Ukraine restarts Druzhba oil transit, first shipments en route to Hungary and Slovakia

The first crude oil shipments via the Druzhba pipeline following its restart have arrived in Ukraine, oil and gas company MOL announced on the BSE website on April 22.

According to the statement, JSC Ukrtransnafta informed the Hungarian oil group that Ukraine began receiving crude oil via the pipeline system from Belarus during the day and that the company is ready to resume crude oil deliveries to Hungary and Slovakia.

The force majeure, in place since January 27, ended at 6 pm April 21, and the repair works were completed, the company said, adding that first crude oil deliveries following the resumption of supply will arrive in Hungary and Slovakia no later than April 23.

Hungary tapped its strategic crude and motor fuel reserves after deliveries through the Druzhba pipeline ceased on January 27 at MOL's request to maintain regional supply security and organise alternative seaborne crude supplies to its refineries. Part of these strategic reserves were subsequently used.

The reserves fell to new historic lows earlier this month, but are being replenished. Experts argue that falling reserves were due to the government’s fuel price cap, introduced in early March at the onset of the Iranian conflict. In his last interview with state media, Viktor Orban said his government would extend the price cap and that strategic reserves were tapped not only due to price pressures but also because of a shortage in crude supply.

Hungary is currently maximising imports via the Croatian route, while the capacity of the alternative pipeline remains disputed. The situation, he added, has been further complicated by a fire at MOL’s refinery last operating, which is currently operating below capacity. As a result, Slovak reserves were prioritised, with Hungarian stocks to be replenished afterwards, Orban said.

Prime Minister-elect Peter Magyar last week said that the new government will maintain motor fuel price caps for both petrol and diesel. The Independent Petrol Stations Association (FBSZ) warned of possible motor fuel supply disruptions in a statement due to elevated demand resulting from capped prices, while the.

The Hungarian Petroleum Association (MASZ) said that the resumption of Russian crude deliveries through the Druzhba pipeline will improve supply security but will not resolve potential shortfalls in refined petroleum product imports.

MOL chairman and CEO Zsolt Hernadi previously said that under wartime conditions, there had been dozens of similar disruptions, typically resulting in pipeline shutdowns lasting only a few days.

The suspension of crude oil deliveries escalated into a political dispute. Hungary and Slovakia called on the EU to intervene, saying Ukraine is using the shutdown to blackmail them into supporting the release of a €90bn loan. Budapest and Bratislava tied the release of funds to the resumpion of oil deliveries, although both countries received opt-outs.

Ukrainian President Volodymyr Zelenskiy announced on April 21 that Ukraine had completed repairs to the Druzhba pipeline and that it could be brought back into operation, while also linking conditions to the release of an EU aid package already approved by the European Council.

The EU agreed to unblock the €90bn loan package after Ukraine reopened the pipeline.