MOL and Lukoil agree compensation deal for contaminated oil

Hungarian oil group MOL has signed a memorandum of understanding with Russian oil provider Lukoil regarding compensation for damages caused by the contamination of the Druzhba pipeline.

In April, a significant amount of contaminated crude oil was released into the Druzhba pipeline and MOL was forced to temporarily suspend the receipt of crude oil via the pipeline, thus preventing the entry of contaminated oil into the country.

“Hungary managed to be the first country to close this case of crude oil contamination,” said Zsolt Hernádi, president and CEO of MOL Group. “Our Hungarian supply security system and our good partnership with the Russian company have both stood the test excellently. Our Russian partners have assured us that they will reimburse our costs incurred in managing the situation.”

Lukoil and Transneft will compensate for MOL Group’s financial damages caused by the incident, including the costs of purification of the crude oil received.

At the same time, the parties signed a letter of intent to extend the supply contract between MOL and Lukoil until 2025.

“There is a good, decade-long relationship between the MOL Group and these Russian companies,” Mr Hernádi added. “Since 2005, Lukoil has been delivering crude oil to Hungary and Slovakia steadily and reliably. Today, we have reinforced this good relationship with our letter of intent for crude oil supply.”

On October 31, MOL raises its 2019 full year EBITDA guidance to around 2.4 billion US dollars.