MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság (MOL) Q3 FY2025 Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to MOL's Q3 2025 Results Conference Call. My name is Márton Teremi, Head of Investor Relations. The top management representatives on today's call are Dr. György Bacsa, Executive Vice President, Group Strategic Operations and Corporate Development; Dr. Ákos Székely, Chief Financial Officer; Mr. Zsombor Marton, Executive Vice President of Upstream; Mr. Gabriel Szabo, Executive Vice President of Downstream; Mr. Péter Ratatics, Executive Vice President of Consumer Services; and Mr. József Simola, Executive Vice President of Circular Economy Services. Before handing over, let me share some technical information. We continue to use Microsoft Teams as a platform to hold our conference call. The presentation can be downloaded from our website at molgroup.info, and we will be sharing the slides in Teams, too. [Operator Instructions] I would also like to draw your attention to the cautionary statement on Slide #2. And now we can start the content part with Dr. György Bacsa taking us through the highlights of the third quarter.

Good morning, everyone. After the third quarter, we will discuss in more detail with my colleagues that the delivery was mainly in line with our expectations, especially outstanding performance in wholesale and retail and significant stable performance in Upstream. Our Clean CCS EBITDA performance in the first 9 months neared $2.5 billion. However, I think the main message that you can also see on our slides is that because of the fire incident on October 20, this -- so last month, we have revised certain guidances -- certain guidelines that we issued previously. The assessment of the impact is still ongoing. So these are definitely should be taken as preliminary guidances. One is that we estimate that this year, we will process 0.5 million tonne less crude in total. That will also have a Clean CCS EBITDA effect, which -- that's why we revised our EBITDA guidance around $3 billion straightforward. We would like to indicate that our EBITDA guidance has come down from the previous guidances. There is an uncertain external environment, several challenges, regulatory changes, moving targets ahead of us, but the revision of our guidance was mainly driven, as I mentioned, because of the incident in October and its effects of our Danube Refinery operation. We also revised the CapEx, and we're now seeing that the group CapEx will be around $1.5 billion for the full year. Let me go to the next slide. So as I just mentioned in my first sentence, the overall delivery was very strong in the third quarter. The external environment was favorable for refining and retail as well, and Upstream posted a robust result. So the third quarter Clean CCS EBITDA rose by 15% year-on-year. The Upstream EBITDA, stable results, 3% quarter-on-quarter basis growth. Downstream Clean CCS EBITDA, 51% increase year-on-year. Consumer Services EBITDA, third quarter year-on-year, 28% increase. The Circular Economy Services posted a loss of $64 million, mainly due to seasonal factors for the third quarter. Some operational and other developments. We can also announce favorable developments in the Kurdistan Region of Iraq. The export crude oil pipeline to Turkey has been reopened, which is a very strategic and essential step for our operation in the Shaikan oil field. The gas expansion project was completed in the Khor Mor gas field, allowing for higher processing capacity. We also announced that we will change the group's legal structure. We think that the new structure will be more fit to MOL's operating and business structure and also granting more flexibility. We will have an Extraordinary General Meeting on 27th of November this month. And some details about the incident in the Danube Refinery. As I mentioned previously, this is one of the most important effect driver of the revision of our guidances. The damage assessment is still ongoing, and it will be premature to jump to conclusions with regards to the causes and the potential financial effects of the fire. We also cannot provide now an estimate of the CapEx needed to restore and the time needed to complete the repairs. What we know now that the AV3 unit was affected by the fire. This is the largest of the 3 atmospheric and vacuum distillation units in the refinery, and one of the most essential unit used to separate crude oil into different sections by heating. Now other units of the Danube Refinery are successfully restarted. And the refinery is expected to run at 50%, 55% capacity. That means that monthly, we lose roughly 250, 300 kilotonne capacity. We tried to adapt to this situation and now the production at Bratislava and Rijeka refineries are enhanced. Still, we expect that, at group level, we will see roughly 20%, 25% total processing capacity reduction. This is a lost opportunity and this will affect our EBITDA performance. That's why we revised the EBITDA guidance as well. The estimates for the still ongoing assessments are ongoing. I also would like to highlight that our refineries are insured and the discussion and the assessment by the insurance provider is also ongoing. The insurance extends not only to the direct damages, but also to the operational loss as well. However, it will be also premature to conclude how much extent we can recover from the insurances. If you go to the next slide, some of our sustainability-related performances. MOL's safety ratio deteriorated to 1.44 in the first 9 months of 2025. It is significantly worse than a year ago when it was 1.25. The increase was due to the Pakistan incident involving 4 contractors. There are also a number of small hand injuries and slip and trip related injuries, which also draw the attention that the awareness program is very important for HSE performance. Although it was not mentioned, but I would like to exclude any speculations that these deteriorating performance in HSE has anything to do with the Danube Refinery fire. That fire was handled professionally, no one was injured, no one was affected. Personnel injuries was not affected. So with all that, I would like to give the floor to Dr. Ákos Székely to discuss the financials.

