Photo by Zbynek Burival on Unsplash
When US President Donald Trump announced on 31 October that Hungarian Prime Minister Viktor Orbán had personally asked him for an exemption or transition period from new US sanctions on Russian oil, few in Brussels were surprised. Trump’s refusal, followed by Orbán’s promise to keep trying to convince Washington, once again highlighted the Hungarian leader’s determination to maintain his country’s strong energy ties with Moscow, at almost any cost.
Officially, Orbán presents this as a matter of energy security and economic pragmatism. In reality, it revolves around money, influence, and a network of personal interests tying Hungary’s political elite to Russian oil profits. For Orbán and his close associates, the flow of discounted crude through the Soviet-era Druzhba pipeline has become more than just an energy issue; it is a profitable venture.
After the EU introduced a price cap on Russian oil in response to the Kremlin’s full-scale invasion of Ukraine, the price of Urals crude plummeted. Hungary’s oil giant MOL continued to process this cheap feedstock at its refineries in Százhalombatta and Bratislava, selling the refined products at full market prices. While Budapest benefitted from the resulting tax revenue, the major profits flowed elsewhere – into what Hungarian and Russian insiders describe as grey supply contracts designed to skirt EU restrictions.
At the heart of these opaque operations is Normeston Trading, a company registered in Belize in 2006. Officially, its owners are Russian businessman Lev Tolkachyov, reportedly connected to Lukoil, and Hungarian national Imre Fazakas. However, the true beneficiaries are said to be György Nagy, through the Madera Investment Fund (holding 33.4%), and two of Orbán’s closest business allies: István Garancsi, a powerful construction magnate, and Sándor Csányi, Hungary’s wealthiest man and head of OTP Bank.
On the Russian side, Valery Subbotin, a former Lukoil vice-president with strong Kremlin ties, acquired a stake in Normeston in 2016. The company’s Moscow office, situated in a business centre on Klara Zetkin Street, operates in the same building as firms linked to OTP Bank and Csányi’s son Attila. OTP itself has issued payment guarantees worth millions of dollars for Normeston’s transactions. In 2014, Normeston’s Hungarian subsidiary, Norm Benzinkút Kft, bought Lukoil’s retail network in Hungary (75 stations) and Slovakia (19 stations), strengthening the company’s position as a key player in Central Europe’s downstream oil market.
Normeston’s activities have enjoyed quiet protection from Hungary’s diplomatic establishment. Deputy Foreign Minister Levente Magyar, a parliamentary state secretary known for lobbying Washington to exempt the Russian-backed Paks II nuclear project from US sanctions in 2019–2020, is believed to be leading Budapest’s new push for oil-related exemptions. The October sanctions against Lukoil therefore struck a raw nerve in Budapest – not for technical reasons, but because they directly threaten the profits of Orbán’s inner circle.
MOL, meanwhile, has been slow in advancing its refinery modernisation projects. The company recently delayed the full conversion of its Hungarian and Slovak refineries to process non-Russian crude until the end of 2026, a whole year later than initially planned. According to MOL’s own figures, out of a combined annual capacity of 14.2 million tonnes, the Slovnaft refinery processed only 0.662 million tonnes of non-Russian oil in 2024, while the Danube refinery handled 0.478 million tonnes. The vast majority of feedstock still flows through the Druzhba pipeline from Russia – by design, not out of necessity.
Since 2011, Normeston Trading has reportedly shipped over 20 million tonnes of Russian crude to Central Europe, valued at more than $10 billion. The profits, insiders claim, have enriched both Lukoil executives and members of Hungary’s political and financial elite, including Nagy, Garancsi, and Csányi. This close relationship explains MOL’s hesitation to diversify. The company benefits from uniquely low input costs compared to other EU refiners, creating an artificial competitive advantage. That this advantage indirectly funds the Kremlin’s war against Ukraine appears to trouble no one in Budapest’s power circles.
Orbán’s oil network reveals a deeper weakness within the European Union: its failure to enforce collective sanctions when a member state chooses to bypass them from within. By legitimising the circumvention of sanctions and maintaining financial ties with Moscow, Budapest weakens not only European unity but also its own long-term industrial foundation. When Orbán eventually steps down, Hungary’s refining sector, protected from competition and reliant on Russian feedstock, may become structurally uncompetitive. The billions pocketed by the prime minister’s allies could have funded the modernisation of the Danube and Slovnaft refineries or helped establish alternative supply routes. Instead, they financed a political and economic alliance between Budapest and the Kremlin.
Trump, it appears, recognised this perfectly. His refusal to grant Orbán an exemption was not just a diplomatic rebuff – it was a rejection of a scheme designed less to safeguard Hungary’s energy security than to extend the enrichment of Orbán’s inner circle.
