The Gas and Power segment consists of the Supply and Trading Division and the Power and Heat Generation Department.
Both the ongoing and successfully completed infrastructure developments aim to strengthen the market efficiency and the security of supply in the region and provide stable cash flow for the Group.
MOL is again an active participant in the gas storage business via MMBF Ltd., generating stable, euro denominated cash-flow on long term and strengthening the security of supply in Hungary.
With the primer goal to ensure the security of gas supply, MMBF Gas Storage Ltd. (72.5% subsidiary of MOL) developed the underground gas storage facility with strategic mobile capacity of 1.2 bcm and commercial mobile capacity of 0.7 bcm.
The operator of the facility is MOL. The development was also managed by MOL and has been accomplished according to schedule in line with Act XXVI/2006 on strategic stockpiling of natural gas. Consequently the 30-year contract for strategic gas storage came into effect. Commercial capacities have also been fully booked for 10 years starting from 1 April 2010. Both activities provide stable, euro denominated return for MOL Group.
The financing of MMBF up to EUR 200 million is provided by the European Bank for Reconstruction and Development (EBRD), with 8-year loan facility, while further financing is secured by a revolving credit contract prolonged with MOL till 2014.
MOL takes part in the Nabucco project in cooperation with Botas, Bulgarian Energy Holding, OMV, RWE and Transgaz with an equal share of 16.67%. The aim of the project is to eventually transport 31 bcm of natural gas per annum from the Caspian and Middle-Eastern region to Europe on a 3,900 km long pipeline.
After the successful year of 2009, when the Intergovernmental Agreement (IGA) was signed by the governments of the Nabucco transit countries of Austria, Hungary, Romania, Bulgaria and Turkey, the Nabucco project made a significant progress in 2010 by signing of a mandate letter with EBRD (European Bank for Reconstruction and Development), EIB (European Investment Bank) and IFIs (International Financial Institutions). Additionally both the Environmental and Social Impact Assessment and the front-end engineering design of the two feeder lines in Turkey have been started.
Nabucco will lead to a more efficient and secured regional gas market and additional value generation for MOL Group taking into consideration the Pearl project in Iraq as a potential upstream gas source.
Managing the trading and supply operations integrated for the whole MOL Group has the apparent rationale of synergies and economies of scale. The potential improved considerably with the inclusion of the integrated planning and feedstock supply into the division – in close co-operation with the Supply Chain Management. The supply and trading activities cover various needs of e.g. MOL, Slovnaft, INA and IES, while being able to utilise the existing expertise and exploit the opportunities on the external market as well.
On the basis of Supply Chain Management needs, 11.8 M tons of crude oil for MOL, Slovnaft and INA Sisak refineries were supplied via Druzhba pipeline in 2010. 550 kt crude oil was transited for Brod refinery (Bosnia). Seaborne crude supply for IES / Mantova refinery reached 2.4 M tons.
INA crude oil procurement integration into the Group purchasing activity taken place during 2010 involving MOLTRADE-Mineralimpex for pipeline and seaborne deliveries. 3.5 million tons of crude oil has been procured for INA refineries (i.e. Rijeka and Sisak) In order to ensure crude supply security of INA a 2-year seaborne crude supply contract was concluded on purchasing 1.4 million tons of crude oil
In addition to the crude oil supplies, 1.5 M tons of raw materials and oil products (including 1 M tons 0.1 Gasoil by pipeline and 220 kt Virgin Naphtha for TVK) were imported.
MOL Commodity Trading (MCT) is a 100% MOL owned company. The company is responsible for managing oil and oil products derivative transactions, optimization and trading of CO2 emissions and electricity.
In 2010 MCT efficiently performed derivatives structuring for oil and oil products with total turnover of 4 million tons in close co-operation with other business units. The three main areas of commodity hedging transactions were relating to crude supply, hydrocarbon inventory management and other commercial opportunities. Optimization and trading of CO2 emission allowances for MOL Group included compliance transactions, CER-EUA swaps - more than 7 million tons of allowances were traded altogether. MCT provided efficient energy position management for Hungarian entities amounted to around 1,5 TWh of electricity.
Supporting the efficient and secured oil, oil product, CO2 and energy management for MOL Group, MCT successfully implemented an Energy Trading and Risk Management System in 2010, which is representing the state-of-the-art control framework.
In 2011 Trading Platform is going to extend its electricity supply operation within MOL Group.
The Energy Portfolio Development continues to exploit the existing, but so far untapped resources and competencies of the company, primarily in the field of geothermal energy and inert gas utilization, thus enable MOL Group to enter the small scale power plant segment, as a new industry.
The planning and permitting phase of the inert gas pilot project, using natural gas with lower calorific value, with 0.8 MW electric capacity was finished in 2010. It will be followed by the project implementation and commissioning in 2011. In addition, there are a number of similar inert gas projects with much larger scale under preparation in different areas of Hungary. The total portfolio will enable MOL to establish sizeable market presence in the small scale power plant sector supported by its gas engines/turbines installed near the inert gas fields.
In the year 2010 several geothermal projects have been identified to be feasible both from geological and financial point of view, targeting significant electric and heat capacity. The first steps of MOL’s geothermal strategy is being implemented through CEGE, the dedicated geothermal joint venture, and now MOL looks forward to the launch of the geothermal concession tenders in 2011.
As the first step of the Group level energy audit of MOL Group, the Energy Efficiency team has completed the comprehensive energy efficiency assessment of TVK, which is followed by the energy audit of MOL’s main domestic Upstream and Downstream sites.