MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság ($MOL)

Good morning, ladies and gentlemen, and welcome to MOL's Q1 2026 Results Conference Call. I am Marton Teremi, Head of Investor Relations. The speakers on today's call are Dr. György Bacsa, Chief Strategic Officer; 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. Jozsef Simola, Executive Vice President of Circular Economy Services. Before giving the floor to Mr. Bacsa, let me remind you of some technical details. We continue to use Microsoft Teams as a platform to hold our conference call. The presentation is accessible at our website at molgroup.info, and slides will be shared in Teams during the call. [Operator Instructions] I would now 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 first quarter.

Good morning, everybody. Thank you, Nathan. So let's start with the first quarter summary and go to Page #4. Let me start with the annual guidance. If I want to be short, I would say that we didn't change the guidance, but let me take some more minutes to go a little bit of deep dive because I would like to remind you that when we issued the guidance, that was the presentation of our fourth quarter results of last year dated 20th of February, so end of February. At that time, we already experienced many of the risks and difficulties, especially to mall, especially to region or globally. Especially to mall, we already -- we were already in the middle of the A3 reconstruction and repair issue after the fire, which will take still a couple of months, but we are on progressive and Mr. Gavriel Sabo will go into details on that. At that time, we already experienced at the end of 2025, Hungary and Slovakia had one of the lowest GDP growth in recent time and Croatian GDP was also going down. There was also -- there was already a stoppage on the pipeline at the end of February, which last 10 weeks at the end. And the risk that we practically presented during our guidance did not decrease, but rather increase. Since that time, in March, the conflict of Iran and the closure of the state of form have brought unprecedented volatility and fragility to the crude oil supply, especially to the seaborne supplies. There was also government interventions, Same for 2 markets, all our core markets are affected some sort of government regulations, price caps, margin regulations, restrictions, export restrictions, which are not just affecting practically our margins and our pricing abilities, but also the moving of goods and the free movement of goods between our market, between our refineries and between our wholesale storages. I think what we are heading into that, especially if this energy shock or this war that caused the energy shock with dragon that practically we are heading into a perfect storm, which was also, I would say, highlighted or emphasized by the latest IMF report as well, which is forecasting in such a reverse situation, historical low global GDP growth. I would say that such an outlook would not give us anything else just to stay cautious and definitely consider all these risks are very serious and draw up a plan how to manage the risk. And now let's go into some of the key ones which are specific to more. The disruptions in the pipeline. The disruption in the pipeline, I would say, and we emphasized several times that we are preparing for that. We were preparing for that. We didn't expect that it would happen. But in the last decade, just an example for that, we invested into the pipeline network more than $300 million to diversify our crude supply system. And I think the first quarter just strengthened our belief that the region needs at least 2 open and accessible crude supply routes to ensure uninterrupted fuel supply for the CEE region. And it's also our business interest or business [indiscernible]. We need to safeguard our ability to always make the best business decisions. And I would also emphasize that our diversity routes enabling us to get access to seaborne supply and also to onshore resources. Since 22nd of April, the drill pipeline is again operative, and we will remain to use both directions, both routes to keep up this diversity, the advantage of the diversity. I also would like to go into the price controls because everyone saw the big volatility, the big ups and downs in the pricing, in the crude and the product pricing. But I think that was in the supply also other volatities, the availability, the availability of seaborne cargo and the availability of resources. There was particularly a fight for the cargo, the fight for the supply on the global market. The oversupply global market became short immediately after the Iranian crisis and regions and companies and countries were battling with each other to get access for the supply. This volatility and the consumers were protected against this volatility with the price contracts and the government mechanisms. But we were not protected on our supply and on our logistic markets against such volatilities. So it negatively affected our performance, especially in the downstream. So let's go to the Page #5. So if you look at the first quarter results, but we can see that our first quarter in CCS EBITDA came in at $626 million, which means 25% year-on-year decrease. Positive, we can report only in upstream, which improves back of the higher oil and gas prices and in Consumer Services, which was mainly supported with the increasing foreign exchange rate with the favorable foreign exchange rate figures. In downstream, we suffered greatly due to the multiple shocks and the volatility, its financial impact and the significant operational challenges that we are facing with. So our Downstream CCS EBITDA decreased to $69 million. Our circular economy service EBITDA was driven by seasonality and reached $21 million. Our Consumer Services EBITDA increased to $177 million and upstream EBITDA rose to $346 million. My colleague will give you more details on the financial performance and the drivers behind the financial performance. As I mentioned earlier, the [indiscernible] pipeline was not functioning for 10 weeks and during which B and the Daniel refinery had to switch to seaborne crude supplies from Russian origin. We deliveed the Adriatic pipeline, but I also have to mention that the [indiscernible] refinery has lost almost half of its crude processing capacity. So it was not running at full capacity during this time. Another event that in the first quarter, I want to emphasize is we increased our stake in ALTEO Plc to 40% by agreeing or swapping of other shares to ALTEO shares. On the mix transactions, we are still continuing the negotiation. We have the negotiation license from OFAC and we have the agreement with the seller. But I think everyone knows that this is a complex transaction where we have 3 work streams of negotiations, not only the sellers and the whole country, but also the United States regulators and to a certain extent, the EU regulators are also involved. The Refinery upgrade project has been completed and is expected to have material operational financial impact on the refinery by end of the year. We expect that the diesel production in the refinery to increase by up to 30%. Furthermore, MOL has also been successful in bidding for an offshore exploration area near Libya or offshore Libya jointly with Repsol and TCO. Now let me give you just a short summary on the sustainability results. I think it's positive that the most CET ratio was -- the TRIR ratio was 1.15, where our guidance for the year is 1.25. So we would expect to keep the guidance throughout the entire year. I would like to give the floor to Mr. Ákos Székely.

