Czech state-owned Mero and Orlen Unipetrol sign new oil transport contract

State-owned Mero ČR and refiner Orlen Unipetrol have signed a new contract for the transport and storage of crude oil. The new open-ended contract updates, after nine years, the terms governing technological, distribution and economic aspects of their cooperation in particular. Mero informed the Czech News Agency (ČTK) of the deal in a press release today. It did not disclose the terms of the new contract.

The state pipeline operator terminated the previous contract, which dated from 2016, two years ago. The company sought to ensure the contract reflected rising costs and other developments in the sector. Following the notice period, the contract expired at the end of May last year. Oil deliveries have continued under temporarily agreed terms until now.

„The new oil transport contract will ensure safer and more stable conditions for transporting and supplying oil to Czechia. The original contract, signed in 2016, was by now a long way from reflecting the technological or economic situation on the market,“ said Mero CEO Jaroslav Pantůček.

According to him, the new contract brings three major improvements. „The first is an update of the technological parameters for oil transport, including the increased transport capacity of the TAL pipeline. The new contract takes into account our plan to end imports of Russian oil and supply Czechia entirely via the western route through the TAL pipeline and IKL. The second change concerns the indexation of transport fees so that they reflect current market conditions. The third major benefit is an extension of the nomination period for the volume of oil to be transported, which gives both parties greater flexibility and reduces the administrative burden,“ Pantůček said.

Orlen Unipetrol CEO Mariusz Wnuk noted that the company’s Litvínov refinery is technologically ready to switch to new crude oil blends. „Following the increase in the capacity of the TAL pipeline, signing this contract is another significant step towards switching to new crude oil blends in the Czech Republic,“ Wnuk added.

Czechia currently receives oil from the east via the Druzhba pipeline, as well as from the west via the IKL pipeline and the connecting TAL pipeline. Mero recently announced the completion of technical upgrades to expand the Italian TAL pipeline, which increased its capacity. Testing and certification are now under way as part of the project. According to Mero, the increased capacity of TAL will allow the Czech Republic to switch to full oil supplies via the western route if Russian oil deliveries through the Druzhba pipeline are disrupted. Under current plans, Czechia is to end imports of Russian oil in the middle of this year. The capacity of the western pipelines will reach up to eight million tonnes of oil a year, fully covering the needs of refineries in the Czech Republic.

In 2023, 7.4 million tonnes of oil flowed into Czech refineries. Around 58 percent of the previous year’s imports came via the Druzhba pipeline, which runs from Russia. Statistics for last year are not yet available.