After several months of negotiations, Hungary’s MOL and Croatia’s oil pipeline operator Janaf have signed a transport and storage deal for shipments of 2.9 million tonnes of crude on the Adriatic pipeline. However, the elevated transit fees under the current agreement fail to create a sustainable and competitive supply route according to MOL.
MOL’s previous contract with Janaf for shipments of 500,000 tonnes of crude on the pipeline expired at the end of March. The company’s refineries in Hungary and Slovakia are supplied with Russian crude oil via the Druzhba pipeline while the Adriatic pipeline could grant access to non-Russian supplies.
“Due to EU sanctions, diesel, gasoline and all other products intended for export must be produced in MOL’s Bratislava refinery from non-Russian crude oil in order to meet the high demand of the Czech, Austrian and Polish markets. The only available supply route of non-Russian crude is coming from Omisalj in Croatia and runs through the section of the Adriatic pipeline, owned by Janaf,” said MOL.
“MOL Group had no choice but to sign the agreement, as the Adriatic pipeline plays an important role in the security of supply in the Central Eastern European region,” commented MOL underlining that Croatia’s oil pipeline operator Janaf provided only a one-year-long contract with an exceptional premium pricing policy which results in MOL paying several times any reasonable current market benchmark.
Under the contract, Janaf will transport 2.9 million tonnes of oil and will store 79,385 cubic metres of oil at the Omisalj terminal on the island of Krk, as well as 70,000 cubic metres of crude oil at the Sisak terminal.
The elevated transit fees imposed by Croatia already drew criticism from Hungary, which considers this “an abuse of Croatia’s monopoly” and turned to the European Commission to intervene in relation to Croatia’s plans to increase the transit fee.
“The current agreement does not create a sustainable and competitive situation for the security of crude oil supply to Slovakia via the Adriatic pipeline, which raises concerns about the security of supply for the entire CEE region,” underlined MOL.
