Refiners in Central Europe estimate the impact of US sanctions on Russian oil companies
Slovak refiner Slovnaft, which processes mostly Russian crude and is part of Hungary’s MOL MOL group, said on Thursday it was analyzing the possible impact of US sanctions on major Russian oil companies on its operations.
US President Donald Trump on Wednesday imposed sanctions on Russia for the first time in his second term, targeting Lukoil and Rosneft, as he tried to pressure Moscow to agree to a ceasefire in Ukraine.
The move raised oil prices and raised questions for Hungary and Slovakia, the European Union’s biggest buyers of Russian oil after gaining exemptions from EU restrictions.
POTENTIAL HEADACHES FOR REFINERS AND BANKERS
Hungarian oil and gas group MOL operates refineries in Hungary and Slovakia that depend on Russian crude, and last year it ran into delivery problems when Ukraine – through which the Druzhba pipeline carries supplies – sanctioned Lukoil.
MOL reached an agreement to take ownership of the affected crude oil volumes on the Belarus-Ukraine border to keep oil flowing at that time.
MOL did not immediately comment on Thursday on the US sanctions, which will come into effect in November.
The MOL unit in Slovakia, Slovnaft, said: “Since this is a new situation, we first need to understand in detail the exact wording of the new US sanctions and analyze their possible impact on our activities.”
Slovnaft processes 4.8 million metric tons of oil in 2024, of which 662,000 tons are non-Russian. MOL processes around 8 million tonnes at its Danube refinery in Hungary.
Slovak and Hungarian government offices also did not respond to questions.
“Compliance departments at certain banks are going to have a lot of trouble in the coming weeks,” Vaclav Bartuska, the Czech Republic’s ambassador to the UK and former energy envoy to the government, told X.
“Expect delays/reductions in Russian oil deliveries to customers.”
According to Iwona Wisniewska, of the Warsaw-based Center for Eastern Studies, around 80% of Russian production now faces sanctions, making alternative choices more difficult.
Refineries have made technological changes to handle more non-Russian oil.
“Losing access to Russian oil does not mean the end of business for Hungarian refineries – but it does mean a complete change in operational conditions,” Wisniewska said.
Source: Reuters
