Good morning, ladies and gentlemen, and welcome to MOL's third quarter 2026 results conference call. I am Márton 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 Szabó, 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 giving the floor to the speakers, let me highlight some technical details. We will 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. There will be a Q&A session after the presentation where you will have the chance to ask questions by using the raise your hand function of Teams.
Very important that please keep yourself muted throughout the call, except when asking a question. I would now like to draw your attention to the cautionary statement on slide number two. Now, please, let's start the content part with Dr. György Bacsa taking us through the highlights of the third quarter.
Good morning, everyone. Let's start with the overview of the group results. The group Clean CCS EBITDA reached $1,760,000,000 during the quarter. Apart from the exceptional external environment, two one-off items also supported the results. The two one-off items, let's name those ones, $100 million came from a payment of the insurance companies as partial compensation for the effects of the fire of the AV3 unit back in 2025 in the Danube Refinery. Further insurance payments also to be expected later. $133 million were recognized in the income statement after we signed an agreement with the Hungarian state on the dissolution of the MOL New Europe Foundation.
Let me, however, highlight that $62 million of cash is still withheld by the state, so we received only half of this amount, but we recognized the entire amount, which is owed to MOL based on the agreement. The funds, the securities, the shares, and the securities have already transferred to MOL, and it is also reflected in our statements. Let me go back to the fundamental results. As I mentioned, the third quarter EBITDA rises up to $1.76 billion. The operating cash flow before working capital adjustment is above $3.7 billion year- to- date. The profit before tax in Q3 is $1.25 billion, and net income after minorities amounted $802 million in Q3. The Upstream.
The price environment was especially supportive on the natural gas side, as the European quotations increased materially during the quarter on the back of low inventory levels as supply bottlenecks. Upstream EBITDA increased to $423 million. Downstream results were also supported by the refinery margin and the diesel cracks, so the R&M input is one of the major one in the Q3 results. Petchem EBITDA, however, reached quarterly all-time low, - $19 million. The downstream EBITDA was $951 million. Consumer Services marked 30% decrease in EBITDA as regulatory pressure and the underlying high fuel price environment is keeping fuel margins compressed across the entire region. Circular Economy Services posted $40 million of EBITDA as efficiency measures are now visible. Let me also share some operational developments. First of all, the AV3 unit.
The AV3 unit at the Danube Refinery restarted, and since the last week, it is working at full capacity. The refinery upgrade, so the DCU, the Delayed Coker Unit, was completed, and as of September, it is contributing with a 30 percentage point increase in the diesel production in Croatia. After the dissolution of the MOL New Europe Foundation, as I mentioned, 5.24% MOL shares were returned to the group treasury. We recognize it as treasury shares. Thereafter, we made the dividend payment, and HUF 317 per share was paid in September, considerably higher than the HUF 300 previously communicated during the AGM time because of this treasury share adjustment. In order to secure a continuous presence at the Eurobond market, MOL issued EUR 500 million, five-year Eurobond in September.
Finally, the share swap transaction, where MOL wanted to swap its Waberer's International position with Alteo in exchange for Alteo increasing Alteo position, was dissolved at the end of the month since the counterparty couldn't secure all the necessary regulatory approvals. Going to the next slide. Regarding the TRIR and the sustainability performance, and the safety ratio TRIR was 1.29 in the first nine months of the year, which reflects small improvement year-on-year. In the third quarter, recorded injuries were mostly smaller cases resulting from human errors. I also would like to note one major issue as well, that the fatality in the MPK unit, that was in the second quarter. I also wanted to say that the company reached an agreement with the family, and we wanted to also express our condolences and definitely keep the memory of our employee.
EcoVadis score, so going back to sustainability, there has been a positive change with a small EcoVadis sustainability rating, with MOL now within the top 5% of the industry peers. Let me pass now the floor to Mr. Ákos Székely, our GCFO.