Thank you, György. And let me continue with the EBITDA performance and the segment breakdown. The Clean CCS EBITDA reached USD 626 million in the first quarter, as György said, a decrease of 25% year-on-year. With the EVPs to discuss the respective segment performance in detail as usual, I will elaborate on the segment which fall outside the scope. First, the gas midstream. The EBITDA came at USD 93 million, which represents a year-on-year increase of almost 40%, 39%. The reason is that the transmission volumes were flat, but the higher cross-border capacity demand was substantial due to the relatively cold winter as well as favorable FX effect supported EBITDA generation. The second, regarding the Corporate and Other segment, the central cost of USD 52 million were broadly in line with the seasonal average and also with the dollar weakening, explaining much of the year-over-year increase. And finally, the intersegment elimination had a negative effect on EBITDA of USD 28 million, which is kind of expected mainly due to the higher oil prices resulting in the higher inventory elimination. Let's discuss the CapEx. The CapEx amounted to USD 241 million in the first quarter of 2026. Organic CapEx was at USD 252 million. This translates to an increase year-on-year [indiscernible] the base was in the base period was relatively slow comparing to the historical figures. Therefore, I think this figure kind of getting back to the normal range. Some words about the details. The growth and efficiency CapEx grew by close to $70 million and amounted to $108 million in the first quarter, mainly as the Refinery investment was finished and invoices were settled. Also, an uptick in field development works in upstream, mainly in Croatia and offshore assets also contributed to an increase has been the construction in product pipeline works between Bratislava and [indiscernible] refinery. The next category is the inorganic CapEx, which amounted to $241 million and was driven by the closing of the acquisition of the photovoltaic portfolio in Mad, Hungary with the SPS signed in December 2025. The solar portfolio has a total capacity of 304 megawatts and is expected to generate around almost $40 million, $38 million of EBITDA per annum. Other transaction is the -- which we closed in the first quarter, this was the vertical integration in the Waste Management segment with the acquisition of one of the regional coordinator in Southeastern Hungary. The first quarter clean CCS EBITDA of $626 million resulted in a net income of $522 million and really the component of the bridge, let's see the details in the next slide. The clean CCS effect showed a positive impact of $47 million in the first quarter, which was in line with the effect of increasing oil price. The positive CCS effect was supported by the seasonal cleaning of CO2 cost by -- limited by the adjustment for losses on commodity hedges. The next is the DD&A, which reached $417 million in the first quarter of 2026. This means a year-on-year increase of 23%, driven by the dollar depreciating by over 10% in the first quarter of '25 and the higher depreciable assets of the group, most notably upstream assets acquired or activated last year. [indiscernible] foreign depreciating exchange rate volatile during the quarter, the financial line was negative to results. And let me stop here and recall a couple of figures because, yes, there was a huge volatility. In the same period last year, the dollar foreign exchange rate was 371, which decreased to 328 in the last quarter of '25. And after that, increased somewhat to $333 per dollar, while in euro, which was relatively stable, the last year quarter figure was 402, which decreased to $285 million and practically the same figure we could see in this quarter, which was also $385 million. So yes, there was a huge volatility, and this was especially seen in dollar FX. The income from [indiscernible] was $35 million, mainly driven by one-off revenue from compensating for earlier inaccuracies in measurement of personas. This one-off effect amounted to $17 million. And finally, the tax expense amounted to $84 million, translating to an effective tax rate of nearly 40%. The [indiscernible] taxation continues to weigh on the group with the special levy in Slovakia impacting the results by $15 million. Let's look at how cash flow evolved during the quarter. Operating cash flow before working capital was around $800 million, even somewhat higher than the first quarter of last year despite the challenges throughout the year. However, ongoing challenges were much more apparent when looking at the change in the working capital, which marked a period of nearly $1.4 billion. Most of the deterioration in net working capital was related to the crude sourcing switching to seaborne in March, impacting working capital on several fronts. Regarding the inventories, there was a build that amounted to $900 million -- roughly $900 million for the group. The time between receiving the crude oil at the port in Omicha in Croatia and the start of processing will become longer as a result of the more cumbersome logistics and blending, leading to an increase in crude inventories. Regarding fuel products, volumes also increased mainly due to the timing effect in Hungary. Strategic product results released in the beginning of March led to e product inventory levels that did not fully deplete by the end of the month. And also the skyrocketing crude and product prices contributed most of the increase in the build of inventories. Part of inventories, I think it's worth to mention that the net working capital position was also worsened by the advanced payments made to secure crude cargoes and also effect of higher margin deposits, more expensive hedging transaction. Overall, as a result of these factors, operating cash flow, including working capital reached over $0.5 billion in the red. And just highlighting again, the inventory effect amounted to around $900 million, adv payment is around $100 million and the margin call deposit roughly $300 million, which finally resulted in $1.4 billion increase. Finally, let's look at the balance sheet. The net debt level deteriorated by over $1 billion compared to during the quarter, which reflected in the challenges in the operational cash flow, especially in the working capital cycle, which we discussed in detail. Net debt closed the quarter at close to 1x EBITDA with the gearing ratio rising to 17%. While the increase in the net debt, we could clearly see, our expectation is that some of the factors leading to the cash drain in the first quarter will just not be with us going forward. Most notably the flows resuming on the Duo pipeline system should able to release some of the working capital that built up during the first quarter. While cash flow and working capital is definitely under higher management focus than usual, the balance sheet remains strong with the available liquidity of around USD 4.3 billion. And after the financial overview, I would like to hand over to Gabriel to discuss the Downstream results.

