Oil in exchange for diesel and electricity: What is the price of Druzhba?
28 August 15:10
ANALYSIS
After the latest Ukrainian attacks on the Druzhba oil pipeline, Slovak and Hungarian officials began threatening Ukraine with restrictions on electricity and diesel fuel supplies. To what extent these threats may be real and the problems critical, "Komersant Ukrainian" found out.
On the western economic front, the situation is turbulent. The leaders of Slovakia and Hungary are very reluctant to lose cheap Russian oil and the additional profits that its refining promises. Especially since the Ukrainian strikes on Druzhba have become systemic.
The latest attack on the oil pipeline infrastructure, dated August 22, was already the third. Before that, there was a strike on the Unecha distribution station in the Bryansk region, then on the Nikolskoye oil pumping station in the Tambov region. And each time oil supplies were stopped for several days. When it happened for the third time, Slovakia and Hungary actually spoke the language of economic threats.
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Diesel for oil
Slovak Foreign Minister Yuri Blaner said that the Slovak refinery Slovnaft, which works with Russian oil, is also an important supplier of diesel fuel for Ukraine and provides about 10% of its monthly consumption. The hint is clear enough: if there is no oil, there may be no fuel.
How critical is this volume of Slovak diesel for Ukraine? Explains the director of the consulting group “A-95” Sergei Kuyun.
“What can be the dependence, if it is only 10%? None. It is not 30%, not 50%. In fact, according to our calculations, we can calmly replace not only 10%, we can even 40% of our balance calmly replace through other directions. These are the Romanian direction and the Polish direction. These are the two main sources of supply that we have. That is, we can simply increase imports in these directions and very easily block this flow from Slovakia and Hungary”,
– states Sergei Kuyun.
He believes that such a situation with hints of possible restrictions threatens the suppliers themselves more than Ukrainian fuel importers.
“Our companies buy this fuel on market conditions and pay a very good premium for it. So it won’t be a problem for us to pay the same money to someone else. But whether they will find such a buyer in the future, I doubt it very much.”
– says the expert.
Russian oil is so important for Hungary and Slovakia because the Russians offer a discount on it in exchange for influence in the European Union through the leadership of these states. In addition, the two Eastern European states are making pretty good money on it, argues Sergei Kuyun.
“The alternative for them is the supply of non-Russian oil. For example, from the Adriatic region, across the sea. And they will need effective sales of their products even more. That is, they now risk that they will remain, first, with expensive oil, with expensive diesel, and without a buyer such as Ukraine.”
– serhiy Kuyun noted.
Electricity in exchange for oil
Hungarian Foreign Minister Peter Szijjarto was more categorical than his Slovakian counterpart. After the latest Ukrainian attack on the oil pipeline, he reminded that Hungary provides 30-40% of Ukrainian electricity imports and hinted that Budapest may stop supplying it to Ukraine. How to treat such threats? The point of view of Daria Orlova, an analyst of the electricity market of ExPro agency.
“I think that this is purely political manipulation, and we should not expect any termination of electricity supplies, because Hungary, like Ukraine, is part of the European energy system. Here you can’t make a decision that today we supply electricity and tomorrow we won’t. Everyone, in principle, works according to European rules, including Hungary,” the expert said,
– noted the expert.
But still, how critical for Ukraine is the dependence on Hungarian electricity, given such a share of imports of 30-40 percent?
“Indeed, Hungary occupies about 40 percent in the structure of our imports. But now imports are not used to their full capacity. That is, conditionally, supplies from Hungary may decrease, but supplies from other directions – from Romania, Slovakia or Poland – will increase. And there is also another point here. Hungarian companies earn on this import. And a lot of money, because this import occurs in the evening hours and it is quite expensive,” said Daria Orlova,
– noted Darya Orlova.
on August 27, Hungarian Foreign Minister Péter Szijjártó, after a conversation with the Russian Minister of Energy, boasted that they had managed to find a technological solution that would resume oil supplies to Hungary, but at first only in a test mode and in smaller volumes. At the same time, it is worth remembering that the Druzhba oil pipeline was and remains a legitimate military target for the Ukrainian army.
Therefore, experts agree that, most likely, such statements from our neighbors are just a political bluff. After all, even if we set aside political risks, it is simply financially profitable for Hungary and Slovakia to sell electricity to Ukraine. And the cessation of its supplies does not foreshadow any special problems for Ukraine, as the volume of such imports is not critical.
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Serhiy Vasilevich