Thank you, György, and good morning, everyone. Let's first have a look at the segment breakdown on the EBITDA performance, which is in line with the details which is already shared by Mr. György Bacsa. On the group level, Clean CCS EBITDA reached $1,760,000,000 in the third quarter, marking an 81% increase year-on-year. The EVPs of the main businesses are going to discuss the business performance in detail as usual, so I just would like to have a couple of words about those areas which are not in their scope. Gas Midstream EBITDA reached $38 million in the third quarter. The year-on-year drop in results reflected decreasing transmission demand and lower regulated tariff levels introduced as October 2025. Also fair to mention that the high natural gas prices does not really help the Gas Midstream EBITDA.
The Corporate and Other segment showed a positive clean EBITDA of $48 million, which includes the $133 million one-off income from the company shares of the MOL New Europe Foundation. Excluding this one-off item, the segment would have shown a - $25 million of EBITDA, broadly in line with the levels of the previous quarters. Intersegment elimination had a negative effect of $24 million, mainly due to the higher oil prices at the end of the period, resulting in a negative EBITDA inventory elimination, as expected, seeing the commodity price development of the quarter. The next part is about the CapEx. The organic CapEx amounted to $982 million in the first three quarters of 2026, which means a 17% increase year-on-year.
The composition of investment is tilting towards growth and efficiency type of investment, which amounted to $612 million year- to- date and represented 62% of total CapEx. The main ongoing investment are driving CapEx spendings are broadly unchanged from previous quarters. A few of the large ticket items I would like to share with you. In petrochemicals, we are continuing with two mid-scale project of maleic anhydride extension and metathesis and spent approximately year- to- date $50 million. Second, the crude diversification project and the product interconnector between the two landlocked refineries, Százhalombatta and Bratislava, have resulted in roughly $70 million investment altogether this year. Finally, we continue to spend on main upstream development projects, with spending on ACG somewhat higher than in the previous year.
Another notable increase in CapEx was in Croatia, where offshore development program is underway and resulted around $80 million CapEx this year. The group Clean CCS EBITDA reached close to $3,700,000,000 in the first nine months of the year, which resulted in net income of $1.7 billion. Regarding the components of the bridge, let's see the details on next slide. The Clean CCS effect marked a loss of $81 million in the last quarter, while the rising oil price environment resulted in a net gain in inventory holding. Results on commodity derivatives hedging the inventory impact overall tied the Clean CCS adjustment to a negative territory, driven by the reversal of the large unrealized gains accounted in the second quarter.
D&A amounted to $413 million in the third quarter of 2026, which is in line with the normal run rate of depreciation. The decrease compared to the previous quarter is due to an asset impairment amounting to $47 million in the second quarter. We already discussed that in the last investment call. Net financial expenses reached $41 million and was driven by the weakening of the forint, while the interest balance remained unchanged around zero-ish. Income from associates was $25 million, with income from associated companies operating the Khor Mor field in Iraqi Kurdistan and the Kazakhstani gas field contributing the most. Finally, tax expense reached $359 million, translated to an effective tax rate of almost 30% on profit before tax of $1 , 250,000,000 .
The increase is due to an unfavorable composition effect, because the profit before tax increased in Hungary and Slovakia in the third quarter due to the very supportive profitability of the refining, and these are also the two countries where we are facing the most severe special taxation regimes. The effective tax rate on our results is the highest, driving the total effective tax rate to a higher group level as well. Few words about the cash flow. The cash flow reflects the support environment we are operating in this year. The operating cash flow before working capital reached a little above $3.7 billion. The net working capital weighed on the cash flow by $963 million year- to- date, which mostly reflects the price changes during the year.
Looking at the working capital in the third quarter alone, there is a release of $172 million, which is due to the lower inventory levels with the ending of the driving season. Overall, the operating cash flow, including working capital, amounted to $2 , 749,000,000 in the first nine months of 2026. Finally, let me present my last slide with the balance sheet items and the evolution of the debt. The total net debt decreased year- to- date and was under $1.4 billion at the end of third quarter, reflecting the really exceptional performance of the group during 2026. This translates to a net debt- to- EBITDA ratio decreasing to 0.3x after dividend payments of roughly $700 million. Overall, the positive trends in indebtedness give us really a comfort with regards to the financing of potential acquisition of the horizon.
Now I would like to hand over to Gabriel to discuss downstream performance.
