Last year, MOL Romania signed a contract with CNAIR to build 14 service stations, which will be located on the A1 and A2 highways, and they will be completed by the end of the current year. The value of the investment amounts to 28 million euros. At the end of July the first station in this project was inaugurated in Murfatlar.
We talked to Robert Pitt, Group Retail Senior Vice President about this important investment, about how the new service stations will help improve electric vehicle travel, but also about security of energy supply and what changes to expect in the short term.
I know you have joined MOL recently in 2021. How has been the activity so far and how was the switch from the retail sectors where you have been activating in the past to energy, such a complex and ‘troubled’ field in the past year?
The biggest novelty for me compared to my previous jobs were the fuel products, which are still the main reason why the costumers come to us, regardless of today’s circumstances. Otherwise, retail has always been a rapidly developing segment with changing customer needs and demands, no matter which sector you are active in, so this side of the business was well-known for me.
And speaking of the energy sector, what changes do you expect in the field on short term and what are your predictions in the long run?
Today, the price of crude oil types is changing dynamically, therefore customers experience high totem prices at service stations. This phenomenon resulted in price regulations by governments, artificially keeping the fuel prices on a lower level, which intervenes into natural market environment. At MOL, our fuel pricing policy is not cost-based, but competition- based: our prices are set in relation to prices in neighboring countries, precisely to ensure that no one is in a monopoly position. So, our general, short term aim is to return to the logic of competition in the market.
Despite the current economic circumstances, we are still working according to our business plans and continue implementing the updated SHAPE TOMORROW 2030+ strategy. Our aim is to become the first choice of the customers as a best-in-class digitally-driven fuel and convenience retailer, and an integrated, complex mobility service provider by the end of this decade. A general change has already started – in the recent years, advancements in technology and new consumer habits are constantly and fundamentally changing what has so far been considered fuel retailing. The way of transportation and the share of different fuel types will significantly change: the long-term outlook is that fossil fuels will lose their monopolistic dominance by the end of this decade, and various alternative energy sources will gain ground. Therefore the retail market needs to adapt to the changing circumstances based on the new consumer habits and demands.
MOL has restricted fuel supplies in Hungary. What prompted to this decision?
The countries of the region are managing from tight fuel supply, due to external reasons. Two refineries in the CEE region have unplanned shut down periods – the start-up of the OMV refinery in Schwechat was delayed due to an incident during maintenance turnaround in April 2022, and the Czechian Litvinov was shut down due to explosion – which means the demand for MOL products became stronger on our region. The turnaround of the refinery in Százhalombatta started already at the beginning of August, therefore we need to adapt our operations and capacity to these changed circumstances in order to fulfil our contractor obligations. In addition, the war in Ukraine also demands fuel from the CEE region, which further increases the risk of shortages.
How do you and the group see the EU urge for the countries to reduce gas demand by 15%?
It is up to EU member states to decide that which sectors on what extent would become covered by gas demand reduction, so it will depend on the Hungarian government’s decision what kind of expectations the 15%-member state reduction will mean for MOL Group. We are currently working on calculations about our reduction options.
Do you see the electric vehicle a real solution to also solve the energy rising prices issue along with the climate change challenge? Is it feasible on short term or has a longer time frame?
As vehicles using alternative fuel are expected to reach price parity in certain segments with internal combustion engine (ICE) vehicles, the consumer adoption of electric vehicles will truly take off, so we expect significant step change in the market share of alternative fuel vehicles in the second part of the decade. On one hand, that would mean a demand decrease for fossil fuels, on the other, it would contribute to the long term aim of MOL Group to become carbon neutral at Retail on scope 1+2 by 2030.
There will be need for the fossil fuels in the long run, but as we are already feeling the influence of the shrinking opportunities in this area, we are continuously expanding our alternative fuel portfolio, to meet with the needs our customers, and to be able to achieve the goal we set up for ourselves:
- From 2018, MOL Group established the MOL Plugee brand and has deployed 200 DC (direct current) and AC (alternate current) chargers along the main highways in the CEE region by the end of 2020 funded by the NEXT-E program of the EU and by own investment.
- Between 2023 and 2025, we will continue to improve our services and business model, and also grow our customer base.
Returning to MOL, the group has signed a contract with the National Company for Road Infrastructure Administration (CNAIR) to build 14 service stations in Romania on A1 and A2 highways? What is the value of the investment and the completion deadline?
MOL has been present on the Romanian market for over 25 years and we had a long-term development strategy here. During this period, we focused on extending our network of service stations and on developing new services and products, aligned to the constantly changing needs of our customers.
From the business perspective, singing the contract with the National Company of Administration of Road Infrastructure (CNAIR) in 2021 was a major achievement for MOL Romania. Under the agreed conditions MOL Romania was awarded 7 concession contracts for 7 double lots (14 service areas) for development and construction of service stations on the highways Nădlac – Sibiu, Pitești – Bucharest and Cernavoda – Constanța.
In December 2021 we kicked-off the construction works on highways A1 Nădlac – Sibiu and A2 Cernavoda – Constanța, and recently opened two service station on A2, MOL Murfatlar. On A1, MOL Ilia started its operations and in August other four will follow. We continue our plans and forecast to finalize the project by the end of the year.
