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Germany and Poland reportedly resulting products at full European prices, flows to Turkey started declining last month
Lukoil was able to avoid having to take the
to their lowest since February, according to
nearing agreement on supplies $20-$40 per barrel discount to Brent that Refinitiv Eikon data. Reuters said a source
Urals has traded at since March. For example,
explained that Socar was reviewing the
to Schwedt refinery an avoided $20/bbl discount on 150,000 bpd situation with Russian oil in order to remain
compliant with Western sanctions.
is the equivalent of $45mn/month of higher
Germany and Poland are expecting to reach revenues vs. selling the crude directly.”
an agreement on the supplies of oil to the The EU embargo on the export of Russian
Schwedt refinery this week, Reuters reported oil to Europe came into force on December 5 Orban invited to MOL’s board meeting
on December 9. and has changed things and prevents Lukoil
Both countries are working to walk away from continuing this arrangement. as company opens new HQ
free from their currently binding contracts Lukoil can no longer send Urals crude to
securing Russian crude supplies via the Sicily, and other sanctions effectively prohibit Hungarian Prime Minister Viktor Orban was
Druzhba pipeline. it from importing crude from other countries invited to participate in MOL’s board meeting
Russian pipelines remain exempt from the to the plant. in its new HQ, which was officially opened
EU’s broader energy sanctions slapped on Italy, facing the possibility of having 20% on December 8. The prime minister was
Russia in the wake of its invasion on Ukraine, of its refining capacity shut down, has been accompanied by Minister of Energy Affairs
as the EU is worried about ways to replace looking at the possibility of ‘temporarily’ Csaba Lantos and Economic Development
Russian oil at short notice. nationalising the plant to keep it running Minister Marton Nagy.
Poland had earlier offered to step in with under outside management. At the meeting, MOL’s long-term business
non-Russian oil supplies for Schwedt as soon “For Lukoil a sale to Crossbridge at this strategy was discussed and the economic and
as the Germans push out the Russians from moment would be ideal, with the proceeds energy crisis was on the agenda, the PM’s
the refinery’s ownership structure. boosting the company’s ability to execute its press office announced in a short statement.
The refinery in Schwedt remains formally planned redemption of foreign debt while Construction of the MOL Campus began
controlled by Russian oil giant Rosneft. affecting dividend payouts less,” BCS GM said. in October 2018 and topped out in 2021.
Germany’s government placed Rosneft’s Previously Italy approved temporary The 28-storey high HQ at 143 metres is the
refining interests in the country under state nationalisation of the ISAB refinery on the tallest building in Hungary. The construction
trusteeship in September, arguing that the step island of Sicily as part of the country’s Council required special government permission.
was necessary to shore up energy security. of Ministers decree to protect strategic The building was designed by London’s
“Talks have been very good,” a enterprises. Foster+Partners in collaboration with
spokeswoman for the German economy Even if Lukoil had been able to keep the Hungary’s Finta Studio. Berlin-based Kinzo
ministry told Reuters about the German- plant and run it off alternative, non-Russian and Hungarian partner Minusplus were in
Polish negotiations. crude flows, typical European refining charge of interior design.
“We are now evaluating the talks within margins would imply annual EBITDA MOL covered the cost of the HQ from
the federal government and are currently contributions of perhaps $0.3bn, vs. typical its own resources, but declined to reveal the
expecting a decision from the federal annual EBITDA of around $15bn, or only 2% amount, citing business confidentiality. The
government by the end of next week,” the of the total. building is heated and cooled with geothermal
spokesperson added. energy and outfitted with 900 sqm of solar
Schwedt is only the fourth-largest refinery panels.
in Germany, but it is seen as strategically Azerbaijan’s Socar reportedly The opening ceremony came days after
valuable, as it covers around 90% of the fuel the worst fuel crisis in Hungary since the
needs of Germany’s capital, Berlin. pauses purchases of Russian 1970s, which forced the government, on the
Poland’s state-controlled refiner PKN recommendation of the oil company, to scrap
Orlen is interested in buying a controlling crude oil for its Turkish refinery a price cap on motor fuels late Tuesday after
stake in Germany’s Schwedt refinery, as soon 13 months.
as supply issues have been resolved, media Azerbaijan’s national oil company Socar has The government blamed European Union
reported in September. reportedly paused purchases of Russian crude sanctions affecting Russian crude that came
oil for its Turkish refinery, the 214,000 barrel- into effect on Monday. The lack of imports
per-day (bpd) STAR refinery near Izmir. and the supply problems at MOL’s refinery
The sale of Lukoil’s Italian sources as confirming the move, reporting led to a situation where the company, as the
Reuters on December 8 cited industry
only wholesaler, was not able to fulfil surging
ISAB refinery in Italy for that it was a sign that Western sanctions demand, a situation aggravated by panic
buying.
on Russia in response to its waging war on
$1.5bn is close to completion Ukraine were starting to impact steady crude Eric Mamer said on Thursday that the
The European Commission spokesman
oil streams outside Europe and the US.
The sale of Lukoil’s Italian ISAB refinery in An EU embargo on Russian seaborne Hungarian government was using the
Italy for $1.5bn may be close to completion, crude oil imports took effect on December European Union as a scapegoat for the fuel
reports Reuters on December 9. 5. The same day, a ban was introduced on shortage in the country and the elimination
A potential buyer is Crossbridge Energy the use of EU shipping services for the of the price cap on motor fuels, but Hungary
Partners of the US, with which Lukoil had transportation of Russian oil purchased above is exempt from the seaborne oil embargo as it
been in negotiations for such a sale earlier in a Group of Seven (G7) price cap of $60/barrel. relies on Russian oil brought by pipeline.
the year. Turkey, which has not imposed any The government decree approved on late
“This would be unambiguous good news,” Ukraine war sanctions on Moscow, arguing Tuesday was titled “On certain provisions
BCS GM said in a note. “The ISAB plant it needs to remain available as a trusted relating to the price of fuel due to the entry
proved itself to be extremely useful to Lukoil intermediary for potential peace talks, has into force of EU sanctions”.
in 2022. As the company was able to export not signed up to the price cap. Russian
150,000-200,000 [barrels per day] bpd of oil can thus flow freely to Turkey with no
Urals crude to the plant and then realise the consideration of the restriction. But Russian

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