FGSZ Natural Gas Transmission Ltd. is the exclusive holder of natural gas transmission and transmission system operator (TSO) license in Hungary. Both activities are implemented in a market environment regulated by laws. The company owns and maintains full operational control of the total domestic high-pressure pipeline system. In addition to the domestic natural gas transmission operations FGSZ Ltd. also transmits natural gas to Serbia and Bosnia-Herzegovina. The technical level of the company’s pipeline system belongs to the best in class technologies in international comparison, which enables the infrastructure to meet challenges arising, like the gas crisis at the beginning of 2009, when the company played an eminent role to ensure the safety and undisrupted supply to the customers. FGSZ is an indispensable company in the region enjoying a strategic position. Its dynamism and efficiency ranks the company one of the best performing natural gas transmission operators in Europe.

Competitive advantage

Operation of the company’s nearly 5500 km long, discrimination-free Hungary-wide high-pressure natural gas transmission pipeline system, together with competitive sale of its capacity and auxiliary services provide stabile cash flow for the Group. As a result of excellent geographic attributes FGSZ is a key player also in the regional transit transmission operations.
The technical standard of the company’s pipeline system represents a state-of-the-art technology even in international comparison. FGSZ Plc. has been operating an officially certified quality assurance system in compliance with ISO 9001 Standard requirements, since 1997. The agency certifying the system is SGS, widely recognised in the international oil and gas sector, its Hungarian subsidiary being SGS Hungária Ltd. SGS Hungária Ltd. and the Mining Bureau of Hungary regularly audit the operations, on semi annual and annual basis, respectively.

Key results in 2009

Capacity expansion projects – implementation of new gas pipelines

The import capacity development project was completed, thus the volume gas transmission from the Ukraine can be doubled. The new pipelines increased the domestic import capacities by 25%  i.e. by 30 mcm/d, and improved significantly the security of supply. Major developments and expansion projects were also implemented, in connection with this project, at Beregdaróc, Hajdúszoboszló and Városföld compressor stations.

Expansion in transit-purpose transmission required development in cross-border capacities. The 47 km long domestic section of the Szeged-Arad gas pipeline was completed, and it will ensure the two-way transmission (4,8 mcm/d capacity) between Hungary and Romania from July 2010. The CAPEX amounted to HUF 9 bn. The implementation of the 206 km long inter-connecting pipeline between Városföld and Slobodnica was launched. The CAPEX of the development would amount to HUF 80 bn, and the new pipeline will ensure a capacity of 19,2 mcm/d. As a result of implementation of the Hungarian-Romanian and Hungarian-Croatian gas networks, the security of gas supply will significantly improve. The facilities are planned to enable the transmission of natural gas to and from both directions, therefore the inlet or entry points of the domestic gas pipeline system will increase to four from the present two points.

The Pilisvörösvár-Százhalombatta gas pipeline was also completed, thus the gas ring around the capital city was closed, improving significantly the security of supply for Budapest and its region.
While implementing pipeline construction operations in 2009, FGSZ paid special attention to the protection of wildlife and ecosystems in the affected areas. During the implementation works the company maintained permanent contacts and communication with the people and social organisations in the relevant areas. FGSZ constructed a forest walkway along the Pilisvörösvár–Százhalombatta pipeline, in conjunction with the parent company and in cooperation with local civil groups. This facility was inaugurated in 2009 May.

A progressive initiative for increasing the regional security of supply (NETS)

NETS (New European Transmission System) is a large-scale project initiated by FGSZ in 2007 December, aiming at increasing the security of gas supply in the region, and through a coordinated improvement of the regional infrastructure (interconnectors, gas storages, LNG terminals) has a goal to establish market efficiency. All these are to be done by virtue of the strategic collaboration of regional gas transmission companies and along common energy-political principles. In 2009 the European Union emphasised on several occasions that NETS is one of its high priority projects, which received funding from the European Energy Programme for Recovery as well. The implementation of NETS would guarantee a significantly higher than present level of security of gas supply for consumers, a key issue for Hungary and for other regional countries, following the gas dispute in 2009 January between Russia and the Ukraine.

Outlook

Besides the capacity expansion projects, implemented in 2009, there are further plans in order to expand the transit-purpose transmission. FGSZ holds consultations on inter-connection options with the partners in Slovakia and Slovenia. Both projects would greatly improve efforts of the regional gas markets, as the former would enable operations using a north-south gas corridor, urged by the European Union, whereas the latter would result in a transmission system connecting Hungary, Slovenia and Italy.

Currently the NETS project supports the implementation of the north-south gas corridor in the most comprehensive way, which is open for the countries and gas transmission companies of the region to join.