Hungary is releasing part of the country’s strategic petrol and diesel stocks to help the situation caused by the longer-than-planned shutdown of the OMV Schwechat oil refinery, the Minister of Technology and Industry said. Tamás Pletser, an oil and gas analyst at Erste Bank, was interviewed by Infostart about the details of this new decision.
Hungary has about 800 million liters of fuel – and a similar amount of oil – in strategic stocks. This is the equivalent of at least 90 days’ worth of imports, according to the rules, which is what is needed in case supplies are disrupted, said Tamás Pletser.
Infostart writes that OMV Hungária will have access to the stocks opened up by the government, so it could supply the Austrian group’s petrol stations. Erste Bank’s analyst believes that it will probably be up to the Austrians to replenish the supply, depending on the reopening of the plant in Schwechat.
During the legally required water pressure test as part of the final work on the refinery’s turnaround, significant damage occurred to the crude oil distillation unit on June 3, following a mechanical incident. This unit processes most of the crude oil into its various components, thereby preparing it for further processing in the refinery, OMV’s website writes. OMV adds that at present it is not yet possible to estimate the duration of the repair phase, however, a new supply system to supply the markets served by the Schwechat refinery has been set up.
On the question of whether fuel shortages in Europe are a real threat, regardless of the closure of the refinery in Schwechat, Pletser stressed that stocks are at a multi-decade low. In particular, the quantities of stored diesel fuel are very low. This coincides with a statement made at the end of May by the head of the International Energy Agency (IEA), Fatih Birol, stating that Europe could face difficulties in the summer, Infostart adds.
Back in March, the government and MOL said that there is no fuel supply crisis in Hungary, only an extreme increase in demand, which caused a logistical challenge. In April, MOL CEO Zsolt Hernádi added that while “Hungary’s supply of raw materials is continuously secured,” “as long as the price cap is in place, there will be supply tensions.”
Considering that the wholesale price in the region is by far the cheapest in Hungary, this puts extra pressure on the logistics of MOL, the Hungarian oil and gas company, as they now have to supply the whole country with the loss of OMV. Pletser thinks that the release of strategic stocks also serves in part to relieve this kind of pressure on MOL.
Featured image via László Róka/MTVA