Slovak oil embargo exemption will benefit Hungarian MOL, not citizens – EURACTIV.com
The oil embargo exemption requested by Slovakia will not benefit the citizens but the owner of the only Slovak oil refinery, Slovnaft, a subsidiary of the Hungarian MOL, analysts point out.
There is a “fundamental difference” between the Slovak exemption and the exemption requested by the Czech government, explained influential energy commentator Karol Hirman.
According to the analyst, Czechia wants an exemption based on capacity issues with the pipelines, which are operated exclusively by Czech state-owned pipeline operator Mero.
Meanwhile, “Slovak Economy Minister (Richard) Sulík is negotiating an exemption for the purchase of oil for the Hungarian oil refining group MOL, which also includes Bratislava-based Slovnaft, but in which the Slovak government does not own any shares,” Hirman said. Explain.
“This is crucial because Sulík’s exemption will have a direct impact on the economic results of MOL/Slovnaft as it will allow them to continue purchases of the Russian oil pipeline Druzhba at a strong discount on market prices and will result in a increased profit margins,” he added.
Sulík argues that his exemption will reduce prices at gas stations. They are, however, based on market prices from the Rotterdam Petroleum Exchange.
One of the minister’s main arguments for an exemption is that the Slovnaft refinery in Bratislava was built to refine Russian crude oil, and it would take a long time to reuse it for Arab oil. However, MOL CEO Zsolt Hernádi claims that it is possible in a few months, even if the efficiency would decrease by 20-30%.
Another argument is that Slovakia and Hungary are so dependent on Russian oil that they cannot afford the ban.
Sulík claims that the capacity of the Adria gas pipeline from Croatia is insufficient. “It will be necessary to strengthen the Adria gas pipeline, which today has insufficient capacity for Slovnaft to produce efficiently,” Sulík said.
But Slovnaft CEO Oszkár Világi said there was enough capacity for Slovnaft in Adria.
EU countries are still struggling to find a compromise on a Russian oil embargo as Hungary insisted on its veto at a meeting of EU foreign ministers last Monday.
Further discussions will take place this week at diplomatic level with the aim of reaching an agreement by the end of the week, ahead of a crucial EU summit at the end of the month.
According to a diplomat who spoke to EURACTIV on condition of anonymity, a deal between the Commission and Budapest is highly likely after the executive presented its REPowerEU plan on May 18 to phase out Russian fossil fuels.
“It is in no one’s interest to take the issue to the EU summit […] Viktor Orbán knows that he will be under enormous pressure there, so he also wants a solution before that,” the diplomat noted.
The diplomat pointed out that Orbán’s position puts other governments in a difficult position at home, because if Budapest gets what it wants, others, like Bulgaria, will wonder why they didn’t get the same. thing.
“The same thing happened with Spain and Portugal when they got the gas price cap,” the diplomat concluded.