Thank you very much, Ákos. Good morning, ladies and gentlemen. So let me elaborate on the first quarter '26 results. So as you have just learned from Mr. Bacsa, we faced a very challenging times in Downstream, but let's get to the numbers. Downstream Clean CCS EBITDA was well below last year's and came in at $[indiscernible] million for the first quarter of 2026. The other performance was due to a series of shocks, which I will then elaborate on them later that led to lower capacity utilization in refining and the petrochemicals performance that is not yet reflective of the better price environment in the wake of the Iran conflict. On the refining side, [indiscernible] CCS EBITDA came in at $132 million, a decrease of 62% year-on-year. This was mainly due to the 34% lower processing in the Bratislava and Danube refineries. While we tried to make up for some of the lost on volumes through third parties, including semi-finished products with the final steps of processing in the Danube refinery, product sales were still 8% below last year's level. Regarding petrochemicals, volumes were 15% below last year at 263 Kt as a result of the naphtha scarcity, what reflects the lower refining capacity. In order to provide you a better sense of those shocks and the sequence of those shocks and their impact on our processing and profitability, we prepared the next slide. So this slide is showing the shocks from 4 perspectives. So what happened and when then how it impacted the crude supply processing and also the profitability. So as Mr. Bacha mentioned, the series of challenges started October last year. You are very much aware of it, the pump station of A3 distillation unit down. meaning that the total crude processing of our 2 land block refineries has been limited to 75%, 80% of the usual capacity throughout the first quarter. Then at the end of January, flows from the Grubba pipeline were disrupted. I have to mention that it was the 23rd disruption, which we experienced from the outbreak of the war. And in this particular case, it was the result of the drone attack of the -- at the 70,000 cubic meters oil tank in Ukraine. So we have no information on when the pipeline could resume operation. The 2 refineries ran on their own reserves. Then by mid-February, we initiated the plans to switch to the Adi crude supply route and started booking cargoes with deliveries expected to the port of Pomichi by early March. At the same time, -- we also triggered the release of strategic crude reserves in both Hungary and Slovakia in order to keep the operation until the first seaborne crude supplies arrives to our refineries. In this period, we although adjusted the processing as a precaution and in order to keep the utilization of strategic reserves as low as possible. While the first crude supplies arrived in March, the war in Iran had already erupted and the Strait of Hormuz was already closed. And although costly, we ramp up our crude processing in order to supply our customers and to start filling the strategic crude reserves and our own inventories. In terms of profitability, it was really volatile and under pressure throughout the first quarter. And mainly the impact of low utilization is magnified in financial result as the fixed cost in the refinery were not covered as in the normal -- or within the normal operation. Additionally, seaborne crude, coupled with the unprecedented situation on crude markets due to the closure of the Strait of Hormuz has also a significant negative impact on the results in March. All in all, the first quarter of the year posed a series of significant challenges. But with the resumption of the crude flows to Trudba pipeline on the April 22, the operational and technical difficulties are eased and we can get back or we are about to get back to the modus operandi of selecting dynamically between the 2 available crude supply routes and different crudes based on our best interest. So now get back to the normal sequence of my slide. So let's tackle the macro environment, please. Thank you. So Brent-based, refining margins were about $11 per barrel for the quarter pulling the average upwards as a result of the supply shock in European middle distillate markets. However, this attractive margin was unfortunately not reflective of the actual unit profits we could realize. After the Strait of Hormuz closure, the producer asked for a premium to dated Brent with volatility in the market, adding further cost to hedging, logistics and insurance is also turning more expensive. At the same time, product prices were also under pressure in March as many governments in the region introduced price cap margin caps or other mechanism to limit increases in the fuel price actually out of the 12 countries we supply with fuel. So out of those 12 countries in 10 countries, there is some regulation there. Petrochemicals margin have a longer lead time in reacting to these changes, so margins remain subdued in the first quarter. So looking to the April, the Strait of Hormuz shock is more visible. Refining margin increased to levels which we experienced last time back in 2022. The Urals blend was traded at a premium to dated Brent. This was also for the first time since the DP India quotations are available. Petrochemicals margin have also increased materially as the closure of the straight has decreased global petrochemical supply directly or indirectly. So in my last slide about the impact of several factors. So I believe there is no surprise in the light of my earlier comments that the refining margin and price effect was positive, but -- and there was relatively much more potential there, but because of the aforementioned factors limited the upside of the refining margin closure close to tripling year-on-year. Petrochemical also contributed positively on the margin side. The volume impact amounted to over EUR 200 million negative contribution, which underlines the severity of the financial impact of the landlock refineries, low utilization. Furthermore, the [indiscernible] refinery also underwent the planned turnaround during the first quarter, adding to the negative volume effect. Within the other factors, there is also a negative contribution there due to the base effects as well as the negative contribution of the gas and power trading and similarly negative impact of the hedging activity. This would be everything from my side, and I would like to hand over to Péter Ratatics to continue with Consumer Services. Thank you very much.

