Security of the Druzhba Pipeline in the Interest of All Parties

An analysis of the economic importance of the Friendship (Druzhba) oil pipeline has been carried out by the Oeconomus Foundation.

The topicality of the subject is that according to leaked information, Ukrainian President Volodymyr Zelensky has threatened to blow up the pipeline in a closed meeting in order to cripple the Hungarian economy.

There have also been reports in recent days that the President of the European Commission has suggested that Kiev should put pressure on Hungary to cut off the pipeline because of the ban on imports of Ukrainian agricultural products. Ursula von der Leyen rejected these reports.

The analysis recalls that 97 percent of the European Union’s oil products are imported. The share of imports from Russia was 25.9 percent in 2021, before rising to 27.7 percent in the first half of 2022 and then falling only moderately to 21.3 percent in the second half of the year following the sanctions imposed on maritime transport on 5 December.

Hungary’s oil import ratio was 90 percent in 2021, better than the EU average.

58 percent of imports came via Ukraine in 2020. The remaining share came via the Adriatic pipeline. Meanwhile, Slovakia’s exposure to the Friendship pipeline is significantly higher than Hungary’s, with 96 percent of its crude oil imported via Ukraine, it was pointed out.

“It is also worth noting that as the oil comes through Ukraine, our eastern neighbor benefits from transit fees on deliveries. The fee has already been increased this year, with a 51 percent increase in 2022, followed by a further increase in 2023,” they added.

The Friendship pipeline transports oil from eastern Russia to Ukraine, Belarus, Poland, Hungary, Slovakia, the Czech Republic, Austria, and Germany. Its branch to Hungary also supplies Slovakia, Austria, the Czech Republic, and Germany. The total annual nominal capacity of the pipelines to Hungary is up to 13 million tons, but the actual capacity is 8 million tons.

Moreover, the latter volume does not only supply our country. Hungary’s oil and gas company MOL itself is an important regional player. However, from Russia’s point of view, Hungarian oil imports represent a negligible share of 2 percent, which is about the same as Slovakia’s.

Although the pipelines are not perfect, they are the lowest-cost, lowest-risk, most efficient, and most environmentally friendly way to transport oil,

the analysis pointed out.

For the security of supply and in line with International Energy Agency requirements, Hungary should have at least 90 days of oil reserves, the analysis said.

The alternative could potentially be the Adriatic pipeline from Croatia, but the switchover could take several years, Oeconomus adds.

Featured photo via Pixabay