Czechia strengthens its independence from Russian oil: what is the current situation?

In recent days, media reports have emerged about problems with supplies of Russian oil to Hungary and Slovakia via the southern branch of the Druzhba pipeline. At the same time, MERO ČR announced an expansion of the capacity of the Transalpine Pipeline (TAL).

The problems with Russian oil supplies to the countries mentioned are the result of steps taken by the Ukrainian government, which, in line with sanctions, halted the transit of oil from Lukoil through its territory. This has a significant impact not only on refineries in Hungary and Poland, but also on Lukoil itself.

How this dispute is resolved will depend on negotiations between the respective governments, with retaliatory measures by both Slovakia and Hungary also on the table. The EU has intervened in the dispute between the governments, proposing an alternative means of transporting oil via Croatia. However, this was rejected by the Hungarian side, which described Croatia as unreliable in terms of supplies and changes to the level of the transit tariff, which it says has increased several-fold.

In the context of these reports and the oil supply issue, news about the expansion of the capacity of TAL and the IKL pipeline connected to it, which supplies Czechia, is becoming even more significant. This also raises the question of the situation regarding Russian oil in Czechia.

What is the oil supply situation in Czechia?

At the end of July, MERO announced the signing of a contract to expand the capacity of the TAL pipeline. The TAL-PLUS project, which should enable Czechia to import up to four million tonnes more oil per year from Western Europe, is progressing according to schedule. Technical modifications are being made on the Austrian and Italian sections of the TAL pipeline, which is connected to the Ingolstadt – Kralupy nad Vltavou – Litvínov (IKL) pipeline on the Czech side, increasing its throughput capacity. The new pumps will have sufficient capacity to meet the new requirements.

Investments are also under way in Czechia in oil storage and processing infrastructure. The central oil tank farm in Nelahozeves has been connected to the IKL pipeline by a new higher-capacity pipeline. Both Czech refineries in Litvínov and Kralupy nad Vltavou are preparing to process various grades of crude oil, originating not only from Russia but also from other sources, such as the North Sea. Total costs are estimated at CZK 1.3 to 1.6 billion, and implementation is expected to take 25 months.

"At the beginning of 2025, we will complete the installation of backup pumps, carry out all necessary tests and trials, and in the first half of 2025 Czechia will finally sever itself from Russian oil," said Jaroslav Pantůček, CEO of MERO ČR.

Average annual oil consumption in Czechia between 2010 and 2023 reached 7.1 million tonnes per year. Last year, 58 percent of oil supplies arrived via the Druzhba pipeline, with the remaining 42 percent coming through the TAL and IKL pipelines.

Currently, specifically from 1.1.2024 to 31.5.2024, Czechia received 1.09 million tonnes of oil from the Russian Federation, followed by Azerbaijan with 1.07 million tonnes and Kazakhstan with 0.43 million tonnes. Imports from Russia thus accounted for roughly 41% and continue to decline compared with previous years, when they stood at around 50%.

Czechia will therefore have sufficient transport capacity to eliminate Russian oil imports and is in a better starting position than Slovakia and Hungary. However, until the embargo on Russian oil takes effect in full, the price of oil remains a question, as it may influence the share of supplier countries. Oil is purchased by a private entity, for which price plays one of the main roles in selecting a supplier.