Croatia's oil refinery ready to end dependence on Russian VGO

Croatia's only active oil refinery, Rijeka, will soon be ready to end its dependence on Russian feedstock as it nears completion on a major modernization project, its owner INA said Dec. 22.

A statement from the Croatian energy company announced it is preparing to begin the final phase of commissioning its revamped facility after 18 months of construction work, with commercial operations expected in the first quarter of 2026.

At a cost of roughly Eur700 million ($820 million), the project constitutes INA's single largest investment in history, promising to consolidate its market share and boost refining profits. The upgrade will boost the site's diesel capacity by up to 30%, positioning it to supply more of the Croatian domestic market, as well as Bosnia and Herzegovina, Montenegro, and Slovenia, the statement said.

By commissioning its new residue treatment plant, the company will no longer need to import vacuum gasoil (VGO), a heavy refining byproduct used to make diesel and gasoline, it said. The upgrade will therefore end Croatia's lasting dependence on Russian VGO, which has received multiple EU sanctions exemptions to maintain its purchases.

The EU banned seaborne imports of Russian refined products in February 2023, but allowed Croatia to continue importing Russian-origin VGO until Dec. 31, 2025, making it one of the last remaining member states to rely on shipped supplies.

According to S&P Global Commodities at Sea data, Croatia directly imported around 8,000 b/d of VGO from Russia every month from March to September 2025, before appearing to suddenly halt its supplies. Greece was the country's only other VGO supplier, also delivering 8,000 b/d in June, CAS data showed. According to the INA statement, however, most VGO on the European market is of Russian origin.

The halt in VGO sourcing will rely on INA receiving on necessary permits to get Rijeka to full capacity. However, a permanent halt in purchasing promises to mark another key milestone in Europe's Russian oil phaseout as it ends various country-specific exemptions.

From January 2026, the EU will also end Russian butane imports that have continued to flow into the Polish market, while Hungary faces a July 2026 ban. Slovakia was previously prevented in June from exporting refined products made from Russian oil, and in a major policy shift, refiners outside of Europe will be subject to the same restrictions starting Jan. 21.

As a result, Hungary and Slovakia have emerged as some of Russia's last remaining oil buyers, relying on continued crude supplies for their refineries through the Druzhba pipeline system.

INA, which is a member of Hungary's MOL group, did not comment in its statement on the imminent expiry of the Croatian VGO exemption under EU law. However, it applauded the upgrade work as a positive step for the country and its energy security.

"With the modernization of the Rijeka refinery complex, INA gets one of the most technologically advanced facilities in the region, which brings better efficiency, profitability, greater energy independence and security of supply," said Goran Plese, Chief Operating Officer of Refineries and Marketing at INA.