Page 15 - EurOil Week 19 2022

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plan, backed by Germany, all EU countries prices. Hungarians pay the lowest gas and previous quarter.
would stop buying Russian crude within six electricity prices nominally, as prices have Group-level simplified free-cash-flow rose
months and Russian refined products by the been frozen since 2013. The issue remains a significantly to $510mn and organic Capex
end of the year. Ambassadors of the 27 EU thorny political question for the government reached $323mn during the period.
countries have been meeting on a daily basis and any change in the scheme will damage The guidance for full-year Ebidta was put
since to strike a deal. its popularity as the government begins to at “around $2.8bn or above.” The company
The EU planned to have the next tighten its belt after extraordinary giveaways expects oil and gas production of over 90,000
sanctions package ready by May 9, when before last month’s election. barrels of oil equivalent per day for the year,
Russians celebrate Victory Day, but due to Maintaining the price caps on fuel but compared to 94,000 boe per day in Q1. It sees
the resistance from a few member countries, more importantly on retail energy have cost group-level Capex reaching $1.7bn-1.8bn for
particularly Hungary, this target will be billions of euros and put a huge burden on the year
unlikely to be met. the public finances. The budget deficit has The company expects oil and gas
EU member states with a high dependence widened to 73% of the full-year target by the production of over 90,000 barrels of oil
on Russian oil – Hungary, Slovakia and the end of Q1. equivalent per day for the year, compared to
Czech Republic, as well as Bulgaria – have Brussels has withheld vital EU funds and 94,000 boe per day in Q1. It sees group-level
asked for revisions of the Commission’s initial the RRF money from the government until Capex reaching $1.7bn-1.8bn for the year.
proposal, seeking an exemption period. the government takes steps against rampant Net debt to Ebitda hovered around 0.7x
Hungary has now been given exemptions until corruption and improves the transparency of and in 2022 it could rise to below 2.0x in 2022.
the end of 2024, a year more than initially state tenders. MOL chairman-CEO Zsolt Hernadi said
offered, but the Orban government remains Without EU funds, some economists the greatest challenges in the coming period
staunchly opposed to the embargo. augur the government would have to make a are achieving energy supply security and
“Hungary can only support these sanctions HUF1.7 trillion (€4.5bn) fiscal adjustment. So, maintaining profitability, referring to the
measures if crude oil carried in pipelines it would be Hungary’s top priority to strike a possible ban on the import of Russian crude
is exempted from the restrictions,” Foreign deal with the EU, as some RRF money could oil to EU countries.
Minister Peter Szijjarto stressed, adding that be used in the green transition. Hungary has threatened to veto the latest
the current proposal would ruin Hungary’s round of EU sanctions against Moscow,
energy security. claiming it would ruin Hungary’s economy.
The Czech Republic, Bulgaria and Greece MOL reaps benefits of On Friday morning, Prime Minister Viktor
are also seeking exemptions, but clearly, it is Orban said Hungary would need at least five
Budapest that has been most opposed to the pumped up demand for fuel years to completely shift from Russian crude
sanctions. oil and billions of euros to develop solar and
Speaking to state radio, the Hungarian and lower Urals prices in Q1 nuclear capacities.
premier said the EC’s proposal disregards the In the Q1 report, MOL’s top man said the
consensus reached by EU leaders at a summit High oil and gas prices and relatively cheap company is making significant efforts to adapt
in Versailles in March on acknowledging Russian oil have boosted MOL’s profits, even to the new environment and diversify its
national sovereignty over the energy mix of as the wholesale and retail fuel cap dented portfolio further to secure energy supplies for
member states. earnings. CEE’s second largest oil and gas the CEE region.
Hungary’s crude oil supply sources would company delivered Clean current cost of He acknowledged that the company is
have to be restructured at the same time as supplies (CCS) Ebitda of $833mn in Q1 2022, in the midst of a strategic transformation
an upgrade of the entire Hungarian energy down by 6% from the previous quarter, but up that “requires heavy investments” and said
system, including an expansion of the Paks from $644mn a year ago. the company is “very much committed to
nuclear power plant and the addition of more Among units, upstream remained the continuing this process in the current volatile
solar power. That process would cost “several largest cash contributor in Q1. Adjusted environment too”.
thousand billion forints” and take five years, Ebitda more than doubled y/y to $504mn, The company earlier adopted a strategy
he added. driven by rising oil prices coupled with the that aims to pivot to a low-carbon, sustainable
impact of an elevated gas price environment. business model by shifting from fuels to
The embargo on Russian crude oil would Downstream Ebitda remained flat at chemicals and from fuel retailing to consumer
hit MOL, Hungary’s leading oil and gas $254mn, as diminishing petrochemical goods and mobility, but it is striving to
company, hard, which so far has benefited margins were offset by higher R&M Ebitda. become a key player in the circular economy
from access to low Urals-type crude oil. The Market regulations in Hungary influenced as well.
transition from Russian high-sulphur type the results. Hungarian fuel sales skyrocketed MOL will start to pay dividends from
crude oil would take three to four years as the market has been distorted by the July 28, the company said late Thursday.
and cost $550mn, chairman-CEO Zsolt wholesale fuel price cap introduced in March. The AGM approved a HUF242bn payout to
Hernadi said in a recent interview. The cost The government extended the wholesale and shareholders, or HUF400 per share.
of overhauling its refineries in Hungary and retail fuel price cap until July 1.
at Slovnaft, the Slovak subsidiary, would be The company’s flagship €1.3bn polyol plant
15-20% less than the dividend proposed to in eastern Hungary is now 96% completed. Croatia to seek exemption
shareholders. The investment will make MOL the first
Hungary’s pro-government media and integrated polyol producer in the region. from EU ban on Russian oil
pundits have been painting a bleak picture of Ebitda of the consumer services segment
runaway petrol and energy prices in Hungary fell 44% y/y to $64mn as fuel price margin Croatia will seek an exemption from the EU-
if the EU’s proposals go through; both are regulation in Hungary, Croatia, and other wide ban on imports of Russian oil in order
currently under government price controls. CEE countries dented earnings. On the to secure material for its oil refinery at Rijeka,
The EU seems an obvious target for positive side, the non-fuel margin expanded Vecernji List news outlet reported, quoting
shifting blame when the government will by 8% y/y and its share of the total margin unnamed sources from the ruling HDZ party.
eventually be forced to lift some price caps rose to 35%. The number of Fresh Corner The EU is expected to impose a ban on
and households will cope with market stores rose to 1,081, up from 1,070 in the imports of Russian oil within six months and

Week 19 12•May•2022 www. NEWSBASE .com P15