Thank you, Gabriel, and good morning to everyone. So the Consumer Services reached $177 million of EBITDA in the first quarter as it was already mentioned, which is roughly 12% increase year-on-year. And if you look at this chart on the right side, you can see that the year-on-year depreciation of the dollar had a material positive effect on the results. And I also have to highlight that this is just the first quarter. So the Hungarian foreign change compared to euro and dollar that just happened in April. So this first quarter effect is just purely the dollar depreciation. Without this effect, the EBITDA would have grown by 1%, meaning basically a flat year-on-year performance. On a more underlying level, the fuel side of the business contributed negatively to results with the rise in nonfuel margin having offsetting partially or close to equally this effect. This is not surprising, by the way, if you think through what range of measures were introduced by the governments across our area of operation in March in response to the crisis in the Middle East. In fact, all countries in our operation in the 10 countries operation, [indiscernible] have imposed regulatory measures for the fuel prices. All in all, I mean, it would take like half an hour to go through on the different countries, different regulations. So some of the countries have had price cap like in Hungary. Many of the other countries have margin regulation, but the frequency of the regulation changes are also different country by country. So during the whole month of March, actually, we were trying to adapt our operation and the whole market try to adapt to the operation of the changed environment. So before we move on to the fuel, just a brief summary for the first quarter. Out of these 3 months, January, February were practically normal months. The dynamics and the direction, the trajectory of the business was practically the same what we have observed in the previous years. But in March, actually, as a result of this Iranian conflict immediately changed the market dynamics. And what was the effect of that for the fuel? Let's move on to the next slide. And you can see that the fuel volumes rose by 7% year-on-year, clearly a consequence of the mentioned price control mechanism. In fact, looking at the first 2 months that I've just mentioned, the volumes were up by 1% only, reflecting purely and consequently to the underlying market fundamentals. However, in March, actually, the fuel volumes increased, the so fuel volumes in our network increased by 18% year-on-year growth, which is, I mean, just in a few -- this 18% came up just in a few countries like Hungary, Slovakia, Slovenia mainly and also in Croatia. Rest of the countries, the increase was a single-digit percentage increase, but still substantial. Regarding the margin, there has been a decrease overall. the profitability of fuel retailing falling the largest where the harshest measures were introduced. And actually, that was in Croatia, Hungary and Romania. So in these 3 countries, the impact on our unit margin was the harshest in March. And we will see that how that will continue in the upcoming quarter. But let's move to the nonfuel part because the nonfuel part is still the bright side of this whole operation. So the development in the nonfuel part of the business where there are no surprises, and we have continued on the path of this 5% organic year-on-year growth. And obviously, in such circumstances, what we see that the fuel drives the footfall and our intention and the clear task for us at this current moment that try to convert as much of these new customers to the nonfuel transactions as we can and also to try to convince them to join to our loyalty program so to gain an additional long-term customers to our operation. Once the world will go back to normal, then hopefully, our market shares and also the nonfuel transaction will land on a higher level than it used to be. So that's our business strategy at the moment. Thank you very much for your attention, and let me pass the floor to Zsombor.

