The Prague Post
September 8th, 2008
Endowment Fund     Business Listings ONLINE      Reservations      Classifieds    Subscriptions
Real Estate Prague Prague Rentals Prague Apartments Prague Art & Antiques

Home » Archives » News

Supply lines

Is the Czech Republic too dependent on Russian oil?

By Ondřej Bouda
Staff Writer, The Prague Post
July 23rd, 2008 issue

ISIFA
Tanks for crude oil storage at MERO's crude oil tank farm in Nelahozeves, north of Prague.
Oil supply, at a glance

The Czech Republic gets its oil through two major pipelines:

IKL (from Germany)
Length: 349 kilometers (170 kilometers in the ČR)
Transport capacity: 10 million tons per year
Volume: 140,000 cubic meters
Flow speed: 0.5-1.2 meters per second
Pipe diameter: 714 millimeters

Družhba (from Russia)
Length: 4,000 kilometers (357 kilometers in the ČR)
Transport capacity: 9 million tons per year
Volume: 101,318 cubic meters
Flow speed: 1.0-1.4 meters per second
Pipe diameter: 528 millimeters

Source: Mero.cz

On July 21, Russian Prime Minister Vladimir Putin ordered his government to correct the reduction in his country’s oil supply to the Czech Republic as soon as possible. The supply was drastically cut July 11, just three days after the signing of the bilateral Czech-U.S. treaty to build a radar base southwest of Prague — an agreement Russia strongly opposes.
“Instead of 16,000 tons of oil per day, we’re getting around 10,000,” said Jana Šmejcká, the spokeswoman for MERO, which maintains Czech pipelines.
While many suspected the reduction to be politically motivated, Russia initially blamed the deficit on a technical fault. But the Russian company Tatneft later said it sold the oil to Turkey instead of shipping it to its intended destination in the Czech Republic. (Some media reported that the oil was rerouted because Turkey paid more for it.)
Whatever the reason for the supply reduction, the current situation made it clear that depending too much on Russia for oil could prove too much of a risk in the future. Is the country prepared for the possibility of long-term shortages of Russian oil?
The current situation doesn’t faze Unipetrol, one of the largest Czech oil processors. “We are fully capable of using our own reserves or getting help from national strategic reserves,” said spokeswoman Blanka Růžičková. “Also, some 140,000 tons have been purchased through the IKL pipeline [from Germany] to fully replenish operating and strategic reserves.”
“The current situation should be over by the end of the month according to our information,” she added.
The Administration of State Material Reserves (SSHR), the government agency that deals with economic measures for emergencies, oil security and the state of material reserves, technically terms anything more than a 7 percent decrease in oil supply a “crisis.” However, the impact of the current reduction in the Russian supply has yet to significantly affect consumers.
Import lines
The country has depended on Russian oil since 1962, when the Družhba (Friendship) pipeline was completed, connecting oil fields in Tatarstan, USSR, to Czechoslovakia. Domestic consumption of oil reached 8.5 million tons annually by 1988, but the fall of communism brought it home that an alternate source of oil would have to be found.
In September 1994, construction began on a pipeline connecting the Czech Republic with the Transalpine pipeline in Germany. The IKL pipeline was put into use in March 1996.
“Currently we import more than 8 million tons of oil each year, most of it through the Družhba pipeline,” Šmejcká said. “But the IKL pipeline is fully capable of supplying all the needs of the Czech Republic. We expect that within the next 10 or 20 years we’ll be buying most of our oil from Germany,” she added.
While no other oil pipelines are planned, the Czech branch of the German energy company RWE plans the 2009 construction of a natural gas line connecting the Czech Republic to the Baltic Sea.   
Backup plan
Even though there are alternate sources of oil, SSHR has developed contingency plans for the event that even those supplies are cut short. With an eye to the worst-case scenario, the agency has preparations for every possible situation and is the body that would advise the government in case of an extreme oil shortage.
“We constantly monitor the oil situation and report directly to the government,” said SSHR spokeswoman Věra Matějů. “Small crisis situations are not uncommon, and we deal with them smoothly, thanks to our reserves.”
Strategic oil reserves must cover 90 days of average consumption, according to EU regulations, and are used to cover any shortfall in oil imports. However, if imports cease for longer periods of time, a contingency plan is put into effect.
During the first stages of a crisis, all fuel exports would be forbidden. To prevent a run on gas, fueling stations would limit their opening hours, and consumers would be allowed to fill up only cars but not other containers.
If the crisis were to continue, more restrictive measures would be put into action. Diesel locomotives as well as air traffic could be banned, and the speed limit could be lowered to force all motorists to drive at the optimal consumption rate. The number of cars on the roads could also be regulated by bans on certain types of vehicles or by instituting driving days for even- and odd-numbered license plates.
If all else fails, a rationing system would be required. To ensure that emergency services continue to operate during an oil crisis, a network of fueling stations has been created that would receive emergency supplies from strategic reserves. “There are plans to protect the selected stations with police officers and even military personnel to prevent rioting, which is extremely likely if a crisis goes on for too long,” Matějů said.

Ondřej Bouda can be reached at news@praguepost.com


Other articles in News (23/07/2008):

Browse the Current Issue

If you enjoyed this article, why don't you subscribe to the print version!
We accept secure online transactions provided by PayPal and Moneybookers

Be the first to add a comment!


Full Name: *
City: *
E-mail: **
This comment can be published in the print version of The Prague Post
Enter the text on the right:
 visual captcha
Comment: *
* Required field. In order to be approved for display, comments must have a first and last name and a city.
** E-mails are required and will only be used for internal purposes.

Most visited in Business Listings

Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.