Thank you, György, and good morning. Clean CCS EBITDA amounted to $974 million in the third quarter, which means an increase of 15% compared to the same period last year. As usual, the heads of each key segment will provide detail -- detailed information into their respective areas they manage. Let me focus on the 3 segments that fall beside the scope. First, Gas Midstream. The EBITDA reached USD 51 million, marking a year-on-year decrease of 10%. While market demand remained robust, profitability deteriorated due to the lower regulated price levels and cost inflation, and this is in line with our expectation. Regarding to the Corporate and Other segment, the USD 46 million of net cost during the third quarter was absolutely in line with the 3 years historic average quarterly charge of HU cost. And third, the intersegment elimination weighed on the EBITDA by USD 22 million, mainly due to the higher gas inventory elimination, owing to the decrease in gas price. Total CapEx amounted to USD 396 million in the third quarter of 2025. Organic CapEx year-to-date is at $840 million, lower by 23% year-on-year. The lower CapEx was predominantly driven by less turnaround seen in Downstream, leading to sustained tax expenditures being materially lower. Growth and efficiency CapEx in the third quarter was higher year-on-year as Upstream was still driven by ACG CapEx while Downstream spending continued on crude diversification, the DCU in Rijeka and several other petrochemical projects. Clean CCS EBITDA of $2.491 billion in the first 9 months of 2025 resulted in a net income of $775 million. Regarding the components of the bridge, let's see the details as usual on the next slide. The Clean CCS effect showed a negative number of $90 million in the third quarter, which was due to the volatility of oil price and inventory management overall resulting in decreasing effective average prices. The cleaning of CO2 cost, on the other hand, also caused a negative effect as seasonally usual in the third and also in the fourth quarter. DD&A amounted to $404 million for the quarter of 2025, slightly lower than in the previous quarter. The improvement was due to one-off effects in the second quarter, not present in the third one, but this was partly offset by the strengthening of the forint. With the forint appreciating, as I said, also there again was a gain on the financial line of $6 million. The next item is the income from associates, which reached $17 million, mainly driven by mostly the ordinary course of business in joint venture companies. Finally, the income tax amounted to $164 million in the third quarter, an increase of $37 million compared to the second quarter. Although the higher profit before tax is the main explanation of the increase, but the effective tax rate still at high level of 33%. Industry taxes were at USD 31 million, higher than in Q2. The explanation is behind renewable tax in Hungary was higher and because of the better results at Slovnaft, leading to higher special levy caused an additional $9 million compared to the previous quarter. Deferred tax expense was also higher due to the deferred tax assets and loss carryforward decreased, thanks to the higher loss utilization in Q3 '25. On the other hand, the solidarity taxation that led to a one-off expense of $50 million in Q2 did not weigh on the results on Q3. This is also something we already discussed during our last call. Let's look how the cash flow evolved during the quarter. Operating cash flow before working capital surpassed $1.8 billion in the first 9 months of the year. The change in working capital supported the cash flow of the year so far with the release of $366 million, mainly driven by seasonal factors. I would like to highlight one element. The inventories were depleted during the major turnarounds in Downstream during the summer. With that, the operating cash flow reached $2.177 billion. And let me finish the financial part looking at the balance sheet. The net debt improved by more than $600 million compared to the end of 2024. This reflects the strong cash generation mostly in the third quarter and also the more rational taxation that we already see in the earlier years. The net debt position has improved from an already comfortable level and stays at 0.45x EBITDA and 9.5% gearing ratio. And now I would like to hand over to Gabriel to discuss the Downstream performance. Thank you.

