankers, for an exemption. a decision of the European Union to begin banning Russian oil imports later this year.

All three depend heavily on Russian oil to fuel their economies, but none more so than Hungary. MOL, one of the country’s largest and most profitable companies, announced in April that it would pay a dividend of $652 million to shareholders.

Mr Orban’s Fidesz Party won a landslide victory in the April election with the promise that, thanks to cheap energy from Russia, gas and utility prices won’t skyrocket like elsewhere in Europe. But this month, Mr Orban’s government was forced to lift the cap on electricity prices for more households to use, as energy prices continued to escalate.

Hungary, along with Slovakia and the Czech Republic, is located at the southern end of the Druzhba pipeline. Yermakov said they have no viable alternatives to Russian oil in the short term.

Germany and Poland, at the northern end of the pipeline, have stopped buying Russian crude and have instead begun buying oil from other suppliers and shipping it to ports on their north coast.

An oil tanker carrying a shipment of US crude oil, of similar quality to Russian oil delivered via the Druzhba pipeline, arrived at the German port of Rostock last week, Reuters reportedciting ship tracking data and analysts.

An oil pipeline connects the oil port of Rostock on the Baltic Sea with two major refineries in eastern Germany, PCK Refinery in Schwedt and Leuna, both dependent on Russia for deliveries until the war began.

Benjamin Novak contribution report from Budapest.

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