Czech Republic secures oil supply with strategic reserve loan
Oil has stopped flowing through the "Druzhba" pipeline to the Czech Republic, which is a problem for Orlen Unipetrol. If the interruption in oil supply continues, the Czech government decided on Wednesday to lend the company up to 364,000 tonnes of crude oil from strategic reserves. The loan constitutes one-third of the total reserves and allows the refinery to operate for a month.
The loan aims to ensure sufficient oil on the Czech market. On Tuesday morning, oil stopped flowing through the "Druzhba" pipeline to the Czech Republic. Deliveries on the western route through the IKL and TAL pipelines from Italian ports through Germany continue. Thus, Czech authorities emphasized that there is no market oil shortage risk.
According to Pavel Szvagr, head of the Strategic Reserves Administration, Orlen Unipetrol can activate the loan almost immediately. However, Szvagr assumes that the company will first use its reserves.
The credit agreement should be signed by the end of the week. If Orlen Unipetrol refineries utilize the loan, the company will ultimately return non-Russian crude oil, currently used by the Kralupy refinery, to the reserves.
In practice, this means that the Czech market will continue to be consistently supplied with fuels and other petrochemical products, so there is no reason for speculative fuel price increases — emphasized Szvagr.
If the loan proves insufficient, the Strategic Reserves Administration is ready to discuss the release of additional reserves.
Oil from Russia, which constituted 42% of Czech crude imports in 2024, is still being processed by the Litvinov refinery. In recent months, Orlen Unipetrol announced that it has improved its technology and that the Litvinov refinery is technically prepared for other oil blends. The second refinery, in Kralupy, has not been using Russian crude oil for a long time.