Good morning. Thank you very much, Ákos. So let me guide you through the Q3 performance of the Downstream. So in the reported period, we delivered Clean CCS EBITDA to -- amounted to $452 million, and this is a 51% increase year-on-year. On the refining side, external factors were more supportive. Fuel demand was broadly unchanged compared to the last year. So it was mostly European supply side issues that drove margins higher. The disruption in imports to Europe and also longer-than-usual outages in other refineries in Europe supported fuel crack spreads, especially on the diesel side. Regarding volumes, crude processing showed a small decrease, while sales volumes improved year-on-year. Turning to petrochemicals. The external environment is still characterized by rather weak demand, high feedstock prices and strong import from Asia. Petrochemicals EBITDA reported a loss of $58 million, and this is a reflection of the unfavorable factors I mentioned. Now let's have a look to the external environment, which we can see on the next slide. Yes. So regarding the external environment, the normalization process of the refining margin has been suspended in the third quarter. So there are more factors there, geopolitical factors around the Middle East, the fall in Russian diesel exports, outages and maintenance have led to this supply tightness, mainly what I mentioned in the diesel area. Regarding the last quarter, so what we see currently is that there is -- in October, there was a refining margin of $10.7 per barrel. And what we see that this refining margin is further increasing, so which almost double today. The reason behind this is still the strong maintenance season, mainly the ARA region, the further sanctioning, so the 19th package in EU, U.K. OPEC, so U.S. administration sanctions are causing the increasing refining margin. Regarding petrochemicals, the relief in most petrochemicals margin was short-lived. In the region, the petrochemical market continues to be characterized by subdued demand weighing on petchem product prices. Recent steam cracker closures in Europe and in China reflect the hardship in the business in general, but have not yet resulted in visible impact to our markets. And my last slide, showing the year-on-year components of the EBITDA change. So refining price and margin environment contributed $152 million to EBITDA year-on-year, while the drop in petchem price and margin environment had a negative impact of $38 million. Higher volumes contribution was $84 million. And within the category of Other of $47 million, there are items impacted mainly by the inflation pressure, so ongoing wage and maintenance cost increase. With that, I would like to hand over to Péter to continue with the Consumer Services.

Thank you, Gabriel. Good morning to everyone. So Consumer Services delivered $317 million of EBITDA in the third quarter in this year. So this is 28% higher than a year ago. Practically, all major building blocks or lines have contributed positively and nicely to the result. Even I can highlight here that though the OpEx is negative, but I think we worked a lot in order to mitigate the wage inflation and the minimum wage increases in practically all countries. And this $11 million OpEx increases, I consider rather as a result of a good management effort. The major contributor, though, was the fuel margin, which drove the growth. Weather condition in 2 countries, actually, that's the ultimate reason for this significant increase in Croatia and also in Romania from different reasons or due to different reasons, but the unit margins were increased significantly. The traction in the non-fuel margin has contributed to $9 million, which is also a good contribution. And also on the one-off items and the FX contribution was positive this time. So let's go deeper and let's flip the slide to the next one, where I can go deeper into the volumes where you can see and also what Gabriel has already mentioned, the fuel volumes practically was on a stable level, though it was a bit minus. The country contribution for the country constellation was a bit different in some countries like Hungary or Slovakia, the consumption was decreased. However, it was nicely offset by the -- by some of the other countries, mainly from the Southeastern European countries and also Czech Republic this time contributed nicely to the volumes. And looking at the margins, as I've already mentioned, price -- fuel price regulation have been lifted in July in Croatia in the middle of the tourist season. So we were able to capture a significant contribution from that country. And also the wholesale market structure has shifted in Romania to allow better margins for the retailers, which is also a good development in this business segment. If you turn the page to the non-fuel part, then broadly speaking, we've been experiencing deceleration at least from a percentage point of view. However, if you see the -- if you check the sales quantum increase, so this $32 million additional sales increase in the main season where we altogether accounted $582 million turnover on the non-fuel part, I consider this as a strong performance. And also, it's visible now that the consolidation of our business has reached its maturity since the margin growth pace is practically on the level or even a bit below than the sales increase, which is usually the maturity phase or maturity evolution of a good retailer. So all in all, I think the attention shall go towards -- to new selling points. We tested a few kiosk type of operation without fuel sales. And those tests were very well -- performed very well here in Hungary. And that's what I will explain a bit more after the next quarter, next time. So thank you very much for your attention. And I would give the word to Zsombor.

