MOL flags temporary motor fuel depletions ahead of refinery overhaul

Energy Trade

The COO of MOL's domestic business said there could be "temporary depletions" of motor fuel at some gas stations as the oil and gas company starts a HUF 8 billion overhaul of its main refinery in Hungary, according to a report by state news wire MTI.

Péter Ratatics told news portal Index that MOL had originally planned the overhaul of the Danube Refinery, south of the capital, for the spring, but postponed it amid rising demand for motor fuel generated by a HUF 480/liter government price cap. The overhaul can't be put off further, he added.

The overhaul will start at the weekend; refinery output will be gradually ramped up, with a "large part" of capacity being restarted in September and a "smaller part" at the end of October, he said.

Under normal circumstances, Ratatics said, MOL builds up inventories ahead of an overhaul, but a "significant part" of stocks has been used up because of supply chain interruptions due to the war, a "jump" in demand because of the price cap and a lack of imports.

MOL will do "everything possible" to make up for the drop production, drawing from its Slovnaft refinery in Bratislava and remaining inventories, he added.

He noted that demand for diesel in Hungary outstrips supply by 10-15%, on average. Low water levels on the Danube have reduced barge loads, and unusually high temperatures have cut rail cargo capacities, creating unexpected difficulties, he added.

Importing motor fuel "isn't worth it" when four-fifths of the market can avail of the price cap, he said.

Ratatics suggested a review of the price cap policy to create room for increased volume of imported motor fuel and said temporarily allowing access to strategic reserves "appears unavoidable".

MOL will continue to sign contracts with its wholesale partners, but cannot exclude the possibility that it will deliver lower-than-usual volumes of motor fuel in August, he said. 

He urged motorists to top up with only as much fuel "as is really necessary" to ensure enough for everybody. He added that panic purchases and unnecessary hoarding would only make the situation worse.

He acknowledged that paying a market price of around HUF 800/liter for motor fuel would be "an extraordinary burden for households", but said the price cap policy should be seen as a matter of supply security rather than cost. The price cap distorts the market, and isn't good in the long term, especially when abuse of the policy is becoming more frequent, he added.

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