Thank you very much, Ákos. Good morning, ladies and gentlemen. Let me report on the third quarter of 2026. Definitely from the Downstream perspective, the last quarter was extraordinary, mainly in terms of the refining external environment, triggered by the stress of the diesel supply-demand balance. Our main task was to maintain the stable energy supply to the region, and also to translate as much of the market upside into cash flow as possible. With the support of the one-off impact mentioned by the two previous speakers of $100 million of insurance compensation, Downstream reached an EBITDA of $951 million in the quarter, which I believe is a fair result given the capacity constraints we were facing in our Hungarian units, both in refinery and our petrochemical site.
Crude processing in the landlocked refineries was in line with the previous quarter at 2.4 million tons, while we managed to keep the product sales high through the depletion of our product and semi-product inventories to meet the demand for the driving season. The start of the production of the Delayed Coker Unit in Rijeka was another great achievement in Downstream, and definitely to the future, it will help to supply the market with the fuels. Petrochemical production, on the other hand, was low, as mentioned before, due to a combination of lack demand and capacity constraints because of the ongoing repair works on our steam cracker unit in Hungary. Now let's have a look to macro factors. Thank you. Brent-based refining margin reached close to $38 per barrel for the group in the third quarter, reflecting the previously mentioned extraordinary environment.
The combination of global factors, and I will mention four. The first, the attacks on refineries in Russia and Middle East causing outages. Then the second is the troublesome logistics in transport through straits and within Europe caused by conflicts as well extreme weather events as low river water levels. The third, the export bans and other protectionist measures. The last but not least, depleting strategic product reserves caused major products prices to increase dramatically. Regarding petrochemicals, trends evolved as we had expected in August, and the relief in the second quarter was short-lived, and the structural factors compressing profitability have returned. Margin of most products are under serious pressure as high natural gas and naphtha prices keep margin compressed from the feedstock side, while competition mainly from Asia, but also from U.S., returned to serve the European market that continues to show weak demand.
Looking at October, refining margins show some normalization, but still extraordinary by historical standards. Petrochemical margins continue their free fall and reach negative territory as the factors that have been weighing on results in the third quarter have only turned more pronounced in October. My last slide, the decomposition of the year-on-year EBITDA change. I think that there is no surprise on the R&M price and margin front. Rising refining margins contributed to the significant increase in EBITDA of $540 million. Regarding petrochemicals, it's a bit interesting. It's counterintuitive that the price and margin effect is positive in light of the decrease in variable petchem margin, and there are two reasons for that.
First, we managed to steer our product mix to increase the share of few other products like aromatics and other chemicals that had a higher spread and that are not or only to small extent covered by the margin indicator. Second, the great job our sales guys are doing, sorry. We managed to increase the sales margin with some of our key clients compared to the second quarter. Volumes contributed negatively by $ 70 million, which was in line with the capacity constraints and the lack of demand in petrochemicals. Regarding the other factor, so there is the $ 100 million there, the insurance compensation, but offset by higher fixed OpEx, as mentioned when we reported the previous quarterly results, but also gas and power trading and rotation of strategic reserves. With that, let me hand over to Péter to discuss Consumer Services financials. Thank you.
Thank you, Gabriel. Good morning to everyone, and congratulations to the Downstream results. As far as the Consumer Services EBITDA concern, we fell by 30% year-on-year to $224 million in the third quarter of 2026. As it is obvious on the waterfall chart, the main reason for the drop in the results is the fuel and the margin environment in what we are operating. Non-fuel margin continues to provide support to the EBITDA, while OpEx inflation continues higher wage and energy-related expenses, and other administrative burdens have kept on an increasing trend. As I highlighted during our last meeting in August, our approach is in the current environment is suitable to acquire new customers. We thereby think of the current environment as an opportunity to invest into growing our business organically. What does it mean? Let's see on the next slide how volumes evolved.
