04. ledna, 2026 Petr Zenkner
For the energy-intensive industries in the Czech Republic, the 2022 natural gas prices of around 200 euros per megawatt-hour (MWh) were absolutely bankrupting. If they had stayed the same, we would have experienced not only painful inflation but a real crisis. The current 30 euro per megawatt hour is a bearable price tag, given the end of Russian gas supplies.
Cynically we can say, calm was restored to the market after the shock of the destruction of the Nord Stream pipeline in September 2022, after which Gazprom, the Russian gas company lost its ability to influence the price of gas in Europe. Moreover, Russia’s dream of freezing the old continent was dashed by two warm winters in a row. This and next year there will be more LNG terminals and capacity added. Coupled with the current global gas surplus, we can expect the price will continue declining in 2026. This assumption does not include the impact of Russian LNG, which continues to be imported into Europe. Despite the efforts of some EU countries, it is unlikely to be completely eliminated from the game. Russia’s share of European LNG imports last year was just under 18 per cent.
In the energy sector, the Czech government under the leadership of Prime Minister Petr Fiala has achieved a significant milestone by managing to rid the country of its dependence on Russian oil. Before February 2022, more than half of Czech oil imports came from the Russian concern Rosneft. This included the oil for the Litvinov refinery, which is connected to the Družba pipeline. On the other hand, the second refinery in Kralupy nad Vltavou has been connected to the TAL pipeline from Trieste, Italy, since the 1990s.
The Czech Republic, which has been a five-percent shareholder in the TAL consortium through the state-owned company MERO since 2012, initiated the expansion of the capacity of the Trieste pipeline by four million tonnes, which will cover 100% of the needs of the domestic refineries in Litvínov and Kralupy (7.4 million tonnes in 2023). The Czech government’s decision is in line with the strategy of their owner, the Polish petrochemical group Orlen, which has been operating the pipeline since 2005. The latter does not take Russian oil even for its refineries in Poland and Lithuania. Initially, Orlen had expected to process it in the Czech Republic until June 2025, but due to the impact of US sanctions, supplies were first interrupted at the beginning of March this year.
The approach of Czechia and Orlen is quite different compared to two other central European countries. The Slovnaft refinery in Bratislava, owned by the Hungarian group MOL intends to continue buying oil from the Russian Lukoil group, the same as MOL itself. This is partly due to the different views that the Slovak government of Robert Fico and the Hungarian prime minister Viktor Orban hold concerning the war in Ukraine, compared to the rest of the EU. But the main difference lies in the fact that Russian oil is cheaper compared to that from the oil tankers. That is facilitated by the simpler logistics connected with delivery by just one “pipe” and also the discount that Russia offered. In 2022 that was a difference of 8 to 10 dollars per barrel (159 litres). Currently the price of a barrel of oil is finally falling due to economic cooling and the OPEC cartel’s willingness to produce more. It fell to 60 dollars in early May, hitting its lowest level since 2021.
If any industry in the Czech Republic has been „kick-started“ by the war in Ukraine, it is logically the arms industry. The Czechoslovak Group (CSG) ammunition manufacturers and STV GROUP have come into the spotlight as well as the firearms manufacturer Colt CZ or the supplier of jet engines for suicide drones PBS GROUP. In addition, some Ukrainian manufacturers of unmanned aerial vehicles have found refuge in the Czech Republic.
According to a study by EY, the defence industry generated revenues of three billion euros, or 75 billion crowns, in 2023 alone. This represents roughly one percent of the Czech GDP. By comparison, the share of automobile companies stands at around nine percent in the long term. However, while the German-linked automotive sector is worried about the future, the opposite is true for armourers. The defence industry in the Czech Republic could thus make up for the current shortfall of German carmakers, which Czech companies supply.
But let’s get back to the arms producers. For CSG group, owned by the youngest Czech billionaire Michal Strnad, the war in Ukraine was accompanied by a massive expansion in Europe and the United States. In 2022, CSG acquired Italian small-calibre ammunition manufacturer Fiocchi Munizioni and last year completed the acquisition of US ammunition manufacturer Kinetic. In addition, it has plants producing large-calibre ammunition in Slovakia and Spain. At the same time, Strnad’s concern is building a complete supply chain for ammunition production, including its own TNT explosives and powder charges. By 2027, CSG Group will be fully self-sufficient in ammunition production, perhaps even faster than Germany’s Rheinmetall, which is following a similar path.
Thanks to increased demand for ammunition not only in Ukraine, CSG’s sales last year reached more than four billion euros and the group tripled its net profit to 526 million euros (13 billion crowns). It also made it onto the list of the world’s 100 largest arms manufacturers compiled by the Swedish SIPRI institute. However, it is still in the bottom part of the list.
Another major producer of large-calibre ammunition (the only one in the Czech Republic as CSG produces it elsewhere) is STV, a company owned by billionaire Martin Drda. STV is also expanding, last year it had sales of 14 billion crowns, and its net profit rose from 1.5 billion to 5.5 billion crowns.