Good morning, everyone. So Upstream's EBITDA amounted in the Q3 2025 to $285 million, marking a 3% increase quarter-on-quarter. While we can say that largely the quarter is flat on production, flat on EBITDA and flat on cash flow, both quarter-on-quarter and year-on-year, this shows a stable internal performance, which fully offsets our natural decline, especially in a mature asset portfolio. The price environment had a little impact on our business this quarter. The realized prices remained broadly stable with gas prices having a slight decrease, oil prices, a minor increase in dollar terms. And then the positive development of the quarter is already mentioned, but I would reiterate the good news in a bit detail later. The export pipeline reopening in Iraq at Ceyhan and the Pearl capacity increase project started the first gas and ramping up of the capacities. So if we move to the unit free cash flow slide, you can see that the unit economics are also very stable. We can say also stayed flat with the $23 free cash flow -- unit free cash flow per barrel oil equivalent. Again, this shows a robust cash generation capability and demonstrates that the division is doing strong efforts to keep the profitability for the portfolio. If we move to the next slide, again, flat EBITDA year-on-year and quarter-on-quarter. All the effect on the waterfall remain at or below $5 million mark. You can see that this is a stable internal performance, again, with a bit of a detailed next slide where I can explain through the production. If we look at the -- production in the third quarter averaged 92,300 barrels of oil equivalent. That's slightly lower by 1,000 barrels per day compared to the second quarter. I would highlight here 3 major contributors. One was a series of outages in Hungary, external, internal factors resulted roughly 1,500 lower performance. That is -- we consider temporarily, so it will come back in the coming quarters. Production in Shaikan was also lower due to drone attacks in the region, and it was offset by increase in Azerbaijan and Pakistan having the strong delivery on the international portfolio. And all the other assets are actually delivered around the same and had the stability. Again, then a bit more detail on the updates in the Kurdistan Region of Iraq. You might remember that it was an export line closure to Turkey from March 2023, and after 2.5 years, an agreement between IOCs, Kurdistan regional government and the federal government of Iraq was signed with the aim to restore the international crude exports to Ceyhan. This shows that there is an improvement in the price realization as well. You see the framework working currently, but the next months will be the test of the payments and the commercial term realizations as well. Again, we have 20% in the Shaikan block. So we expect like a significant increment on commercial realization. On the Khor Mor field, the gas expansion project was completed and having a capacity of almost 50%. Increment and extension ramp-up started. We expect that by the beginning of next year, we will realize that extra volumes and potentially also extra sales as well. If we move to the last slide, what I would highlight here is the third quarter CapEx, which increased by 16% year-on-year, out of which -- that's like $6 million in absolute terms, out of which 6 percentage point is increase attributable to weakening of the dollar, while much of the rest is driven by scheduling of maintenance works this year in different periods in a different manner, having a Q3 higher share this time. And also, we see that we have a continuous shift in the composition of the production towards higher OpEx assets. That is also slightly raising our unit OpEx where we do serious efforts, both on energy and both on also production maintenance projects to offset those increments. So again, we see that single-digit percentage range is the OpEx increase itself, which is a very disciplined work considering inflationary pressures. With regards to CapEx spending, accelerated somewhat in the third quarter, but again, it's like flat. That's a very disciplined year-to-date spending in the first 9 months of 2024 -- '25. So with that, I would give the floor to József to discuss the Circular Economy Services' financials.