Good morning. Upstream recorded $46 million in the first quarter of '26. And this corresponds to a 40% increase compared to the previous quarter and around 10% increase versus last year. So the increase was predominantly driven by higher hydrocarbon prices because of the Strait of Hormuz closure. And with that dated Brent increased to $81 per average and gas price to $80 on a dollar per barrel of oil equivalent. I think what the good news is that we were able really to capture this relatively high share of these elevated prices, plus we delivered a strong production in our home turf, both in Hungary and Croatia, and we're able to catch that and harvest. We are still pushing for more than accelerating in the sea as well for the future, trying to get more out of the favorable environment. If we move to the next slide, you see that this trend is reflected in the evolution of the unit economics. That's the highest after the 2022 price peaks in the last 4 years and even accounting for -- despite of the higher organic CapEx, the simplified free cash flow per barrel reached $32, well above the $20 per barrel equivalent strategic guideline. If we move to the next on the EBITDA, let us now break down quarter-on-quarter. You see that it was really because of the higher prices, most of the increases compared to the fourth quarter of '25 is due to the macro. Lower volumes only accounted for $15 million negative effect that was mainly due to lower production in Iraq, both Taycan and Pearl because of the stoppage of the precautionary halt in Shaikan production in March as well as the technical factor of less cargoes loaded in Azerbaijan. The other category you see on the waterfall had a positive impact [indiscernible] extent of $32 million. And in a year-on-year perspective, the volume impact was also positive despite the suspension of production in Iraq Shaikan with this average production. So if we move to the next slide, let's see the production volume as well. So the production is lower compared to the fourth quarter, but averaged above the lower threshold of the annual guidance of 95,000 and 97,000 barrels of oil equivalent a day. So still with the Iraqi Shaikan and Pearl stoppage and lower production, we are inside the guideline, and we are missing around 7,000, 8,000 barrels of oil production, which we believe if it -- the Iraqi production really start, then we will be above 100,000 barrels in average. And that could still end up in the year-end forecast between the 95,000 and 97,000 guidance. So in April, again, the Iraqi Pearl resumed production after the suspension of production. It is not yet fully operational, but that's why the production level decreased to 92, what you see in April, but we are seeing now an elevated production going forward. And lastly, let me share a few thoughts on the evolution of the unit OpEx and our investment perspective. So the OpEx rose by 11% year-on-year. This increase is predominantly due to a weaker USD. If we would consider that not in the numbers, we would only be 1% above the plan. So we can say that the OpEx is flat. still due to the measures we are taking on efficiency and the diligent production. With regards to CapEx, the spending in the first quarter is usually the weakest, but here, there was an increase of $36 million year-on-year, and this is largely due to the offshore campaign on the development wells we are doing in Croatia currently and then of ACG CapEx, which is coming with the drilling of the new offshore platform. Let me also share that in the [indiscernible] block in Pakistan with regards to our projects, we were able to have a new discovery, Buetang-1 well, which is gross 5,000 barrel well production. We will start that still this year. And the production is -- the share is only 8.4% of ours. This is still a nice discovery and adding volumes to our portfolio. In Croatia, we have also expanded our onshore portfolio to exploration blocks to by the Hydrocarbon Agency, while we have also completed farming, acquisition of Vermilion's remaining 60% share of the Sava 7 block. Furthermore, we have also moved in Hungary and had acquired the range of upstream assets from OGD at the end of April. This acquisition would add almost 10,000 barrels of oil equivalent to production and to our group oil production primarily, and we see to develop these fields as well with a large exploration acreage, mostly oil dominated. And again, let me also finish with the news from Libya, that's a new country entry. For upstream, that was a successful joint bid together with Repsol and [indiscernible] where Repsol will be operator into an offshore block in Libya. We have 20% in the joint venture. With that, I will pass the floor to Jozsef Simola to discuss the circular economy.

On a year-on-year basis. This increase includes also seasonal factors such as the higher DRS return volumes and the lower collected waste volumes due to the colder winter, but it includes also the impact of the ongoing efficiency program. Organic CapEx was at low level as planned and expected, reflecting our cautious approach for spending. And as discussed last time, the preparations for waste-to-energy plant to be co-located at our refinery in [indiscernible] but are ongoing. And currently, we are foreseeing final decision sometime during this year. As on the general trends on the business side, with the above 90% return rate in the VRS system, we can clearly call it's fully operational and completed. We reached this result in shorter than 2 years. And from now on, clearly, the focus will be on the continuous improvement of service level and operational efficiency. And generally, we will continue to keep our focus on efficiency and financial results in the coming quarters. And with this, I'd like to hand over to Marton for the closing Q&A part of our session.

Thank you very much. So that completes the formal part of our presentation. I would like to now open the floor for the Q&A session.

[Operator Instructions] Anna, please go ahead with your first question.

