The domestic energy system still relies heavily on Russian sources, but at the same time it is becoming increasingly clear that long-term security is strengthened by diversified procurement.
In October, the United States imposed sanctions whose effects jeopardize the energy security of several European countries. However, Hungary’s situation differs significantly from the exposure of other countries, as the government agreed on an exemption with Washington in good time, confirms an analysis by the Oeconomus Economic Research Foundation.
The first and most important consequence of this is that there will be no predicament for Hungary’s oil supply that would risk a sudden switch or disruption of the supply chain.
Due to the technological and logistical peculiarities of the Hungarian oil system, the switch to other types of crude oil cannot be made overnight. The refinery in Százhalombatta went into operation in 1965 and has since been optimized for processing REB/Urals oil. A complete conversion of the refinery requires investments of around €500 million on the part of MOL, and development has already begun.
The refinery in Százhalombatta will be converted in several stages so that, in addition to the current system optimized for Russian crude oil, it will also be able to process other types of crude oil on a large scale and in continuous operation.
Oil pipelines in Central, Eastern, and Southeastern Europe (Photo: commons.wikimedia.org)
Several questions remain unanswered with regard to the Trans Adriatic Pipeline pipeline. The Croatian side claims that the pipeline could cover Hungary’s entire demand, while MOL believes that joint tests contradict this: the system cannot be operated at maximum pressure in the long term, and there is no clear technical opinion on its load capacity that is accepted by all parties. For this reason, negotiations are currently underway as to whether additional pipelines, new compressors, or capacity expansions are necessary, which would require extensive investments over several years. The exemption therefore provides the time needed to prepare these measures, writes Oeconomus.
The situation is similarly complex for natural gas, but the challenges are of a different nature. Hungary is fortunate in that, with the exception of Slovenia, it has connections to all its neighboring countries. However, the mere existence of these connections does not mean that any quantity can be transported through them at any time. The actual capacity of the pipelines is determined by compressor stations, pressure conditions, and physical flow directions.
The rest is imported, but the delivery routes cannot be used evenly. There are currently no imports via the Ukrainian border point only exports. The Slovak-Hungarian connection is also used only for exports. Imports are exclusively in the direction of Serbia-Hungary, and the pipeline is practically at full capacity.
As Hungary has significant export and transit capabilities (in the first ten months of 2025, for example, 2.4 billion cubic meters of natural gas flowed into Ukraine), the gas entering the system not only covers domestic consumption but is also forwarded to other countries.
Natural gas pipelines in Hungary (Photo: commons.wikimedia.org/ Author Kisscsi)
In his article, Oeconomus points out that Hungary has recently concluded two important gas contracts that clearly illustrate the new directions of its diversification efforts. The ten-year contract signed with the energy company Shell secures around 200 million cubic meters of gas annually. In addition, the long-term agreement with the French company Engie carries even greater weight: Hungary will purchase 400 million cubic meters of LNG-based gas annually over a period of ten years, totaling 4 billion cubic meters.
Thanks to the successful Hungarian-American and Hungarian-Russian negotiations, not only is Hungary’s security of supply guaranteed, but the ongoing diversification process can also continue without pressure and according to plan.
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Via oeconomus.hu; Featured image: Pixabay
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