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Hernadi: Hungary cannot replace Russian crude oil overnight

Central Europe and Hungary cannot replace Russian crude oil overnight as this would have "a very serious impact" on the region, the chairman and chief executive of Hungarian oil and gas company MOL said on Thursday.

Several oil refineries in central Europe, including in Hungary and Slovakia, are designed to process Russian crude, Zsolt Hernadi said at the company’s annual general meeting. Regionally, these refineries receive 120 million litres of Russian crude oil each day, processing it into diesel, petrol and other vitally important products for the economy. Replacing such volume would take a lot of time and money, he said.

MOL, he said, was acting in full compliance with the European Union’s system of sanctions aimed at bringing the swiftest possible end to the war in Ukraine.

Commenting on the petrol price cap, he said it was necessary to react to the sudden increase in energy prices at government level, but temporary measures would have to be withdrawn in the medium term. They cannot be maintained for long because resources would run out, he added.

The global crisis sparked by the war in Ukraine has highlighted the fragility of European supply security and MOL’s obligation to ensure energy sovereignty, he said. The company has already taken steps: in the past eight years, it has invested 170 million dollars in raising the ratio of non-Russian type crude mixed into products to 30 percent, he said.

Should Russian crude stop flowing into the country from one day to the next, it would take 2-4 years and some 500-700 million dollars to ramp up refineries to satisfy demand in the region, he said. Russia also delivers about half of Europe’s diesel imports, he added.

Hungary has done “more than other countries” to enhance regional energy security, setting up a strategic gas reserve and linking its pipelines to those of its neighbours, Hernadi said.

Meanwhile, growing demand and the war have caused energy prices to skyrocket, he noted. High prices will prevail this year, and it will take at least two years before prices consolidate once again, he said. Companies will also have to bear the costs of developments necessary to ensure energy security, he said.

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