Will the Czech Republic run out of oil when the embargo starts? According to Slovnaft, there is a threat, the government is calm

At the end of December, the exemption for importing oil products of Russian origin into the Czech Republic will end. The expansion of the capacity of the TAL pipeline, which leads from Italy, will not be completed until the turn of 2024-2025. A part, mainly diesel, is processed and imported from Slovakia. With the end of the exception, this will no longer be possible from December. However, fuel producers or the Ministry of Industry are not worried about fuel shortages.

Shortly after Russia started a war against Ukraine, the EU states decided to announce sanctions against Russia, which included an oil embargo. They aimed to gradually stop taking it completely and to replace this resource with, for example, oil from the Middle East or northern Europe. The Czech Republic, Slovakia, Hungary and Poland, due to their inland location or dependence on the Družba pipeline, have received an exemption and can also export products from Russian oil. However, this exemption will end in December 2023.

“The Czech Republic simply does not have enough capacity today to supply Czech refineries with non-Russian oil,” said Slovnaft chairman Oszkár Világi.

Slovnaft covers approximately half of the fuel imports into the Czech Republic. The editors approached one of the largest fuel distributors MOL, Unipetrol, and the Ministry of Industry and Trade with the question of whether they share Slovnaft’s concerns.

Martin Pavlíček, a spokesman for MOL, which also includes Slovnaft, told Echo24 that the company will continue to try to supply enough fuel to the Czech market through refineries in the Czech Republic. Slovnaft will try to make up for the shortfall from third-party sources. Russian oil can still flow to the Czech Republic until it is replaced by deliveries from other pipelines, and it can be processed in refineries in the Czech Republic. Oil products that have already been processed will not be allowed to be imported into the Czech Republic from December.

Unipetrol, the largest oil processor in refineries in the Czech Republic, is ready for the end of the exemption. “We have secured oil supplies in sufficient quantity, and thus the continuity of fuel production in both of our refineries and their subsequent distribution is also ensured. In our refineries, we produce fuel from crude oil that comes from various regions of Europe, Asia, Africa and America. Therefore, we are able to adjust our trade policy to meet our domestic and export commitments. We export roughly a fifth of our fuel production to neighboring countries. But our priority is the Czech market, which is why we try to place the maximum amount of our production right here. If necessary, we are ready to redirect our export distribution in favor of the Czech market,” said Pavel Kaidl, spokesman for ORLEN Unipetrol.

The Ministry of Industry and Trade is not worried about a drop in fuel supplies to the Czech Republic. “We are in regular contact with all major PHM distributors. They are also prepared for the situation after December 5, 2023, so that there are no problems with supplying the market. In the event of an accidental outage resulting from a lack of fuel, the Czech Republic has sufficient resources in the state’s material reserves, which were increased this year for diesel fuel and crude oil in such a way that they exceed the legally required 90 days of average consumption,” said ministry spokesman David Hluštík.

He also pointed out that the state is aware of the risk of a shortage of oil products, but that the supply of oil through the Druzhba pipeline is currently not time-limited until the oil is replaced through the named TAL pipeline.

The Czech Republic invested 1.6 billion crowns in its expansion. Oil flows through it via the IKL pipeline connected near Ingolstadt, Germany, to the TAL pipeline from Trieste, Italy. After the expansion, it should bring an additional 4 million tons of oil to the Czech Republic and thus fully replace the Družba pipeline with a total of 8 tons of oil per year. “Work on the TAL-PLUS project is in full swing, we are consistently meeting the schedule of activities, and it is true that the Czech Republic will be independent of Russian oil from 2025. We have now succeeded in tendering and signing contracts with suppliers of important technologies and components, which will increase the capacity of the TAL pipeline. These are pumps and pumps that are among the most modern on the market. They must ensure the transport of oil from the Italian Trieste across the Alps to Germany, their performance is comparable to electric locomotives,” said Jan Pantůček, chairman of the board of MERO, which operates oil pipelines in the Czech Republic, regarding the modernization.

The MERO company recently stated that in the future it can use the Druzhba pipeline for the supply of oil from Ukraine. Alternatively, the oil pipeline can be modified, for example, for the transport of ammonia or for high-speed Internet cables.

As part of the EU sanctions, the import of Russian oil by sea was prohibited. But in the event of an acute shortage, landlocked states can also use this option. The indefinite exemption for the Czech Republic, Poland, Hungary and Slovakia was approved at the instigation of Hungary, precisely because of the insufficient infrastructure of the landlocked states. In the case of the Czech Republic, this problem should be solved by the mentioned extension of the TAL pipeline.

The Unipetrol Group is already preparing for the transition to non-Russian oil and is changing technologies in its refineries. In Kralupy nad Vltavou, it processes exclusively non-Russian oil, which flows to the Czech Republic via the TAL pipeline. The Litvínovská refinery is connected to the Druzhba pipeline and processes mainly Russian oil. Temporarily, the Litvín refinery can be operated under new conditions. In October, it successfully passed a test for the processing of non-Russian oil. “The first tests have already taken place and now we will evaluate them together with the company,” said spokesman David Hluštík. “However, in order to keep the refinery operational in the long term and with the necessary production capacity, and at the same time to be able to further expand the portfolio of acceptable oil mixtures, future investments in the order of billions of crowns are inevitable,” board member Tomáš Herink told the ČTK agency.

Bulgaria also has a similar exemption from the processing of Russian oil. As the Politico server found out, thanks to this exception, Russia received more than a billion euros this year. The EU member states agreed on the exception for Bulgaria last June after weeks of complex negotiations. The Balkan country is largely dependent on Lukoil’s vast oil refinery in Burgas on the Black Sea coast, which covers 80 percent of Bulgaria’s diesel and gasoline needs and accounts for a tenth of the country’s economic output. According to the website Politico, these factors ensured the Russian company in Bulgaria, among other things, considerable political influence.