Thank you, Zsombor, and good morning, everyone. The CES EBITDA for Q3 was minus $64 million. We generally expected a weaker quarter due to the DRS seasonality. The reason for this is that a higher volume of drinks and so DRS relevant packaging material is put on the market in Q2 when we realized revenues. But a large share of this -- the redemption takes place in Q2, increasing relatively higher cost. But clearly, there were other items negatively contributing to the minus $64 million. One of them is being the relatively lower material sales and somewhat lower market material prices. And also because this is a dominantly foreign business, the strengthening of the foreign to the dollar caused around $6 million contribution -- negative contribution compared to Q3 2024. I'd also like to point out that the last year number, the plus $16 million is not a good basis for comparison because that included several large positive one-off impacts. Going ahead, we expect to see the recent positive EPR fee regulation change and the impact of the efficiency improvement having a positive contribution to the EBITDA in the next quarter. As for the CapEx, year-to-date spending is $43 million, somewhat lower than last year, and we expect this trend to continue this year and next year as the large CapEx item at the startup, the setting up the network of diverse vending machines in the country, around 4,000 pieces. It's mostly completed. So we don't foresee any larger CapEx item in the future, except for one potential major item. We are working on planning on a waste-to-energy plant or waste incinerator co-located with the [indiscernible] refinery. Preparations are ongoing. If we go for this, that would be in the ballpark of $500 million investment and with a final investment decision potentially coming mid-next year. And with this, I'd like to hand the word back to Márton for the Q&A session.

Thank you very much. So that completes the formal part of our presentation. We'd like to now open the floor for the Q&A discussion. [Operator Instructions] Anna, please go ahead.

First would be around the guidance. So around $3 billion of EBITDA for this year would suggest that the EBITDA for fourth quarter should drop -- should basically halve from the strong third quarter. And yes, obviously, there was a fire and there will be an impact on the utilization rates. But as you mentioned, the refining margin has stayed so high and production on the Upstream side is pretty good. Can you please comment around where do you see this huge drop coming from in fourth quarter? That would be my first question. Another question around Slovnaft. There were some contradicting headlines in the news we saw around possible fire at Slovnaft. Can you just confirm that there was no issues? And the third one is around the crude supplies and whether this new round of sanctions impacted your current crude supplies and what you expect in 2026?

I would like to ask György to take the first question, please.

I think regarding first on the guidance, if we divide it down to $3 billion, it means that the previous guidance was exceeding $3 billion with a couple of hundred million dollar extra EBITDA expectations. As I mentioned, annually, we will have opted [Technical Difficulty] of course, the financial impact is just an assessment because first of all, it depends how much we can procure from other refinery. That's why I mentioned the group refining capacity, which is [Technical Difficulty] up and running at full capacity. There is no fire. So I would like to immediately answer your second question. There was no fire and there is no issue. Also definitely, we will use our internal sources, not only the reserves, but also the capacities but also using the third-party trading opportunities to cover it. So exactly margin was [Technical Difficulty], it's hard to estimate. That's why the guidance is cautious. So there is still strong performance, a stable performance, fully in line with, I would say, our standard $3 billion EBITDA delivery, which are integrated that is truly -- it depends on these challenges. But definitely, we should have a kind of revision, downward revision, not being able to properly calculate penny by penny how much margin EBITDA from trading from increased capacity utilization, but there is an outage in [Technical Difficulty]. So it's nothing to hide about it, and there is some work to recover, to restore and to assess the time and CapEx needed for that. So I think that's for sure. Regarding the crude supply part, I ask Gabriel to comment.

So regarding the crude supply, we do not -- for the next year, we do not count any interruptions.

Tomasz, please go ahead.

A couple of questions. The first one, again, on fire. I realize that you declined to give a precise comment. But when it comes to repair works, do you think it's going to take months, quarters or years to repair that refinery? So this is the first one. The second is on your Consumer Services business line. So you mentioned the growth rates for [Technical Difficulty] business and you also said that you are testing some. So do I understand correctly that you're contemplating whether to enter just a grocery convenience business separate from your fuel stations? So it was the second.

