Illustration - Photo: MTI

Mol head: Normal operations to resume fairly quickly "after the panic subsides"

Gulyas: Government scraps fuel price caps

Hungary's government is scrapping the price cap on fuel at the proposal of oil and gas company MOL, two days after the European Union slapped sanctions on crude from Russia, Gergely Gulyas, the prime minister's chief of staff, said late on Tuesday. Gulyas lambasted EU sanctions on Russia, and insisted this was the reason why the government must terminate the 480 forint (EUR 1.6) price cap which benefited Hungarian citizens.

“The implementation of the sanctions has caused tangible disruptions to Hungary’s energy supplies,” Gulyas said.

MOL said in a letter to the energy minister on Monday that it would be unable to ensure supplies without imports, he said. MOL has asked the government to ensure national fuel supplies by importing Brent crude oil, Gulyas said.

The company’s chief executive Zsolt Hernadi said a quarter of station pumps had run dry at some point in the past few days, an unprecedented occurrence during MOL’s existence.

Mol has sold 2.2 billion litres of fuel this year, up from 1.5 billion last year, he said. Sales over the past week have totalled at 50 million litres, up by 60 percent from the same period last year, he said.

Last week, the company served 2.2 million customers at the pumps, the equivalent of the peak of a “robust tourist season”, he said. It failed to fulfil 871 orders from corporate customers, he said.

In the past days, turnover has almost doubled from last year, and was up by 2-and-a-half-fold from 2020, he said.

Demand has spiked, consumers started stockpiling, and “a certain degree of panic ensued”. Mol has reached the end of its capacity, he added.

Government price caps on fuel have been in effect for a year, and Mol has done everything it could to ensure secure supplies, Hernadi said.

They supplemented about a quarter of the supplies from Slovakia, he said.

Next year, the delayed effects of the EU sanctions and the new sanctions slated to enter into force on February 5 are expected to create a “new crisis”, Hernadi said.

Russian diesel banned from the EU will be then missing from the European markets, he warned.

That will cause serious problems in the surrounding countries too, as the two-thirds of the production of the Bratislava refinery, which uses Russian oil, was exported, and so now falls under the restrictions, he said.

Hernadi said preparations must be made to turn to alternative routes should deliveries on the Druzhba pipeline be disrupted. “This is why imports must be restarted and storages refilled,” Hernadi said. “We must act today to ensure that Hungary can have a stable, import-backed fuel market again by the beginning of next year,” he added. “It is not good if something is expensive, but it is much worse not to have it,” Hernadi added.

In response to a question, Gulyas said the price caps had been terminated at 11pm on Tuesday night. At that point, Mol’s recommended price for a litre of 95 octane petrol was 641 forints, and 699 forints for diesel.

Hernadi said the company expected normal operations to resume fairly quickly “after the panic subsides” and the refinery in Szazhalombatta returns to full capacity. In a few months, importers will regain about 30 percent of the market, the same they possessed earlier, he said.

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