This is a proof of evidence for the increased customer acquisition. The sold volumes increased by 4% year-on-year, which reflect that I think we are on the right path in this very turbulent environment. Although this increase in volume is not sufficient to counter the effect of the lower fuel unit margins, but it mitigates the impact in the short run, and should we be able to retain these customers in the long run, can lead to a sharp increase in profitability when we see fuel markets get back to normal operation. Let's move to the last slide, where I can highlight the non-fuel part of the business, which is practically continuing the year-over-year dynamics with a very stable mid-single- digit year-on-year annual growth rate. Thank you for the attention, and let me pass the floor to Zsombor to discuss the Upstream results.
Good morning, everyone. The Upstream EBITDA increased by 13% to $423 million in the third quarter. The price environment remained supportive of the results. We had an average Brent inch lower in the third quarter on average, but it was still at an elevated level, close to $100/bbl . Meanwhile, the European gas prices increased to levels I have not seen since 2022, and the TTF averaging above EUR 60 /MWh , and this translates to $125/ boe . These macro developments had an overall positive impact on our group Upstream EBITDA, with realized hydrocarbon price increasing by 6% quarter-on-quarter to $98/ boe . In such a supporting price environment, unit economics also improved.
You can see also unprecedented $52/boe EBITDA, unit EBITDA, and the simplified free cash flow, $38 /boe . If you see now the breakdown of the quarter-on-quarter results, prices have had a $19 million positive impact proportionate to increase in realized prices. The volume impact was also higher, driven by increase in production of consolidated international entities before PSA adjustments and higher ACG cargo volumes by one, which overcompensated for the negative impact of lower CEE production. The other factor you see is driven by the base effect of an impairment booked in the second quarter 2026. So year-on-year, the price impact was materially more visible as the base period reflected in a relatively calmer period before the hostilities began in the Middle East, so before the Hormuz.
Otherwise, drivers of the changes were similar to those in the quarter-on-quarter comparison. We are arriving to the production slide. I think with the decrease of the entitlement production reflects several temporary operational and technical issues in the third quarter. The CEE production dropped by 2.3 kboepd , mainly due to planned turnaround, both in Croatia and Hungary, of gas processing facilities. Small drop in consolidated international production was mainly due to close to 3,000 bbl lower entitlement production in Azerbaijan. That is just a technicality due to the higher oil prices, which is leading to lower entitlement volumes. Iraqi Shaikan production offset part of this impact, and it returned to operations at the end of the summer, which is now also back to full capacity.
Production rates of joint ventures also increased, most of which is attributable to Kazakhstan, but the production of the Pearl gas field in Iraqi Kurdistan also rose, thanks to higher season demand in Q3. The October production was under 90,000 boepd . The drop is due to temporary factors. We have several planned turnarounds in the autumn time ongoing in some of our fields in Hungary still, but also in Kazakhstan, Pakistan. The drag on the ACG entitlement production was also high too, due to high oil prices. So, with the production above 94,000 boepd and our strategic guidance, I think we were able to really harvest the strong macro at upstream in the Q3. Moving to the last slide, let us look at the OpEx and the CapEx investments.
Unit OpEx increase slowed to a 2% year-on-year and decreased by 4% quarter-on-quarter on group level. I think this is a very strong result, and that really contributed strongly to the generated cash flow with this very competitive $7 unit cost to the upstream results. Regarding CapEx, there has been 33% increase year- to- date, which is mainly driven by ongoing offshore development program in Croatia. Finally, some few updates with regards to the inorganic expansion. So, in Hungary, we completed acquisition and takeover of some upstream assets from OG&D in October. We estimate that the transaction will add roughly 1,000 boe to group production, but there is further exploration opportunities, which we will be already drilling multiple wells in 2027 with a big potential.
Moreover, the deal involves infrastructure and gathering stations, which will help us maneuvering and flexibility on our infrastructure to maximize production and minimize turnaround losses. In Libya, the PSA was ratified by the Libyan Parliament in September. Local branch office we already established. We are preparing with our partners to launch the seismic campaign. Finally, the Cyprus Aphrodite. We are progressing towards closing the transaction. We submitted the official documentation to the relevant authorities in Cyprus for the consent for the transaction. With that, I give the word to József.