Thank you. So let me start with the fire. Yes, definitely, the fire case in AV3 units in [Technical Difficulty] refinery is a critical issue in our operation. So let me share with you some facts what happened. So from the evening -- late evening on October 20, major fire broke out in the pump station of AV3 unit in Danube Refinery. The fire burned for more than 10 hours until it was extinguished with the firefighters. But as Mr. Bacsa mentioned, there was no personal injury. The power station is the kind of pumping the various fractions at the distillation units from one tower to another. So without this station, the AV3 unit can't operate. As it was mentioned after the fire case, the -- all the other units in Danube Refinery were successfully started. The refinery is expected to run at 50%, 55% capacity. And as Mr. Bacsa mentioned, it's causing roughly 300 kt of crude oil processing drop per month. So what we are doing currently, we are trying to clean the area, but you can imagine that there is a lot of equipment there with hydrocarbon. So safety first, [Technical Difficulty] are rather very cautious. Once the hydrocarbons have been removed from the system, we will be able to approach all the [Technical Difficulty] to make a proper inspection [Technical Difficulty] for repair works. I expect that we won't be able to comment it for the couple of next weeks. So there are lots of professionals there on the site. First, we need to clean the area to make it safe, then there will be a lot of testing and analysis done. And after that, we can just say properly what is the scope and hence, time is needed to do all the repair works.

And what is the worst-case scenario, assuming that you need to rebuild all the pumps which are there?

The worst-case scenario that we will procure new pumps and we will replace the burnt pumps, the damaged pumps with the new ones. So for me, this is the worst-case scenario.

Yes. And then it takes how long?

Look, I don't know. So firstly, you really have to see what is the scope of work to be done.

Yes, but I'm just wondering whether this is the equipment which you can just buy from the shelf or we need to wait, I don't know, a year or 3 in order to have it installed?

So let's get back to this question once we see clearly what is the scope of work to be done. So please understand that I don't want to say anything because then it will be taken for granted. So I would like to avoid to be very specific in this area. So thank you very much for your question.

As far as the second question concerns, so about the Consumer Services and the non-fuel performance, so what I meant about the maturity or became a mature business, it means that the previously experienced double-digit growth pace can come down to -- I mean, on a normalized level. It's much more closer, by the way, to the regional retail growth pace, but also the underlying business operation grew significantly over on the past several years. So that's just the relative growth pace, what I reflect on. But on the other hand, on absolute terms, you can see that quarterly actually, the sales increase is roughly $30 million, and that can come down to $10 million margin contribution on a quarterly basis. So still, the business is growing. I still see a natural kind of growth direction. It will not stop. It will continue its pace over its direction. The other thing what I meant about the additional sales point or opening up additional selling opportunities that naturally and historically, the fuel retail or destination or locations and also the customer base whom we have, those are rather those customers who have a car and who is driving. And actually, that's what we would like to broaden up towards to that customer base who is using the public transport. And that's why actually we started up. But by the way, that was -- I mean, several pilots during the past several years in different formats, in different locations to test our Fresh Corner convenience store operation model. And actually, all those pilots now comes down to an operating model and that we fit into a kiosk type of operation in several railway stations, several high-traffic areas. And actually, organically, we would like to grow towards that direction to offer hot dogs, coffee, soft drinks, salty snacks, very limited number of SKUs in a very limited number of square meters with a very limited number of FTEs who are working on the location in order to utilize this organic growth opportunity to attract more and new customers into our non-fuel sales business or operational business. And that's what I see that actually, there is a space for that. And really our hot dog, coffee, our assortment are [indiscernible] and also our loyalty program is a very, very good baseline of pillars for this kind of growth opportunity.

Oleg, please go ahead.

