MOL Group Downstream

2023 HIGHLIGHTS

• In 2023, Downstream generated HUF 472.4bn (USD 1,328mn) Clean CCS EBITDA, which is 44% below the previous year’s performance. The lower result was attributable to the narrowing of the Brent-Ural spread, the significant decrease in petrochemical margins, and the higher incidence of extra government takes in Hungary such as the Brent-Ural tax and the revenue-based extra tax. The base effect contributed significantly to the year-on-year decrease, as the termination of price cap regulation was compensated by higher extra taxes.
• In 2023, one of our primary focus was to guarantee stable and sufficient market supply within the core region and to comply with the EU sanctions during our operations. Crude diversification program started in 2022 in response to the EU sanctions on the Urals and continued in 2023 and is on schedule at the Danube Refinery, Slovnaft and Logistics. Full Compliance was achieved in 2023, alternative crude oil processing in the Bratislava Refinery has been increased.
• During the year of 2023, 6 new types of crude oils and their various blends in volume 800 kt+ were successfully processed in Slovnaft within the crude oil diversification program. By gradually increasing the processing of alternative oils, we are getting closer to the goal of meeting the regulations imposed by sanctions on the export of products from Russian oil and also to ensure the supply security of the region in the future.
• The flagship Polyol Project of MOL Downstream has reached an overall 99.9% progress by the end of 2023. Construction activities have come close to completion at the same time, with focus of the project management teams shifting towards the complex sequence of commissioning activities of all units. The operating teams have been set up and play an integral role in commissioning as “on the job” training. In May 2024 the Polyol complex, MOL Group’s largest organic investment has been inaugurated. The Rijeka Refinery Upgrade Project reached 84% completion despite unfavorable external factors, such as lack of workforce and the increased prices of construction materials.
• Under the new strategy, crude diversification, CO2 emission reduction, sustainable chemical transformation, circular economy, renewable fuels and green H2 will be the focus of the Downstream business. Accordingly, MOL has built up its green hydrogen facility in the Danube Refinery, which has 10 MW electrolyzer capacity and can produce 1600 tons of clean green hydrogen yearly. The plant was handed over in 2024 April, with the introduction of this technology MOL Group became the largest renewable hydrogen producer in CEE region.
• MOL Group's biofuel purchase with regards to both supply points (8 countries) and concluded amount (>600 kilotons) remained stable in 2023 as the national transport compliance mandates did not or hardly changed in its core countries compared to 2022. The group of bio components used is similar to that used in the previous year: food- & waste based bioethanol and fatty acid methyl esters are still serving as basis for decarbonization of our fuels. In addition, bio components made of advanced feedstocks are further increasing in our portfolio: MOL successfully processed such material in its co-processing unit in Százhalombatta.
• Key achievement for MOL Group is to have the first supply of aviation fuel blended with a remarkable share of Sustainable Aviation Fuel (SAF) as well as selling 100% renewable diesel (called Hydrotreated Vegetable Oil or HVO) in selected wholesale and retail outlets.
• In 2023, Downstream R&D continued its activities and projects across three main product fields: Polyol, Polyolefin, and Refining. R&D has a vital role in the Polyol Project by continuing the development of product recipes and grades for the upcoming start-up of production. We extended the polyurethane application development know-how to ensure the necessary support for MOL Group’s future customers for polyols. Our Polyol R&D team is actively engaged with potential customers to prepare the ground for the market entry. In the Polyolefin area, the focus was to continue the portfolio transformation into a more sustainable one. The active portfolio management allowed us to extend the co-operation framework through the whole Petchem product line, including waste-management activities. To meet the future demand of low carbon fuels, to diversify the feedstock portfolio and to accelerate the conversion to circular economy, several small-scale co-processing lab reactor tests were successfully completed. The focus was put on waste-based fraction and new waste-based/advanced feedstocks in order to produce higher proportion of non-crude-based middle distillates. We also continued the co-operation with international partners in the field of rubber bitumen production and completed successfully our project converting heavy fuel oil to nonfuel products.
• With Biogas gaining momentum in Europe, MOL has prepared its biogas roadmap with the ambition to build a unique position in CEE by 2030. As a first step of its implementation, the Group has acquired its first biogas plant near Szarvas, Hungary. The plant processes more than 100,000 tons of feedstock (residual waste from food producers, farmers and livestock producers in the region) producing more than12.5 million cubic metres (mcm) of biogas per year. Furthermore, to support the Group’s strategic targets, INA Group is planning to invest in a biogas/biomethane plant using agricultural waste in Sisak, Croatia. With these developments, MOL Group has been establishing its presence in this new value chain, and can be considered as a stepping stone for further organic and inorganic developments.

OUTLOOK FOR 2024-2030

• In 2024 MOL Group introduced its revised Shape Tomorrow strategy. Our vision hasn’t changed, we are still working towards to reach carbon neutrality by 2050, and building up a highly efficient, sustainable and chemical-focused company. However, changes in the external environment and the more ambitious climate goals of the EU indicated to update our long-term strategy.
• Integrating bio- and waste streams and focusing more on biomethane and green hydrogen production is one key pillar of the updated strategy. These projects not only set the way to the sustainable future but contribute to the MOL Group's GHG emission reduction target.
• Extending our petrochemical value chain reach with mid-sized projects and our emphasis on circularity will boost our petchem more efficient and sustainable.
• Continuing the diversification of our oil supply to further strengthen the region’s security of supply.
• Downstream will invest more than USD 5 bn, including USD 2.5 in sustain & life time extension of assets, and more than USD 2.8 billion in strategic CAPEX for transformation including decarbonization, logistic investments, waste and chemical projects by 2030.