Thank you, Zsombor, and good morning, ladies and gentlemen. Let me briefly summarize for you the results of the Circular Economy Services. Quarterly EBITDA stood at $40 million, year- to- date $77 million. Despite the usually negative impacts in external impacts in the third quarter, we could even increase the EBITDA, and the reason beyond this, the impacts of our systematic efficiency improvement program. On a year-on-year comparison, the baseline impact of the positive regulatory changes end of last year also contributed to the increase. In terms of the program, this is a comprehensive program encompassing several dozens of projects, which include, like, on the DRS side, the countrywide optimization of the logistics and collection network.
On the municipal side, an example would be the simplification of the subcontractor management, where we take out one layer and we will have a direct contact and contract with around 60 + subcontractors in the country. Year-to-date CapEx at $19 million reflects the continuation of our cautious CapEx spending. As for the planned waste-to-energy plant, which would be a large CapEx item coming up on the horizon, the supplier selection completed, early works planning and agreement started, but we are front of the final investment decision, which is expected to come in the next months. With this, I'd like to hand over to Márton for the Q&A session and wrap-up.
Thank you very much, gentlemen. That completes the formal part of our presentation. We now open the floor for the Q&A session. Please do indicate if you'd like to ask a question by using the raise your hand function of Teams. Piotr, please go ahead.
Hi, yes. Good morning, everybody. It's Piotr Dzieciolowski from Citi. I have two questions maybe to start. First of all, I wanted to ask you about the working capital reversal. Do you expect this to happen and when? The $1 billion that went into the working capital this year, is this going to come back and what is needed? The second thing I wanted to ask you was about your CapEx profile. You finished the delayed coker in Rijeka, and what is likely to be a kind of a maintenance and the growth CapEx in the next two, three years, if I can ask you this? Maybe the final one, shall we read anything from these good results as of nine months into prospects for the dividend that will be announced next year?
I know it's very early, but how do you think in the context of CapEx needs and results and cash flow generation versus the payouts to shareholders? Thank you.
Thank you very much, Piotr, for your questions. The working capital and the dividend, I'm going to take. With regards to the working capital, I think, yes, there is a very fair observation that we have an increased working capital, but is absolutely in line with the commodity price increases. The overall price environment has been increased substantially, and obviously it has a very positive impact for our results. On the P&L, you can also see it, but also it has a cost, and also it reflected in the net working capital. I don't really think that having substantially lower price environment, we can get back to the opening level of the net working capital. With regards to the dividend, this is a kind of usual question.
In MOL, also in other large corporation, there is a sequence of decisions and the respective bodies are going to take. But the first, I think, really important milestone for that, having the annual closing and having the full year result. After that, as we usually communicate, in March, we are going to see what is the decision of the board of directors. For the CapEx-related question, I would like to ask Gabriel to answer it.
Yes, thank you very much
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—some voice there. Yes, so regarding the CapEx, we would like to keep the pattern we are having today. We accomplish in the last year, there was the polyol project, now the DCU. As mentioned by Ákos, regarding the running projects, there are two major ones, the maleic anhydride and the Olefin Conversion Unit. My guys, the engineers, they are working hard to come with the other projects. Once approved, we will inform. But we would like to keep the pattern as today. Thank you.
Sir, to clarify, keep the pattern, meaning you are going to spend around $ 2 billion a year, roughly on the growth and maintenance together?
I can speak about the Downstream. The CapEx is roughly $ 1 billion of the Downstream. I can report on the Downstream. Thank you.
Thank you very much.
Thank you. Anna Kishmariya, please go ahead.
Thank you very much for taking my questions. I have a couple. Starting from the one-offs that you expect in fourth quarter, what do you expect for the insurance compensation for the fire in fourth quarter, and also for this $400 million from the government? Do you expect to receive those in fourth quarter, and whether they will be booked above EBITDA line? That would be the first one. Also, I wanted to check around the taxes, and what we are seeing across different companies for this quarter is that effective tax rate is higher in the quarter, but the cash taxes are a bit lower. It is just the timing matter, or there is anything to comment on this side? Also, for the effective tax rate, what would you expect in fourth quarter? Probably the final one for me is on the Petchem side.
You showed on the slides this very low Petchem margins, which dropped below zero in October. What could this imply for the Petchem EBITDA in the fourth quarter if this continues? Thank you.