I have several and actually, all of them are kind of a follow-up on an earlier question regarding the oil supply to your refineries in Slovakia and Hungary. So firstly, the U.S. sanctions against Rosneft and LUKOIL will come into effect on 21st of November. I understand that the PM, Orbán is seeking some exceptions from the U.S. administration. But assuming that there is no exception granted to Hungary and Slovakia to continue importing Russian crude oil, does it mean that MOL will not be able to import any Russian crude as of November 22nd? And if yes, then how is the company going to secure the oil supply of the 2 refineries? Secondly, you mentioned that to prepare the group for a potential switch to non-Russian seaborne crude, a CapEx of circa USD 500 million would be required. So firstly, would you still see this level of investment necessary? And secondly, would the intensified rhetoric of both the EU and U.S. administration regarding the need to completely cut off Russian supply. So would this accelerate the speed of spending the $500 million mentioned earlier? In other words, could we see a step-up in CapEx spending next year as a result of that? And thirdly, there have been multiple articles commenting on the ability of the group to fully switch to seaborne crude oil imports via Adria pipeline. Could you please maybe provide some light on the how viable is the Adria pipeline as an alternative route of supply? Because on one hand, we read here and there that MOL and Hungarian authorities are reportedly claiming high cost and technical issues with the supply via Adria pipeline. On the other hand, the Croatian authorities and JANAF specifically is negating those concerns. So help us understand where the problem is regarding this potential route of supply. So that will be my questions, and then I'll get back in line to ask a few more.

Thank you very much. So let me go one by one. So regarding the U.S. sanctions and the effect, so first, we don't want to or I don't want to comment on any on our partners. But with the sanctions not turning effective for a few more weeks, as you mentioned, the negotiations are still ongoing on the diplomatic level. I believe you are very well informed about it from the media. So I believe it would be premature to specify any action. Then so whatever will be the outcome, MOL will definitely continue to comply with all applicable sanctions. But as I mentioned at answering the first question that we do not expect any disruption in our operation because of the U.S. sanctions. So we believe that we can supply our refineries via the Druzhba pipeline. Regarding the second set of the question or the second set of the challenges, so these are the diversification and how are we to proceed. So yes, we informed all the stakeholders that we need this $500 million CapEx, and we want to invest it to be fully able to decouple from the Russian crude. We are investing in blending facilities, refinery facilities and in the logistics. We tested several crudes. So we know what would be the optimal crude basket once there is no real-world supply there. All the -- then these are not just 5 engineers, but dozens of engineers who are working on this. So I think that there is no room to accelerate the works further. So we are very much aware of the threat that the operating crude oil infrastructure can be -- the operation of this infrastructure can be interrupted every moment. So of course, that we are doing our best then to switch to the alternatives. And this comes to the third question that whether JANAF is able to deliver us the required quantities in the first place. And then what is the commercial side of it. So let me comment and as I'm sitting in the Board of Slovnaft and yesterday, just yesterday, we put to the media that there was an agreement and schedule that 58,000 of Arab Light crude will be delivered to Slovnaft, and JANAF who is the operator of the Croatian pipeline system, failed. So we were to receive yesterday 58,000 tonnes of crude, which was not delivered. So what we see that even the first technical challenge results in a delay of weeks. We miss the transparency. So we still don't know the condition and capabilities of the pipeline. So what we learned that JANAF has started the assessment of the Croatian pipeline section, but has not shared the findings. And we are not aware of this works to be done there. So we do not see the maintenance plan. So this is the part -- the technical part of the question. Then another, which is the factual truth that there were several tests and several of them failed. And to move, this is the commercial side that the terms which are proposed by JANAF are very much beyond the market fairness. So of course, that we are trying to solve all these issues on the technical level. So engineers speak to engineers, then we are trying to fix those issues on the business level. And as I said that we miss the transparency. So we made several public statements because this is really critical. So on the east side, there is a huge risk that the pipe is interrupted. On the other alternative side, we see that there are a lot of concerns.

Understood. Maybe just one clarification regarding my first question. From the legal point of view and in the worst-case scenario, if there are no exceptions granted by the U.S. administration to Hungary, would MOL, legally speaking, be obliged to comply with the U.S. sanctions, or the exceptions granted by the EU to both countries would prevail? Just to understand these legal specifics.

Yes. So I'm not a legal expert, but what I can read is that the U.S. administration sanctioned particular companies. We are not sanctioned to be supplied by Russian crude -- to deliver Russian crude.