The Czech Republic put itself in the centre of these activities when President Petr Pavel officially presented the Munitions Initiative at the Munich Security Conference in February 2024. Thanks to the contacts of domestic arms producers, the Czech Republic was able to secure ammunition purchases for the Ukrainian army, which had desperate shortages at the time. The goods initially came mainly from non-European warehouses in Africa and Asia. Nearly two million rounds of artillery ammunition of various calibers have already been purchased with donor money from eighteen countries. As a result, the Ukrainian and Russian armies have become equal, the latter having at one point outnumbered the former ten to one in shells fired. The initiative has already included orders from Europe, where production capacity is gradually being expanded. It also includes ammunition purchases from CSG and STV.
Also involved in the ammunition initiative is arms dealer Omnipol, which, among other things, is the owner of ERA, a leading manufacturer of passive tracking devices. In addition, Colt CZ, another significant producer which makes not only firearms but also small arms ammunition. This is thanks to the acquisition of another Czech company, Sellier & Bellot. The name of the group associated with the legendary American brand Colt pistols is no coincidence. Česká Zbrojovka billionaire owner René Holeček’s concern acquired the company in 2021, before renaming the company.
The latest example of how the war in Ukraine has helped the Czech arms industry is the jet engine manufacturer PBS Group. That is, the engines that power suicide drones (in addition, the company produces auxiliary units for helicopters). This top company competes in its sector with the biggest players such as Rolls-Royce, GE or Safran. For jet engines, its production grew 300 percent year-on-year in 2024, and this year PBS expects to grow 200 percent. From dozens of engines, the company has moved on to producing hundreds of units a year and will probably produce thousands of them in the future. In addition, PBS has a partnership with Ukrainian engine manufacturer Ivchenko-Progress and opened a new manufacturing facility in Roswell, USA, in early May.
Russia’s aggression against its neighbouring country has also had an impact on the Czech labour market. According to the Ministry of the Interior, there are currently about 560 000 Ukrainians living in the Czech Republic, almost six percent of the population. Even before the war, they helped alleviate labour shortages in the domestic economy, mainly in construction and industry. However, the war changed the demographics of Ukrainians in the Czech Republic, as women with children began to prevail after February 2022. They were soon able to find work, albeit often less skilled and lower paid. This is clearly visible in the service sector, where service in shops and restaurants has become considerably „Ukrainianised“. Similarly, Ukrainians are saving social services. Their presence in administrative professions is also important and increasingly in manufacturing.
In the case of the Ukrainians, however, we must consider the other side of the coin. For many Czechs, their benefits are less visible, or they do not want to see them. Or they feel threatened by them. As in other countries where Ukrainians have gone, their stay is being politicised. But if the companies themselves were to decide, everything would be clear: 65% of corporate HR professionals see the possible return of Ukrainians to their home country as a significant risk. The state budget would also bear the brunt. According to statistics from the Ministry of Labour and Social Affairs, Ukrainian refugees will have paid 55 billion crowns in taxes by the end of 2024.
But even more important is a factor that is not mentioned so much. If Ukrainian women and their children remain in the Czech Republic, this will have a significant demographic impact. According to various estimates, up to 70 percent of the refugees could end up staying. This will rejuvenate society in the Czech Republic. Only three percent of Ukrainians who have settled in our country are of retirement age, and one fifth of them are children under 15. Women make up 58 percent of the refugees and many of them may still have more children. While Ukrainians will not solve the ageing of the population in the long term, without their contribution the pension system in the Czech Republic would face an existential crisis in this decade.
The influence of Russian aggression on three big Czech companies
Škoda Auto
For the largest Czech carmaker and a member of the Volkswagen Group, Russia was still the second largest market after Germany in 2021. The company also had two production plants in the country. Now its official sales in Russia are zero. Škoda Auto has written off 700 million euros because of the war.
PPF
PPF, the largest Czech financial group, profited from Russian privatisation in the 1990s. For a time, it held a percentage of the Gazprom gas concern. Russia has long been one of the places where it owned a number of assets. After 2022, PPF divested its remaining real estate and the Russian division of consumer lender Home Credit. It wrote off more than €300 million
Škoda Jaderné strojírenství
ČEZ, the 70% state-owned energy company, bought back Škoda JS, a company focused on manufacturing components for nuclear power plants, from Russia’s Gazprombank-linked OMZ in 2022. It is important for the operation of nuclear power plants in Dukovany and Temelin. The company had been on the US sanctions list for eight years.
First published in June 2025. Translated from Czech by Alžbeta Kovárová.
The article was written in the framework of the project Reflections of the War in Ukraine in Visegrad Countries. The project is co-financed by the governments of Czechia, Hungary, Poland and Slovakia through Visegrad Grants from the International Visegrad Fund. The mission of the fund is to advance ideas for sustainable regional cooperation in Central Europe.
SPECIÁLNÍ ČÍSLO/SPECIAL EDITION