This complex project generated a great deal of responsibility for our team, as the lots are positioned on highly transited areas, both by professional drivers and individuals, which have very diverse needs. Thus, we took the challenge of designing new stations and of equipping them with high-end technology and offer a wide range of services and products which would match the needs of such a diverse audience. The total value of the investment amounts to EUR 28 million and, as agreed with CNAIR, the project will be completed by the end of 2022.
The plan was to commission the first of these stations in Murfatlar. Were you on schedule? Tell us a little bit about the event.
The Murfatlar stations are fully operational, and the development was in line with our planning, and we were pleased that the local authorities from Murfatlar and the National Company for Road Infrastructure Administration were very supportive as well throughout the entire process alongside all other partners involved.
At the same time, the Group is right in the middle of a transformation process, which will allow us to enhance our efficiency by transforming our traditional business and by embracing a more sustainable, carbon-free future. In this respect, the Murfatlar stations play an important role, as they are reflecting our new Consumer Services vision in terms of sustainability. For the first time ever in the Romanian network, the stations are integrating an environmentally friendly waste management system and Green Info Corners – dedicated areas for promoting a responsible behavior in relation to environment. These innovations are helping us make great progress towards our goal of reaching net zero carbon emissions by 2050.
How will these new stations contribute to improving rides by EV?
The electric vehicles play an important role in the process of transition towards a more sustainable future. The number of EV drivers is rising, and that means, they need access to infrastructure which will ensure the freedom of movement. MOL Group is committed to support this process of transformation, and one of our major achievements so far is being part of the NEXT-E, a major infrastructure project co-financed by the European Union. It was launched it 2017, and at that moment the Connecting Europe Facility (CEF) granted the largest funding ever for an electric vehicle initiative . The project consortium developed a network of 252 chargers in six countries (Czech Republic, Slovakia, Slovenia, Croatia, Hungary and Romania), installed at a distance of 70-80 km by MOL and its strategic partners (E.ON, HEP, Petrol, BMW, Nissan).
We are continuing the efforts of expanding the network on our own, as we remained loyal to our goal of facilitating e-mobility. Up to this point MOL Romania has 31 EV charging stations, and by the end of the year – once the project within the agreement with CNAIR will be completed, the network will be further extended, offering more flexibility to our customers.
Each of these newly opened service stations, comprised by the CNAIR concession contract, are equipped with ultra-fast charging stations for electric vehicles. This service can be accessed through the MOL Plugee application, which offers an innovative payment method which keeps track of the cars’ capacity of absorbing the electric energy and of the type of charger (AC/DC) used by the vehicle.
What should the clients expect about the new stations?
The newly built stations reflect the vision of the company, as driven by the Shape Tomorrow 2030+ strategy update. They will contribute to enhancing the travel experience, both for professional drivers and individuals. The customers would be able to satisfy their needs, regardless of wanting to take a break during the trip, having a meal and freshening up, or taking a shower, and getting some rest in the designated areas for truck drivers and trailers. The stations are family friendly as well, including the Green Corner areas, where children can discover games helping them to develop a responsible attitude towards environment.
The Fresh Corner concept is implemented in each of the newly opened stations, providing our customers with a wide range of hot meals, coffee and beverages options, including the newly launched own branded Crunch&Go chips and Jim energy drink Moreover, we will be able to turn the food waste into compost in these stations, by using the equipment which can produce approximately 0.5 kilograms of compost after a 24-hour cycle of processing five kilograms of waste.
The new stations will offer wide range of high quality fuel products of both maingrade and premium. MOL Murfatlar service stations are offering three multi-product pumps available, serving of the MOL EVO and MOL EVO Plus fuels, an increased flow pump for refueling with MOL Evo Diesel and a distinctive pump for AdBlue, skid for LPG refueling and, of course, two ultra-fast charging stations for electric vehicles. On top, they will also be provided with a range of MOL lubricants, suitable for almost every type of machinery: our private label brand of lubricants has over 100 OEM approvals, guaranteeing the highest level of quality and a more reliable operation.
What other investments do you plan in Romania this or next year? Or is it room for further investments in this complicated and unforeseeable future? I refer here to the potential post-Covid economic recession, Ukraine war, etc.?
As I mentioned before, we are currently working according to our business plans. In general, MOL Group would like to play a regionally leading role in the transformation of fuel retailing by tapping into growing areas of consumer demand and taking part in the reinvention of transportation not only in Romania, but in the whole CEE region.
All investments plan will be in line with our long-term aims:
- Further develop the food and convenience offers and continue the standardisation and digitalisation of processes.
- Diversify sales channels through integrated digital platforms and franchise models, expand our service station network organically.
- Sell kilometres instead of litres: expand alternative fuel portfolio and complex mobility services in the second half of the decade.
- Become carbon neutral at Retail on scope 1+2 by 2030 and focus on conscious waste management and recycling.
Does Romania have some particularities in the investment plans? How is the relation with the authorities? The fact that we, as an EU country, still have a very low number of highways, is affecting you as a group?
Highway stations play an important role in our network strategy, as they have such diverse target group with different kind of needs and demands, which requires several kinds of fuel products as well as coffee, hot meals, beverages, ad other convenience products and services. MOL’s aim is to be present on each and every highway route across MOL Group countries, so we are expanding our highway network parallel with new constructions, and we are adapting the strategy and expansion plans accordingly.