I have a couple of questions, if I may. First, starting with April and second quarter performance. Given that the flows were pipeline restarted, but at the same time, fuel caps, margin caps remain in place. What level of margin capture can you realize since 22nd of April, if you can comment? And the same question around the utilization rates to what extent did you manage to increase the rents? Second question will be around the comments and news flow on the Croatia side. On the one hand, we've heard the final award from U.S. court for collection of the award. Do you expect it to happen this year? Do you expect to get the collection this year? And another news was around Croatia discussing or considering to buy back the stake in [indiscernible]. Can you share any thoughts on that regard? And my final question will be a technical one on the cash flow from operations. There is this other category, other line, which supported the cash flow. Can you explain what was in this other category?

I will answer the first question. So regarding the utilization and the [indiscernible] supply. So yes, as I mentioned that from 22nd of April, the Durba supply was restarted and is still operational. On the other hand, we believe that we will start processing the Russian Repco and Ukrainian crude just the second half of May or end of May. So we still run fully on the seaborne crudes. In terms of the utilization of the processing capacity, so in Slovakia, in Graatislava, we are back to 100% utilization or close to 100% -- in Croatia, we also run a full throttle, while in South, we are still limited because of the unavailability of the unit there. And I would pass the answer during the second question to my colleagues. Thank you.

Thank you. I think the question regarding the U.S. court decision on the international arbitration case. I think we are glad that the U.S. court endorsed the earlier international arbitration decision, which were in favor of MOL. I think the claim is now they become enforceable. However, at this point, we are not in a position to say when and how and what we view next step. There is still a kind of period before any enforcement actions can be started. But we still believe and hope that the claim can be settled voluntarily as well. Regarding [indiscernible], I don't comment on political statements, but there is no sale process.

And the final question about the cash flow. This is kind of a technical item. We need to translate the P&L to cash flow and some of the P&L item is considered as cash flow relevant and some of that. Well, what you just asked, the other categories here, this is mostly the adjustment adding back some noncash item in the profit as per the income statement. The largest impact was due to the loss on unrealized hedges. And well, this is how we translate it from the P&L to cash flow. And the hedge amount has felt considerably in the first quarter, mainly due to the longer lead times of crude supply as already we discussed and stemming from the switch to the seaborne crude sourcing.

Just a follow-up regarding the margin capture since the Russian forward start. Do you expect better margin capture in second quarter from second half of May?

Yes, sure. But on the other side, what I mentioned that there are -- out of the 12 countries where we supply our production out of those 12 countries, 10 applied some kind of regulation. So I think that the -- there will be some adjustments there. But so far, based on the run, I am rather positive.

Tomasz, please go ahead with your question.

A couple of questions mainly on the downstream side. First of all, when do you expect the agreement with [indiscernible] to be signed? And would this agreement include the usual 2 million, 2.5 million tonnes or higher? I presume this should be higher because in the last 2 months, you bought much more crude via the seaborne route than because the route was not available. So when do you expect this agreement? That's my first question. Also looking at now the -- your presentation that the [indiscernible] price is above the Brent prices. Do you expect in the future to play a little bit and buy more seaborne crude if this situation persists? Or do you see a better economics on buying crude at the moment? Because it's not obvious that has a cost advantage versus the seaborne crude oil types. And my third question would be about the strategic reserves. I think you received both from Slovakia and Hungary some strategic reserves. When do we expect them to give it back or fill up the strategic reserves? If I remember correctly, you said last time that the deadlines are September, October. So I wonder how this would look like. And finally, how do you proceed with the upgrade projects regarding the decoupling from the Russian crude oil? I think the original deadline was the mid next year. Do you still see this as a realistic deadline?

Yes. Thank you very much. So I will go one by one, but please chip in once you see that I missed something. So regarding the agreement, very good observation. So the agreement with Yana is still not signed. There are still a few pending issues there, which are from our side, rather critical. Now I don't want to elaborate on those because we are tied with some confidentiality, and I believe that in terms of a good partnership, we should not negotiate publicly. But what is very important with Yana and this is not a contractual term. This is our interest to test the whole system of the crude supply, where we cannot reach an agreement with our partner operating the Adria pipeline. So we would like to test the whole system while the counterpart would rather test just the partial part of the system. So this is what I also -- from my side, this is also a very critical point there. Then the other question, could you, Tomasz, please?

Yes. Basically the second. Second question was that would you buy more crude from the seaborne [indiscernible]?

Yes. So now having 2 pipelines operational, which I believe is a huge advantage currently or benefit, we can optimize based on the economics more. And this is also a good point that the Saudi Aramco is now traded with a premium delivered to India. Of course, we have to adjust the logistics cost there. But still, I think having those 2 options, it's the right way how to move on with the security of supply. And also taking into account that there were some problems at the to pipeline and the other countries having just one supply route. For example, Austria, they were also forced because of these problems of the pipeline. They were forced to ask for a state reserve release in Austria. And also I heard that the other partners in Czech Republic, they also ask for a state reserves release. So it just proving our standpoint that one route, we believe, is not sufficient. But coming back to your question, yes, so now there are more options. And of course, based on the economics, based on the technical feasibility, we will now use both of those options. The third one was regarding the DCU, am I right?

