Pipeline Operator Janaf, Hungary's MOL Sign Transport Deal for 2.9 Million Tonnes of Crude

(Reuters) — Croatia's oil pipeline operator Janaf has signed a transport and storage deal with Hungary's MOL for shipments of 2.9 million tonnes of crude on the Adriatic pipeline to MOL's Hungarian and Slovak refineries, Janaf said on its website on Wednesday.

The refineries in landlocked Hungary and Slovakia are fed with Russian crude via the Druzhba pipeline's southern spur, and with non-Russian seaborne crude supplies via the Adriatic pipeline, MOL's main alternative.

Janaf and MOL have been in drawn-out talks over transit fees. MOL's chairman said last month that the Croatian company wanted to raise fees on the Adriatic pipeline to four times the benchmark fee charged on the Baku Tbilisi Ceyhan (BTC) Pipeline.

Janaf did not confirm this at the time and on Wednesday did not disclose the transit fee agreed with MOL.

After talks spanning more than a year, MOL said it would pay what it called an "exceptional premium" to use the Adriatic oil pipeline.

"Janaf provided only a one-year long contract with an exceptional premium pricing policy which results in MOL paying several times any reasonable current market benchmark," it said in an emailed reply to questions.

"MOL Group had no choice but to sign the agreement, as the Adria pipeline plays an important role in the security of supply in the (central European) region."

Under the contract, Janaf will transport 2.9 million tonnes of oil and will store 79,385 cubic meters of oil at the Omisalj terminal on the island of Krk, as well as 70,000 cubic meters of crude oil at the Sisak terminal.

"With the signing of these contracts, several months of negotiations have been successfully completed," Janaf said.

MOL's previous contract with Janaf for shipments of 500,000 tonnes of crude on the pipeline expired at the end of March.

MOL shares closed 1% higher at 2,784 forints ($8.24) on the Budapest Stock Exchange, outperforming the blue chip. BUX index, which closed flat.

($1 = 338.01 forints)

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