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MOL clears the way for Russian oil deliveries to resume to Hungary and Slovakia

Crude oil transport via the Southern Druzhba pipeline could resume after a six-day halt to Hungary and Slovakia after the Hungarian oil and gas company, MOL offered to settle the transit fees owed to Ukraine as a temporary solution. Slovakia began to receive Russian crude via the link, but pumping to the Czech Republic is not planned yet.

The Southern leg of the Druzhba oil pipeline passing through Ukraine carries oil to European refineries in Hungary, Slovakia and the Czech Republic on the basis of a long-term agreement between Transneft and Ukrtransnafta for the provision of oil transportation services with full prepayment.

On Tuesday, Transneft informed that Russian oil deliveries through the pipeline have been halted by Ukraine as the payment couldn’t be completed due to EU sanctions. Consequently, the Ukrainian operator, Ukraintransnafta stopped the transit of oil from Russia through the Southern Druzhba pipeline.

The suspension of oil flows on the Southern route would hit hard Hungary, Slovakia and the Czech Republic, which rely heavily on Russian crude and received a temporary exemption from the wider EU oil embargo.

Hungary’s oil and gas company, MOL announced on Wednesday that it paid the transit fee for the use of the Ukrainian section of the pipeline, as a swift solution. In its press statement, MOL said that oil flows can resume in a few days, which was initially stopped due to “technical issues emerging on the banking front”.

According to the press statement, the supply situation required a quick response and although MOL has its own reserves sufficient for several weeks in Hungary, as a regional company it also assumes responsibility for the security of supply in the surrounding countries.

MOL’s Slovak subsidiary Slovnaft announced that it also made the payment on Wednesday and Slovakian Economy Minister Richard Sulik confirmed that oil has already arrived to Slovakia on Facebook.

However, this does not apply to the Czech Republic. Minister of Industry and Trade, Jozef Síkela, announced that the interruption of Russian crude oil shipments does not currently limit the operation of oil refineries in the Czech Republic and that the Czech Republic still has enough reserves for several days. However, he underlined that they are working together with the Polish side to find a solution to restore supplies, as the Czech refiner, Unipetrol belongs to the Polish group PKN Orlen.

All three countries are heavily dependent on Russian oil supplies and asked for more time due to phase out their dependence in May when European Union leaders agreed to block more than two-thirds of Russian oil imports.

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