Was actually back the strategic reserves.

So the strategic reserves. So actually, MOL has processed crude from the state reserve, Hungary straight reserves in February, March in the amount of 134 kt. Slonaft has processed from Slovakian state reserves 105. We stopped the state business pumping or utilization in MOL on the 23rd of March and in Slonaft at the end of the March. In Slognaft, we already refilled all those 105 kts, while in MOL, we need to refill that until August this year. Yes.

[indiscernible] upgrades of the.

Yes. So the upgrade. So we are starting up the facility. There was a public announcement that the mechanical completion is done. So once fully operational and so far, we see that there are no hiccups there. So I think that until the end of this year, we will experience higher processing in our refinery in Riaca, which will be also reflected in roughly 30% higher diesel output.

I was actually referring to the upgrade of the decoupling projects from the Russian crude oil. You said you would do by the mid next year. So how do you go on with them?

Yes. So it's fully online with the schedule. So we are working hard. There are some learnings from the recent period, how we can operate our refinery fully on seaborne, different available crudes. So from my perspective, we learned a lot. And I hope that till 2027, we will be ready to process alternative crudes fully.

Oleg, please go ahead with you question.

I have several questions. And if you don't mind, I'll ask them one by one just because some of them are a bit longer. So starting with the first question, market expects the new government to improve the business climate in Hungary. And when it comes to MOL, which business area would you see potential for positive impact or improvement? And what I can think of are the abolishment of the CO2 tax and other special tax, maybe high visibility on the future royalty regime, less interventional fuel price regulation, et cetera, but it would be interesting to know what are your expectations, if any? That would be the first one.

I mean thanks for the question, Oleg. You know that it's very speculative to ask us about the future political economy -- sorry, economic politics will bring us and how the political development will affect us. So -- but definitely, based on the statements and let us also confirm our understanding that I think normalization and standard solutions that we expect and we hope regarding some of the points that you mentioned. I would like to emphasize that the royalty regime is already cleared out, especially in Hungary. So after years of [indiscernible] royalties. Now we have a progressive royalty regime, which is I think is mutually beneficial both for E&P companies who are running exploration campaigns, helping the production level to -- not just to particularly to a little bit cut the decline, but also to keep the production level even to increase in certain parts, but also benefiting the state in case of higher hydrocarbon prices. So I think that is a progressive royalty regime, which I don't think that needs change. The CO2 taxes was before the European Court of Justice and European Court of Justice already agreed that the CO2 [indiscernible] is not in line with the EU regulation. So that was also public information. So definitely, we expect the CO2 in its current form to be abolished. So fuel price regulation, I think it's not unique. It's -- we think that -- and we believe that it's temporary. And it's -- as I mentioned, it's about shielding the consumer, the vulnerable consumers against these volatilities. Of course, it has a cost. The cost is mainly borne by the wholesalers and as you could have seen and as you could because we are exposed to global supply volatilities, but all domestic markets are regulated and normalized, which is definitely flattening the hikes of the price volatilities. I strongly believe and I strongly hope that there will be -- we have basically a chance both global macro normalization. And of course, these price regulations will fulfill its goal and then we'll be abolish because as Mr. Szabo mentioned, 10 out of 12 countries, we are now facing with some sort of regulation. So definitely, we are always positive if governments are announcing market-friendly normalized and predictable economic policies.

Understood. And the second question refers to the Downstream segment. I was hoping you could tell us what would have been the clean EBITDA of the segment, assuming no disruption to the oil supply via Druzhba. This would allow us to better understand the first quarter development as well as to make better projections for the rest of the year.

Yes, I still have your point, but I'm sorry. So I did not elaborate the scenario of having Druzhba operational. So I would need more time to get the figure, which could help you.

Okay. But the next question, I guess, it's also addressed to you because I noticed that the petchem margins have sharply increased in April. And I was hoping you could tell us what level of petchem margins would require in order to breakeven in petchem also maybe assuming that the EUR 100 million CO2 tax is absolished in this scenario, for example.

So I'm rather positive about the petchem performance, seeing now the petchem margins. On the other side, once the world gets normalized again, so there, we see that the supply is really robust. And in terms of the growth, Mr. Bacsa at the beginning mentioned his concern about the growth perspective, and I believe you are also aware of those. So probably the petchem margins will get normalized, which means that they will get to the breakeven level or even below.

So in other words, this almost EUR 600 per ton margin in April is still not sufficient.

I said that I'm rather positive. But in the long run, I'm worried that it will get back to the couple of [indiscernible].