Thank you very much, Anna. The first three questions I am going to take. With regard to the insurance, yes, there is a very good news that the AV3 unit came back to the operation in October. This is a trigger point as the lost opportunity calculation officially has been closed for this period. Now, we are really in very close cooperation with the insurance companies and the final stage. Therefore, the details and also the agreed figure, we are going to have once those negotiations are going to be completed. You raised the question whether it might happen in Q4 or it is going to last till the first quarter of 2027. At the moment, I do not know the answer. Obviously, we are doing everything in order to close the negotiation by the end of 2026.
With regard to the CO2 taxation, well, as we several times discussed that, yes, the original CO2 law was incompatible with the EU law, and the Hungarian Parliament adopted the legislation to phase out this tax. As we already communicated to the investors, we got an out-of-court settlement with the government and the tax authorities. So there is roughly $406 million, HUF 133 billion, which is going to be paid back to MOL Group. One part, roughly $130 million, already received in October, and we are expecting to happen with the rest of the amount in November or December. But I think-
Well, if everything goes according to the agreement, we are going to receive it in the first quarter. So there is a good chance that we are going to book it, and also the cash settlement is going to happen. Sorry, in the fourth quarter. With regards to the taxation, whether there is a P&L and cash impact, yes, as you highlighted, this is just a simple timing effect. So there is no other information to be shared. This is just happening as usually, so this is just a timing impact. With regards to Petchem, I also would like to ask Gabriel to answer.
Yes, thank you. Anna, regarding Petchem, once the macro stays as it is combined with the demand, I do not expect that there will be a critical change in terms of the performance. Once the natural gas price is as high as it is, the demand weak, I would not expect any change. Thank you.
But if I may follow up on this, given the margin further dropped, do you expect worsening results in fourth quarter, right? Or you can mitigate the impact somehow? And thank you very much.
Yes, we are trying to mitigate the impact. What we can do, and we did in the past, is to optimize the operational run of the crackers. We can, I believe, do still a lot on the sales side. But it is a stressful environment for our Petchem guys, definitely. Thanks.
Understood. Thank you.
Thank you. Mr. Anton Iurchenko, please go ahead with your question.
Good morning. Thank you. Intesa Sanpaolo. Thank you and congratulations on strong performance and results. I have a general one. In terms of given that you have a very strong liquidity and comfortable levels of leverage, where do you see the best opportunities to deploy capital in the coming years and quarters, both regional-wise and across sectors? Thank you.
Thank you. I mean, very short and very simple question. I think this is definitely the key that just keep the business running as usual, and keep us the effectivity and the productivity of our units. This is one of the major goals. So definitely, big part of our CapEx is going back to the existing markets, existing businesses, the traditional businesses, because I think that there is still a long run at which these assets shall and will produce significant results and still have upside. Definitely, we want to invest into the growth, into the expansion opportunities, both in the traditional and the new businesses, since we started new low-carbon investments as well. So we just opened several battery storages, biomethane units, we are having, and et cetera, et cetera. But this is definitely new businesses in that significantly lower scale.
In the traditional big businesses, that E&P Upstream and Consumer Services, we are actively searching for further expansion opportunities because still believe that at this scale and at this operational professionality that we can provide, these are the best opportunities to invest into.
Thank you.
Thank you. Oleg Galbur, please go ahead.
Yes. Good morning, and thank you for the presentation. I have two sets of questions, and the first one is regarding your Downstream or refining business. Given the continued volatility in refining margins, could you please first tell us what levels do you currently see of the refining margins? Any comments on the evolution of the crude differential to Brent would be very helpful. When it comes to MOL refining margins, are you going to update your model refining margins with the impact of Rijeka refinery upgrade? Maybe you could give us an idea of how much of improvement would have been in October as a result of the DCU startup. That would be my first group of questions. The second one relates to the crude oil supply from Russia.
Can you update us on the legal status of the E.U. decision to grant exceptions to Hungary and Slovakia, given that the European Union, as far as we know, is aiming at a full decoupling from Russian energy sources? What is the probability for you to benefit from a continuing supply from Russia? What are the risks, et cetera? Thank you.
