Hungary is opposing a EU proposal to cut Russian oil imports by the end of this year. Their government said that doing so would "ruin the Hungarian economy". I see that they import some 60% of their oil from Russia, but it's not too clear to me what, besides the present $35/barrel discount that Russian oil seem to presently enjoy is stopping Hungary from importing from elsewhere. Basically, is this just a price issue?
asked May 4, 2022 at 21:53
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11Crude oil is normally imported by pipeline or by sea by oil tanker. You might want to look at Hungary's facilities for oil imports.– Stuart FCommented May 4, 2022 at 23:53
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21You might also want to look at Hungary's coastline and count how many harbours it has for importing oil by sea.– gerritCommented May 5, 2022 at 7:32
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7@gerrit: well, they're in the EU. It's not like the EU is blockading them from importing via other EU countries. Austria for instance is in the same kind of position geographically, but they are not objecting. (But Austria has nearly twice the GDP per capita.)– got trolled too much this weekCommented May 5, 2022 at 7:55
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@gerrit: OTOH, a year later, Austria is still importing most of their gas from Russia lemonde.fr/en/europe/article/2023/03/16/… So, not making loud noises is somewhat different from changing their main energy imports source.– got trolled too much this weekCommented May 7, 2023 at 20:15
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And "Although Austria’s Chancellor Karl Nehammer has condemned Moscow’s war, he was the first EU leader to visit Putin after the invasion." politico.eu/article/…– got trolled too much this weekCommented May 7, 2023 at 20:22
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2 Answers
All the refineries in Hungary (and in Slovakia) are calibrated to the Ural type of oil coming from Russia. This type is different from the Brent type of oil coming from North Sea, etc.
Adjusting the refineries to Brent oil, or building a new refinery, would take at least a few years and about 700-1000 million dollars according to experts.
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The article actually talking about adjusting to Arab Light (exported from Saudi Arabia mostly) which is higher in sulphur. Another piece suggests that Omani or Iranian oils are a closer substitute for Urals, but they're not easily available in Europe. Commented May 5, 2022 at 14:52
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6This is the key point. Unlike gas (which is mostly burned for energy right away, and any sort of natural gas burns the same), crude oil is never burned directly, all of it first has to go through lots of processing. Every refinery is custom-built to work with a particular kind of oil. Switching to a lighter or heavier feed means half of your expensive refinery is idle because you don't have the feedstock for it anymore, while the other half is unable to cope with excess feed. You have to tear lots of equipment down and replace it with completely new processes, which is a massive undertaking.– TooTeaCommented May 5, 2022 at 19:19
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@TooTea: Natural gas does have one somewhat similar problem. The nitrogen content can differ. This has become relevant with the proposed switch to LNG, which will contain hardly any nitrogen. The Dutch are building a nitrogen mixer– MSaltersCommented May 6, 2022 at 10:11
Ruin is relative. Hungarians would certainly take an economic hit. If you look at the oil pipelines in Europe, you can see that they are by and large going east to west, not north to south or south to north (there is a pipeline from the Med to Hungary, however). Replacing pipelines by trucks from distant ports will be expensive, and it will require trucks which might not be immediately available.
Hungary would have to balance the cost of a boycott with the cost of the pandemic, the cost of climate change, and other priorities.
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2"other priorities" Absolutely true. Like future goodwill from the other EU countries. My guess is, Hungary just plays poker in order to get more money in compensation. Commented May 5, 2022 at 6:28
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34@Trilarion Calling it 'playing poker' is unnecessarily derogatory. The bigger, wealthier EU countries decided that they are aiming for an embargo on Russian oil but not on gas because they can afford to replace the oil but not the gas. It so happens that Hungary can't easily replace the oil either. It is perfectly legitimate for them to be unhappy with that decision and try to negotiate some better solution for Hungary.– quaragueCommented May 5, 2022 at 7:03
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2Even for the wealthier countries (notably Germany) the oil boycott does not kick in immediately, but by the end of the year. What's being negotiated is (if I understand correctly) a longer transition phase for Hungary.– gerritCommented May 5, 2022 at 7:33
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3@quarague Yes, I agree that they can try to negotiate something better for them, but still this is a poker game. Russia might be a threat to Hungary too and therefore it might be a really good decision in the long term to learn to live without Russian oil. Or maybe they actually are happy with Russian waging war and have no intention of cutting off their oil supply. I didn't mean playing poker in a derogatory way, rather quite neutral. But it is also perfectly legitimate to see the actions of Hungary critically, for example seeing them as playing into Russian hands. Commented May 5, 2022 at 8:26
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4Romania doesn't have enough oil to export oil to every neighbouring countries. And the pipelines isn't large enough. They don't have enough capacity.– turbodCommented May 5, 2022 at 9:33