Interview with Slovnaft Production Director, Peter Sramek, about MOL group development strategy and refining industry in Europe
Friday, Oct 20, 2017
As we approach the CIS & CEE Downstream Project Management in Vienna. Peter Šramek, Production Director of Slovnaft – official partner of the conference, shared his thoughts about the current situation, company plans and the downstream industry in Central Europe in general.

1. What is your assessment of the current situation in the refining sector in Europe? We can see that fossil fuels are being pushed out due to some European markets encouraging the use of electric cars. How is Slovnaft embracing the changes?

The current and previous years have been quite favourable in terms of profitability in the refining industry, as the price of raw materials and energy has fallen and in some markets we have seen a growth in product consumption. However, we see this only as a transitional period that is untenable in the long run as new trends are on the rise in the energy consumption sector (car-sharing, electric cars) together with the changing consumer and government awareness and their efforts to suppress the impact of fossil energy in everyday life. From this point of view, you will definitely have a deviation from fossil energy in the long run, and we are already preparing for it.

At present, Slovnaft and its parent company MOL, are primarily oil companies, but besides our core business, we want to transform into chemical company in the future. On top of that, we aim to leverage our 10 million customer base and 2000 service station network to respond or even create future demands. Our intention is to go beyond our current fuel and non-fuel offering by becoming regional leaders in alternative fuels and mobility services (car sharing, electric mobility, car fleets, integrated urban transportation, etc.).

From the point of view of chemical business, it is crucial to reduce the production of motor fuels from ¾ of the total output to 50%, and replace the difference with the production of petrochemical feedstock and other high value products (such as jet fuel, aromatics, LPG, etc.) . For the entire group, we want to invest around € 5 billion in this transformation by 2030.

2. What is Slovnaft’s strategy on meeting rigid emission legislation requirements to stay competitive in the European fuels market?

As a European fuel manufacturer, we meet all the emission requirements that are imposed either locally or by the EU. This increases our costs, and in today's globalized world it is a drawback for us, as the requirements imposed on Union producers are stricter than those for producers in Asia.

3. According to MOL Group 2030 strategy, diversifying away from fuels and investing more in the petrochemical sector is one of the company’s priorities. Can you please tell us more about Slovnaft’s
investment strategy for increasing petrochemicals production?

Slovnaft is not a separate entity within the MOL Group but benefits from synergies resulting from the operation of several refineries operated by MOL Group. This is why the transformation investments will be divided among several countries. In Slovnaft we expect the modernization of the ethylene unit, which will restore 40 years of technology, and thus will provide us with the opportunity to produce chemicals and increase the production of basic plastics. MOL Group also launched the polyol project, which  will enable MOL to produce propylene oxide, a key component for the production of polyether polyols. Polyols are semi-commodity polymers with main applications of automotive, packaging, construction, furniture and bedding, used as one of the main components of polyurethanes. Even though the polyol industrial complex will be built in Hungary, the investment will be important for the whole Group, including Slovakian market.

4. The industry is clearly moving into a digital era. Using digital technologies can drive a significant impact in terms of the operational performance for the refining business. What digital benefits do you see for your business?

We see digitization in particular as a further service. We will have more data to analyse, and with that we can better plan preventive and reactive maintenance. The increased amount of data will enable us to operate better the assets we have, better manage our energies, better plan general reviews and so help us improve the refinery's flexibility. We will also get data to provide better storage or shipping services. Besides refining, big data will be instrumental to adapt to changing customer habits and rapidly respond to their needs, which is the backbone of our retail operations.

5. What do you expect from your participation in the upcoming
CIS & CEE Downstream Project Management, taking place on 2nd-3rd November in Vienna?

I am looking forward to gaining interesting suggestions from professionals from other European refiners, for example, on how to manage projects and find out where other companies are heading.

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