Thank you, Oleg. Let me answer your question. I will start from the last one. Yes, currently, based on the executive order of the OFAC, we have got the extension for the supply of the REBCO from Lukoil. There is a submission of the request to prolong this one. Currently we have the extension till 21st of November, and we do expect some reply from the OFAC there. Once not granted, then of course, we have to reach out and we are ready, and we have to reach out for the alternative solutions and alternative suppliers. Regarding the European Union, within the REPowerEU, there was submitted from, I believe, from governments to the Brussels, there was submission of the plans there. We are working hard on our diversification program there.
As I mentioned previously, we believe that in the end of next year, we will be ready with all the projects and with that capable to process other crudes, next to REBCO. Of course, the critical point is how these alternative crudes are delivered to our landlocked refineries. In respect to this, we are in discussion with the JANAF, and we would like to have end-to-end testing. It means not just to test the part of the pipeline, but rather to test the whole complex infrastructure. It means from port to the furthest refinery on that line, which is actually the Bratislava refinery, Slovnaft. This is regarding the supply of crude. Regarding the model, it is a good point. I will ask my colleagues to come back with this, because I am not informed. But in October, we do not assume, so still we successfully started up.
I think in general it was a very successful operation. We got a lot of engaged workers, hours, then a lot of contractors on site, so I believe it was a great work and the startup was rather smooth. But still, we are learning the technology, the operators, they are learning the asset itself. So in October, I do not assume that there will be any significant change in terms of the output. But in long run, definitely, as mentioned before, roughly 30%, so 30% uplift in the fuel production in our Croatian refinery. Regarding the margins, yes, you are right. The volatility is pretty high. We all know the reasons why are those there, so for me, it is hard to predict. This is mainly caused by political decisions.
I believe the political decisions are needed to revert that trend as it is today, or the status which is needed today, and hopefully we will get back to normal soon. Thank you for your questions.
Thank you. Maybe just one clarification. Could you share with us what levels of refining margins do you currently see?
Yeah, so as I refining margin. So refining margin, our refining margin, I believe, is around $30 /bbl currently.
Yeah.
Thank you.
Thank you. Ricardo Rezende, please go ahead.
Hello. Couple of follow-ups and one question from my side. First one on the follow-ups. First on the refinery, when we think about the startup, you mentioned that you have started in October. How should we think about the ramp up on the volumes? Do you got to do any stops or small turnarounds, just make sure that all of the equipments are working correctly? Second follow-up is on the alternative sources of crude by end of 2027. When I look at your investor presentation, you show a CapEx for 2026 and 2027 on the other pipeline of $130 million-$150 million. How much of that is due to be spent this year and next year? Then finally, final question on the NIS acquisition. We saw your press release yesterday from one of the OFAC licenses.
We also had some people from the government talking about potential closure of this deal by December. Could you provide us some color on what's the latest and what's still needed to get to a final conclusion? Thank you.
Yes, so I will start with the startup. So yeah, currently we are behind the successful startup of two critical units. So first was the delayed coker unit in Rijeka. As I mentioned, we are learning the asset itself. Of course, that we will increase the portfolio of the processed crudes, all alternatives of the processed crudes there, so there will be a lot of tests done. But we do not count with the shutdown of the unit. So hopefully everything goes well, and we will not force to do these shutdowns there. In terms of the AV3, also a successful startup. As mentioned, the unit is running full blast, so this means 10,500 tons processing as today. Again, so once everything goes well, we do not plan with the shutdown there. Excuse me, the other was the alternative source of crude. Can you please repeat your question?
Yes, on the CapEx that we see on your investor presentation-
Ah, yes
to be deployed.
Right. So, out of the two dozens of projects, still 11 to be concluded next year. So, as mentioned, the figure, I believe it will be then spent next year. And there was a third part of your question, if I am right.
On NIS.
Yeah. So please, György, help me out regarding the sanctions and the operational license we received.
