Fuel shortage seems to hit Hungary in two weeks
Experts believe there will be a fuel shortage during summer, even if the accident in the Schwechat oil refinery did not take place. Therefore, Austria and Hungary made a part of their strategic fuel reserves available for domestic consumption last week. However, it seems those measures will not provide long-term solutions to ease the problems.
Strategic fuel reserves released
Blikk.hu says that in July and August fuel consumption was 30-40 percent higher than in January. For this reason, the fact that the OMV’s refinery in Schwechat, Austria, temporarily stopped its operation due to an accident during scheduled maintenance poses a huge issue. As the international press wrote, a distillation tower was damaged, and two workers suffered injuries. Based on the plans, the refinery would have resumed operation by 10 June. But the damage is so severe that the company has not announced yet when they might restart production.
This problem affects not only Hungary but also Slovakia, the Czech Republic and Poland. Currently,
OMV petrol stations provide 17-19 percent of the gasoline and 13-15 percent of the diesel supply in Hungary –
Thus, Austria and Hungary made a part of their strategic fuel reserves available for domestic consumption last week. The Hungarian government’s decree gave 18,000,000 litres of 95 gasoline and 29,000,000 litres of diesel for the OMV. The company will have to return it though: 40 percent until 31 August and the remaining 60 percent until 31 October. According to the decree, the Hungarian Hydrocarbon Stockpiling Association will determine the price.
MOL provides 70 percent of the demand
Tamás Pletser, an expert in the gas and oil sector at Erste Group, said that substantial maintenance projects ought to be carried out every 4 to 5 years. However, companies had to postpone them because of the pandemic. Therefore, they take place now simultaneously worldwide.
Mr Pletser said that the OMV would like to provide fuel support with the help of the Austrian reserves. However, there is a specific order. Satisfying domestic demand comes first. Foreign stations can only come second. Moreover, Hungary is probably at the bottom of the list because the government’s price cap makes the business unprofitable. After the introduction of the price cap, several fuel retailers left Hungary, and now the OMV seems to drop out of the market as well.
Hungarian MOL provides now 70 percent of the domestic fuel supply, but they cannot go above that level,
Blikk argues.
Hungary follows the rules of the EU and the International Energy Agency, so it has a strategic reserve of crude oil and oil products that equals 90 days of import and 60 days of consumption. That means 800,000,000 litres of gasoline and diesel. OMV borrowed 6-7 percent of that thanks to the Hungarian government’s offer.
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There will be a significant fuel shortage
July and August mark the two peaks in fuel consumption since everybody goes on holiday and agricultural work takes place. Because of the pandemic, approximately 5 percent of the refineries terminated operations. When demand started to skyrocket again, Russia attacked Ukraine. As a result, the EU implemented an embargo on Russian oil and oil products delivered by sea. The deadline is 6 to 8 months.
Mr Pletser said that the MOL reserves would not be sufficient to satisfy the increased demand.
Importing fuel to Hungary is not worth it. Furthermore, scheduled maintenance will take place in the refineries of MOL in Pozsony (Bratislava) and Százhalombatta during summer and autumn.
The data of the National Tax and Customs Administration of Hungary show that fuel demand is higher this year than in the last pre-COVID year, 2019. Pletser said that the reserve the OMV received from the Hungarian government would only be enough for 12-14 days.
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Source: hvg.hu, blikk.hu