Okay. And lastly, you mentioned that the negotiations with the -- for the acquisition of NIS are ongoing and they're quite complex, but maybe you still can tell us when do you expect the transaction to close? And looking a bit more into the future, can you also tell us if the supply of Russian seaborne crude oil to NIS would be possible or you would have to rely mainly on non-Russian seaborne crude oil.

So let me answer the question. I mean, to the extent I can answer it. The closing of the transaction, I think it's 2 phases down the road. So I don't want to predict when closing could happen. If you mean when the agreement could be signed, we have a negotiation license till 22nd of May. We are deep in the negotiation phase. We completed all the due diligence and other phases that were practically preconditions. We are heavily negotiating and working on to particularly to meet these deadlines and by this time to conclude some sort of arrangement. But of course, currently, I cannot say that with full certainty because we are in negotiation. The other one is the Russian crude supply. Russian crude supply is not permitted to NIS. So currently, NIS is running on non-Russian seaborne crude supply.

And that will not change in the future or this is not expected to change in the future?

We don't count with changes.

Ricardo, please go ahead.

A couple of questions on the crude supply, if I may. The first one, given just how volatile the first quarter was because of Druzhba and then having to access some of the seaborne and the strategic reserves, if you could just comment what are the major learnings that you had during those weeks? Was that getting access to those seaborne or on the prices? Just how did perform according to your expectations on almost overnight on having access to Drusba? The second question that I have is, when we look at towards the end of the year, if we assume the current situation remains with some disruptions on the global supply side and you have your full capacity back, would you expect to have a mix on your feedstock from both Drusba and seaborne? Or would you just go back to how you're operating until last year?

Yes. Thank you. So I mentioned that there are several learnings. So firstly, the first one, and I believe you also realized it that this was the kind of decoupling of the paper and the physical market. So there were really high premiums, ask for the physical deliveries of crude oil. And then we even learned that some of the big traders try to issue kind of tenders to run. So we got a confirmation for a vessel, then next day, we were asked to submit a bid. And so this was the learning there. In terms of the processing itself, so we had our view what kind of crudes and crude baskets we would like to process once the Druzhba is stopped. In terms of this, we did not get all the time those crudes or those crudes were rather expensive. So we were forced to go for a different crude basket. And in terms of this, I would like to praise the team that we were very agile to select the proper crude basket, and we were able to run the refineries and to supply the market. So there was another learning there. The third learning I would share is the backlog of the vessels. So there is -- there is some experience that the European refineries book the vessels for a month in advance, the Asian countries for 2 months, while in the United States is rather very much on time. So there was another learning. So in case of these disruptions and volatility, probably one month is not sufficient once those elements of extra bidding and problems comes. And the fourth one was with the Adria pipeline. So we learned that the crudes with higher density and the low temperature environment. So there could be some hiccups in the system. And for this reason, we are pushing even more that we would like to test the whole system. Yes. And regarding your second part of the question, what would happen or how we are going to -- what is the scenario once there is another [indiscernible] topic. So I think that we are ready. We keep a high level of inventories. Now we got an experience processing different crudes. So I think that we are ready for this situation. But a good question.

Anna, has a follow-up question. Please go ahead.

A follow-up to Oleg's question. You mentioned which taxes -- special taxes could be in theory uplifted or where you see more probability. But you didn't mention windfall tax on euro spread differential. Do you think there is a possibility for it to be abolish at some point? And of course, currently, the price differential is not there, but in a normalized environment?

So in case -- if I may answer. So in case of the normalized environment, I believe that this Brent crude differentials get back to normal. So historically, I believe it was around $1 and $2.

Probably not that normalized, meaning like we will be back in the sanction regime and there could be a bit higher differential on euros again. Do you think with the new government in Hungary, the windfall tax on the difference could be abolished? Or will it stay?

Let me take the question. So thank you very much, Anna, for pointing out. So the Brent [indiscernible] has been extended until the end of 2026. At the moment, this is the information we have. There is no signs pro or contra whether the position is going to be changed. On the other hand, as György mentioned, we are all -- always welcoming the business-friendly environment. But I think down the road, how the government is going to decide, I think this is not to comment by ourselves. But also, I think it's quite important to mention that if there is a premium [indiscernible] is traded, I think the whole notion of the taxation is questionable.

Adam, please go ahead with your question.

Just to confirm because you showed that there is premium of Ural oil to Brent oil, but it's Indian market. But in the European market, do you pay all -- are you paying also premium? Or are you paying -- or there is differential? Because it seems based on my estimate that there could be differential.

I would not share with you the specific number, but it's heavily dependent and it's a good observation. And I also mentioned that the India has to be adjusted by the different logistics route. So the logistics costs have a very high impact of that number, which is varying a lot, the logistic cost itself. Thank you for the question.

Okay. Thank you very much, ladies and gentlemen, for your participation in today's call. Please do reach out to Investor Relations if you have anything to follow up with. Have a nice day, and thank you very much. Goodbye.