I think Gabriel is not a legal expert, but definitely U.S. sanction regime and the EU sanction regime are parallel to each other. And regarding any hypothetical cases or future developments, which are a result of diplomatic efforts, all are involved, and we are not directly affected by the U.S. sanctions. I think we made it clear, and we fully comply with all applicable sanction regimes. So I think it will be very much a speculative discussion than proper analysis. So the regimes are parallel. This is a fact and the direct effects and secondary effects is also separated several times. What if type of questions, we are not ready to answer.

Tomasz, please go ahead.

Two questions, basically 2 follow-ups on this fire incident in the Danube Refinery. First of all, it was not clear to me, but have you shut down the entire refinery when this fire bursted out? Because from the news, what I understood that basically AV1 and AV2 were also off for almost a week. And after that, you restarted both units. That will be my first question. My second question is, how would this fire change your export strategy? And would you touch the Hungarian strategic reserves in order to meet the Hungarian needs? Or you don't plan to do this at the moment? And how would it change your export, especially towards Ukraine and Serbia?

Gabriel, please go ahead with the answer.

Yes. Thank you. So as it was a really major fire, a major accident, the first thing what the firefighters do in this occasion, so they do not fight the fire, but they rather control the fire. So in the first step, we have to cut back the supply of the energy to this fire, so all the potential hydrocarbons flows towards the unit. And because of it and because of the emergency protocol, you are right, the majority of the refinery was shut down. But as it was mentioned today, the refinery successfully restarted. So all the distillation and all the other units are operating as usual. Excuse me, Tomasz, what was the second part of your question?

Yes. Basically, the second part was how will your export strategy change? And you touch the strategic reserves in Hungary?

Yes. So definitely, we have to reschedule our supply to our domestic countries -- supply of the fuels to our domestic countries and abroad. So in the first place, the domestic countries are secured. So supply is fully secured. So there shouldn't be any worries there. And we have to reschedule the exports to other markets. So to the extent we can do, we maintain our position. As it was mentioned, we are getting the products also from third parties. We increased the trading activity, and we try to supply our -- in the first place, our own network of service station and then our partners.

And do you plan to require to touch the Hungarian strategic fuel reserves in order to supply well the market, I mean, the Hungarian market?

So far, we did not do this. Once the situation stays as it is, so we will operate as today.

[indiscernible], please go ahead.

Can I ask you about Kurdistan? What is next in terms of other phases of growth there? I have seen reports that the Chamchamal reserves could be used to develop and that gas could be used to pump it to federal Iraq using the old oil pipeline. Is that feasible? Is that something that is being discussed at all?

Yes. So the Chamchamal is the other Pearl reserve, which is to be developed. Currently, Khor Mor is the sole production supply of largely gas, but also condensate and LPG as well. The Chamchamal is going to be tested probably in the next 2 years with a trial production facility. And in the midterm, it is going to be also serious and significant gas suppliers, largely gas, maybe oil as well that we don't know yet. And it can be also potentially going into the direction of South Iraq, yes.

[indiscernible] please go ahead.

A question regarding the Schwechat-Bratislava pipeline that was under planning for more than 20 years, and now there is no word about it. I know, at the beginning, it was about to use the Druzhba pipeline to reach Schwechat. But nowadays, as you are talking about closing the Druzhba pipeline and having problems with JANAF. Why don't you talk about this 62-kilometer-long pipeline that should be built, in my opinion and would solve your problems and getting oil from the West from the Trieste-Vienna pipeline?

Gabriel, please go ahead.

Yes. As far as I know, the project was canceled several years ago. The partners were the Transpetrol, so the Slovak crude oil pipeline operator, and the OMV. Yes, so the project is fully off the table and is canceled. There were several issues there, I learned, that first was the crossing of the Danube, which was heavily fight by the environmentalist. And also on the Austrian side, there was the pipeline route was set in the environmentally protected area there. But probably there were more. But as I mentioned, we were not part of this consortium. Now the project is canceled.

Okay. With that, thank you for your participation on today's call. Please reach out to Investor Relations if you have anything to follow up with. Thank you very much, and goodbye.

Thank you. Bye.