Slovak refinery Slovnaft wants prolongation of exemption from Russian oil embargo

Slovak oil refinery Slovnaft, part of the Hungarian MOL group, is to ask the EU to prolong its exemption from the embargo on the imports of Russian oil.  

The exemption for Slovnaft is in place until December due to Slovakia’s and Hungary’s high dependency on Russian crude.

Slovnaft’s spokesperson Anton Molnar told Slovak public broadcaster RTVS that the company can now process 30% crude from alternative sources and 70% from Russia.

“Next year, we plan investments which can adjust our technologies to process more alternative oil and supply Czechia,” Molnar was quoted as saying, adding that the “exemption would help very much to stabilise the market of Central Europe.”

Hungary already signalled it wants the exemption to be prolonged, with Hungary Minister of Foreign Affairs Peter Szijjarto saying in July that both MOL and Slovnaft need “one more year” of exemption “to carry these investments” [at Slovnaft reifnery].

Energy analyst Radovan Potocar told RTVS that from an economic and ecological point of view, it would make sense to “prolong the exemption” and “supply Czechia by Slovnaft”.

RTVS also quoted the Czech Ministry of Foreign Affairs envoy for energy security, Vaclav Bartuska, who said that Czechia could replace Slovnaft oil imports from elsewhere but that Czechia won’t object to the exemption.

“Our only interest is to have a sufficient amount for our citizens at a decent price,” Bartuska told RTVS in a telephone interview.

The Slovak public broadcaster noted that Czechia has been linked to Slovnaft’s pipeline since the era of the shared state, Czechoslovakia (dissolved in 1993).

Bartuska’s words contrast with Czech cabinet representatives who have declared the government's priority to end Russian oil imports.

Minister of Industry and Trade Jozef Sikela told the gathering of Czech diplomats just this Monday, August 28, that after the completion of the TAL-PLUS project, a path would open to end all imports using the Druzhba pipeline from Russia, though this might not happen immediately after the project’s completion.

In 2022, Czechia imported 56% of its oil from Russia, or some 7.4 million tonnes, while the rest came from the IKL pipeline connecting Czechia to the TAL pipeline – which pumps oil from the Italian port city Trieste – in Ingolstadt, Germany.      

In May, Czech state crude oil transporter and oil reserves operator Mero signed an agreement with TAL pipeline shareholders to develop the pipeline. The CZK1.6bn (€67.5mn) TAL-PLUS expansion project should be completed next year before the embargo exemption for Czechia ends.

Some 8 million tonnes could be pumped into the country via TAL after the TAL-PLUS completion.   

In July, Slovnaft stated that its revenues in 2022 were at €6.06, and its operating profit reached €1.06bn, which is four times higher than the 2021 profit of €250mn. Slovnaft’s profit after tax is €416mn, and the company said it is taking legal steps against Slovakia for collecting a total of €625mn from Slovnaft in a solidarity tax.

“We consider the solidary tax as disproportionate and unlawful. The tax [measure] was significantly higher than the recommendation of the European Union, and none of the countries around made such a radical move,” Molnar stated in July.