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Czechs take next step to eliminate Russian oil from Polish-owned refineries

(Reuters) - The Czech Republic can cover its oil needs through shipments via the Transalpine Pipeline (TAL) pipeline from 2025, Prime Minister Petr Fiala said on Tuesday after the country signed a deal to boost capacity along the link.

The Czech government is looking to eliminate all dependence on Russian oil in the coming years, and thus end its exemptions from a European Union ban on imports from Moscow last year.

Czech refineries are owned by Polish state-controlled refiner PKN Orlen, which said in April it terminated a contract for Russian oil supplies for its Polish refineries.

Polish government and PKN Orlen officials met with the Czech Industry Ministry in Prague on Tuesday and said they would work to eliminate Russian oil from PKN-owned refineries in the Czech Republic.

Speaking separately outside of Prague at an oil storage facility for strategic reserves, Czech prime minister Fiala said an agreement just signed between state-owned pipeline operator MERO and the TAL pipeline company to boost capacity along the TAL by up to 4 million tons would enable it to cut off dependence on Russia from 2025.

"It is significant milestone," Fiala said.

The Czech Republic won TAL shareholder approval last year to upgrade the link, which runs from Italy to Germany and hooks up to the IKL pipeline from Germany to the Czech Republic.

The central European country needs about 7-8 million tons of oil annually, which has been split roughly between shipments coming via TAL and the Druzhba pipeline from Russia.

The EU banned shipments of Russian oil from December 2022, but exempted Druzhba pipeline supplies to refineries in Germany, Poland, Czech Republic, Slovakia and Hungary.

"Our common goal is to diversify crude oil deliveries as quickly as possible in order to completely eliminate Russian oil as we already did in Poland," Polish Deputy Prime Minister Jacek Sasin said alongside PKN Orlen Chief Executive Daniel Obajtek after meeting with Czech Industry Minister Jozef Sikela.

PKN said separately it was preparing to reconfigure technology at its Litvinov refinery, which is dependent on Russian crude, to take non-Russian supplies.

PKN Orlen is also open to cooperation on oil and gas supplies as well as cooperation in nuclear power with the Czech Republic, Obajtek said. He also stressed that tax issues, including windfall taxes, could hurt investments in Unipetrol assets, which include the two Czech refineries and petrol stations.

"Our investments also depend on the regulatory approach by the Czech state, we cannot invest in places where tax regulations are suffocating for our investment," Obajtek said.

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