Oil group MOL disputes hikes to pipeline fees through Ukraine, Croatia
(Reuters) - Hungarian oil group MOL expects to be able to choose between Russian or non-Russian crude for its refineries by 2026, its Chairman and Chief Executive Zsolt Hernadi told Reuters, by implementing substantial investments.
MOL owns refineries in landlocked Hungary and Slovakia, both of which are fed by the Druzhba pipeline's southern spur.
Import shipments via Druzhba were disrupted last November when a Russian rocket hit a power station in Ukraine which provided electricity for a pumping station, highlighting supply risks.
Hernadi said that MOL planned to partly finance the $500 MM-$700 MM in technological investments needed to diversify its Danube and Slovnaft refineries away from Urals oil from European Union funds.
"We would like to be able to freely decide at the end of 2025 about when, how much, and of which kind of oil we want to ship into which refinery ... by end-2025, early 2026," Hernadi said during an interview at MOL's new headquarters overlooking the Danube River in Budapest.
He said that last year only about 5% of Slovnaft's oil intake was non-Russian but that this will rise to about 30-35% or 2 million tons by the end of 2023.
Hernadi said MOL was fighting to prevent a hike in oil transit fees in Ukraine and in Croatia.
Janaf, Croatia's oil pipeline operator, wants to raise transit fees via the Adriatic pipeline, which is MOL's alternative supply route, to four times the benchmark fee charged on the Baku Tbilisi Ceyhan (BTC) Pipeline, Hernadi said.
The BTC pipeline transports crude oil from offshore oil fields in the Caspian Sea to the Turkish coast.
Hernadi said that MOL was making short-term extensions to its Janaf contract and trying to negotiate a long-term one.
MOL had a contract with Janaf for shipments of 500,000 tons of crude on the Adriatic pipeline until end-March.
Janaf said in a reply to Reuters that the prices of services on its oil pipeline and storage system were defined during the negotiation process, in accordance with rules governing its services.
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