Péter Magyar: MOL Will Not Build Oil Storage for Ukraine

Hungarian Prime Minister Péter Magyar told parliament that his government would not allow an oil storage facility for Ukraine to be built, just a day or two after MOL and Naftogaz signed a memorandum of understanding on the project. Meduza reports the statement was made on September 21, while B92’s report on it is dated September 22.

Naftogaz CEO Serhii Fedorenko announced on September 20 that the memorandum had been signed, presenting it as part of the Carpathian Economic Forum initiative. The document calls for building a fuel storage facility in Hungary, near the border with Ukraine, so that Ukrainian fuel would sit beyond the reach of Russian strikes on energy infrastructure. Fedorenko wrote on Facebook:

Amid constant Russian attacks on our oil infrastructure, diversifying supply routes and building additional storage capacity out of reach of these attacks is a matter of stability for the entire market.

Magyar answered him directly in the Hungarian parliament:

The storage facility that MOL signed a memorandum of understanding on will not be built, not on the Hungarian Ukrainian border, not anywhere else. If you read the statement that was published recently, you will see it describes only a theoretical possibility. Even if it were ever carried out, it would take years. But I want to say here and now: as long as the Tisza party government is in power, this will not happen.

He called the move unacceptable and said the matter would have consequences.

Who raised the issue in parliament

The debate over the storage facility was opened by Bence Rétvári, leader of the Christian Democratic People’s Party (KDNP) parliamentary group, who said Budapest had learned of the MOL Naftogaz agreement from Ukrainian media rather than from the company itself. Magyar added an accusation of his own: that MOL had negotiated the storage deal without government approval, and that the talks with Naftogaz had actually begun under the previous government of Viktor Orban.

According to Hungarian media, the prime minister had already sent a written message to MOL chairman and CEO Zsolt Hernadi, demanding that the company treat the state, going forward, in line with the fact that Hungary owns 25 percent of MOL’s shares. He repeated the same figure in parliament and said he would formally convey that position to the company.

The memorandum was signed at a summit of the Carpathian Eight initiative, launched by Ukrainian President Volodymyr Zelensky. Ukrainian media reported that Hungary was among the invited participants, but Magyar said his government had turned down the invitation to the summit.

Hungarian authorities, according to Meduza, said MOL had no government authorization to negotiate the construction of the storage facility. MOL, for its part, says the agreement is only preliminary and that preparing the project, if it goes ahead at all, would take years. The company added that it already stores oil in Hungary on behalf of other European Union countries as well as countries outside the bloc.

Why 25 percent matters for NIS too

The dispute over the storage facility comes as MOL is pursuing a second, far larger deal in the region. The company recently signed the main terms of a binding framework agreement with Gazprom Neft to buy a 56.15 percent stake in Serbia’s NIS. The same 25 percent state stake that Budapest is now invoking against Naftogaz is the instrument the Hungarian government, as MOL’s co-owner, can use to influence the company’s moves in other countries in the region, including that deal in Serbia.

So far there is no indication that the Ukraine storage dispute is connected in any way to the NIS negotiations. These are two separate deals involving the same company, and the Hungarian government is tracking both with the same argument: its quarter stake in MOL.