Regarding this transaction, I think we announced just recently the new license, which is an additional license received from OFAC. As previously discussed, this transaction needs beyond normal or customary transaction-related permissions, like competition cases, et cetera, et cetera. It needs two additional, I would say, not ordinary permission. One is the OFAC one. Here, I think it is a major step forward because so far we had only negotiation license, and this itself had operational license. Now these are all extended, so negotiation and operational license. Plus, in addition, now we received a license which is not the final permission, because for that one you have to submit the transaction documents and everything, all in all, for a final check. But this is a major one because it enables us to do those transactions which are needed to be able to pay the seller.
This also enables and allows us to seek for approvals in Russia for the transactions. I think I don't want to go into details because this is not adding too much. Second, it is still, we are in the middle of the process, but I hope that the license is given until end of February, but I hope that now we can accelerate the process in the coming weeks.
Okay, that's great. Thank you very much.
Thank you. For the last one, Piotr, I see you have a follow-up question.
Yes, I have two follow-up questions. Thank you very much. I wanted to ask about your Circular Economy Services. There is a very good result, so just wanted to understand how you think about the recurring profitability of these businesses. What we see are more sustainable, or there was some one-off elements? The second question I have as a follow-up is that, you bought the fuel stations in Poland after Lotos was taken over by Orlen, and now there is a bit of headlines that potentially Saudi Aramco would want to sell the refinery or the wholesale contract. At that time, you didn't buy it, so I just wanted to understand that if this refinery, piece in this refinery would fit into your strategy in this market. Thank you.
As for the Circular Economy Services, I think in terms of operations, the impacts of the program are showing up, and I think we expect in terms of this positive cash flow generation to be continued. You are probably aware that the major part of the Circular Economy Services segment is MOHU, which is the countrywide concession is Hungary, and there is a strategic review by the new government. We are expecting the results of this review and the new direction set in probably the next couple of months. In terms of medium-term outlook, will depend on the result of this direction, and then we will sit down with the government and see where and who we can cooperate.
Just a couple of sentences about our strategy regarding Poland. I also emphasized this recently as well, that all investment in Poland, in all aspects, we consider as strategic. It also means that we are actively seeking for further opportunities, how to increase our presence, how to stabilize and improve our profitability and operational excellence in Poland. It is not only in retail, but it can also include wholesale and other related market positions to be considered. Regarding specific projects and transactions, of course, we will inform the market whenever it is tangible or realistic.
Okay, does this mean you are searching a little bit more broader, like you could buy more stations, or you'd be Because there's a number of station networks that could be potentially up for sale. Is my understanding correct that you would be interested in buying such an asset as well?
Of course, it depends on the value that we can create with those investments. But as I mentioned, we are considering to stay, invest, and profit and prosper in Poland, not us, not others, thanks.
Sure. Thank you very much.
Okay, and the very last one from [Idat]. Please go ahead.
Yes, thank you. Hi, everyone. I have a couple of questions on Upstream. On Syria first. I think I have seen reports about MOL being in discussions of potential projects in Syria. Is this something you are still interested in? Are there any updates you could share? On Croatia, I think there have also been some reports about discovery and offshore development. Can you share with us any midterm outlook for production there? Thank you.
On Syria, we started negotiations already like a year ago for a return to Syria. It depends on many factors, security factors. It depends on contractual terms. What we know is that the field in the last 15 years were produced. However, we still see opportunities. This is an ongoing discussion with the Syrian Petroleum Company, and potentially in the coming months, we will come to a conclusion, and whenever there is a right time, we will inform the stock market as well. With regards to Croatia, we are running a campaign now for the second year on offshore appraisal and development program in the Adriatic Sea. We expect that the production will also be increasing, and in the midterm, you can expect still gas production from the Adriatic Sea. Why it is also better? Because we can tie in these wells much earlier than in the onshore.
Usually after drilling, three, four months, we tie in and start producing those wells. You will see increasing offshore production from the Adriatic Sea, and not only from INA sole licenses, but also the licenses which we share with Energean as well. Drilling program will also continue in the first half of 2027.
Thank you very much.
Okay. Well, thank you very much, ladies and gentlemen, for your participation on today's call. Please reach out to Investor Relations if you have anything to follow up with. Goodbye, and have a nice weekend. Thank you.