By Samir Muradov
In late October 2024, it was reported that Hungaryand Slovakia had resumed the supply of Russian oil through the southern branch of the Druzhba pipeline, which crosses Ukrainian territory. This decision, despite political and economic challenges, underscores the commitment of these European countries to maintain stable energy supplies against a backdrop of strained international relations. Here, we explore the factors driving these supplies, the associated economic and geopolitical risks, and the implications for Europe and Russia.According to sources cited by Kommersant, following the resolution of issues related to Lukoil's supplies, Hungarian company MOL’s trading arm, Moltrade-Mineralimpex Zrt, shipped approximately 300,000 tons of Russian oil via Druzhba in September 2024, transiting through Ukraine. Notably, around 90% of this volume was sent to MOL’s refinery in Slovakia, with the remainder distributed to MOL’s Hungarian facilities. This volume constituted more than a third of all Russian oil supplied to refineries in these countries in September 2024, highlighting a substantial reliance of Hungarian and Slovak refineries on Russian imports.
The total volume of Russian oil supplied to Slovakia and Hungary through the Druzhba pipeline in September 2024 reached approximately 850,000 tons, with around 57% allocated to Slovak refineries. Tatneft alone accounted for approximately 48% of the total supply. These figures underscore the strong energy ties between Russia and Eastern European countries, while forecasts for October 2024 indicate that oil volumes to Hungary and Slovakia could rise to 855,000 tons, underscoring the importance of the Druzhba pipeline as a reliable supply channel.
The period when Lukoil temporarily suspended deliveries coincided with scheduled maintenance (PPR) at MOL’s Hungarian and Slovak refineries. MOL’s Danube Refinery in the Hungarian city of Százhalombatta was closed for maintenance from April to June 2024, while MOL’s Slovak refinery underwent similar work from May to June. Additionally, the temporary shutdown of the Litvínov Refinery in the Czech Republic, also connected to the southern branch of Druzhba, in August 2024 due to an unexploded WWII-era bomb, facilitated a redistribution of crude oil to MOL’s refineries.
However, demand for additional supplies grew quickly, with Hungarian and Slovak refineries facing the need for increased crude oil volumes by July, immediately following the completion of maintenance. In September and October, Slovnaft’s Slovak refinery halted operations for fall maintenance, giving MOL additional time to replace missing volumes and conduct negotiations with Ukraine regarding supply continuity.
Russian oil deliveries to Hungary, Slovakia, and the Czech Republic through the southern branch of Druzhba remain exempt from the EU’s embargo on Russian oil; however, additional sanctions imposed by Ukraine in June 2024 effectively prohibited the transit of Lukoil oil through Ukrainian territory, threatening supply stability and forcing companies and governments in Central European countries to seek alternative supply solutions.
To resolve this issue, MOL conducted extensive negotiations with Lukoil and the Ukrainian authorities, resulting in a compromise: the delivery point was shifted from the Hungarian-Ukrainian to the Belarusian-Ukrainian border. This change meant that oil transiting through Ukrainian territory was no longer officially linked to Lukoil, but was attributed to Hungarian MOL, allowing MOL to bypass Ukraine’s restrictions on Russian oil transport. Hungarian Foreign Minister Péter Szijjártó emphasized that this revised supply arrangement came with substantial financial burdens and risks for Hungary. However, he stated that Hungary was compelled to proceed with this solution due to Ukraine’s "unfriendly actions" and a lack of support from the European Commission.
The resumption and increase of Russian oil deliveries through Druzhba highlight the necessity for Eastern European countries to maintain access to Russian energy resources, despite Western political pressure. This step demonstrates Hungary and Slovakia’s determination to leverage all available options to secure energy stability. The return to stable supplies was made possible by MOL’s flexible logistical approach and substantial governmental support.
For Russia, oil exports to Central European countries through Druzhba remain a vital element of its external economic policy, enabling it to maintain a presence in the European energy market despite ongoing sanctions. This also strengthens Russia’s engagement with certainEU countries , potentially influencing EU internal policy and exerting pressure on a unified sanctions stance.
The continuation and potential growth of Russian oil shipments via Druzhba will depend on the evolving relationships between Russia, Ukraine, and the European Union. Despite the current agreements, significant risks remain due to political and economic factors, including potential sanctions expansion or new logistical obstacles. However, the successful resolution of Lukoil’s transit challenges signals the high level of flexibility and readiness of European countries to reach compromises to ensure their own energy security.
