In Hungary, only FGSZ Földgázszállító Zrt. (FGSZ) has a licence for natural gas transmission and system operation. Both activities are carried out under market conditions regulated by law. The company possesses and operates the high-pressure natural gas system covering the entire territory of Hungary. Aside from domestic natural gas transmission, FGSZ is also engaged in transit activities to Serbia, Bosnia-Herzegovina and export to Romania and Croatia. In international comparison, the company’s pipeline network represents the highest technological standards. FGSZ ranks among the region’s companies of strategic importance. Its dynamism and efficiency make the company one of the most significant natural gas suppliers in Europe.

Competitive advantages

Good geographical position: Due to its geographical location, FGSZ also has a key role in terms of regional transit transmission. 

High quality standards: The company implemented a certified quality assurance system in accordance with the ISO 9001 standard in 1997. The certification was issued by SGS (SGS Hungary Kft. in Hungary) which is a highly acclaimed certification company in the oil and gas industry. The operation of the quality assurance system is reviewed semi-annually by SGS Hungary Kft. and annually by the Hungarian Office for Mining and Geology. 

Stable cash flow: The operation of FGSZ’s high-pressure natural gas transmission grid of approximately 5,800 km – covering the entire territory of Hungary – and the discrimination-free sale of its capacity and supplementary services provide a stable cash-flow for the group.

“Best Employer”: FGSZ Zrt. also has considerable merits as an employer. In 2009 the company achieved first place in its category in the Best Employer Survey conducted by Világgazdaság-Hewitt and also won the first place in the industry competition. The company was also selected as the best workplace in the country and was also ranked among the best workplaces in the regional survey of The Best Employer of Central-Eastern Europe.

The most important events of 2010

The construction of the Romanian and Croatian Interconnector was successfully completed

The transmission through the interconnectors between the Hungarian and Romanian natural gas transmission networks started in July 2010. The Hungarian section of the pipeline is 47 km long and has a maximum capacity of 4.8 million m3 /day. The total value of the investment was HUF 9 billion. The Hungarian-Croatian interconnector, Városföld–Slobodnica was also completed. The Hungarian section of the pipeline is 205 km with a maximum capacity of 19.2 million m3/day. Costs of the investment in Hungary amounted to HUF 80 billion. Both pipelines are suitable for bidirectional transmission therefore the implementation of the interconnectors considerably improves the safety of supply as with the completion of the interconnectors the domestic gas pipeline network may have four input points in addition to the previous two.
During the pipeline construction works completed in 2010, FGSZ paid special attention to the protection of the natural resources of the area concerned, environment and nature protection and the improvement of air purity. The company also maintained regular contact with the public and social organizations during the construction works.

FGSZ operates under Independent Transmission Operator model (ITO)

The publication of Directive 2009/73/EC brought about fundamental changes for FGSZ Zrt. In the spirit of enhancing market liberalization, this directive established a new comprehensive framework for natural gas takeover, storage and distribution, including the regulation of the company’s operation. The EU directive was included in the Hungarian legislation with the appropriate amendments as a result of which in the future FGSZ operates under a new model called ITO (independent transmission operator). During 2010 the Company implemented all the necessary measures to continue its operation under the new system operation and gas transmission model following the deadline for submitting the licence application.

Daily Natural Gas & Capacity Market (NFKP) a new special electronic trading platform for natural gas

Pursuant to Act XL of 2008, FGSZ Zrt. provides a new type of service for its clients as of 1 July 2010. With the establishment of the Daily Natural Gas & Capacity Market (NFKP) a special electronic trading platform was created where natural gas traders, private users, natural gas producers and other system operators – such as natural gas storage operators or distribution system operators – can sell and buy natural gas and high-pressure gas transmission network capacities. Due to NFKP, market players can plan their daily tasks more effectively and the risk posed by day-end balancing is also lower therefore they can provide end users with smoother and more reliable services. NFKP represents an important step towards FGSZ’s long-term objective which is the establishment of a more competitive Hungarian natural gas market with higher liquidity.

Outlook
 

North-South Gas Corridor and NETS cooperation

The North-South Gas Corridor is one of the key projects of the European Union. Its main objective is to diversify the gas resources of the region between the Baltic Sea and the Adriatic Sea and create an integrated gas market. These goals are attainable through the strategic cooperation of the regional natural gas supplier companies and the establishment of common directives in terms of energy policy. FGSZ’s Project NETS (New European Transmission System) provides a frame for the creation of the North-South Gas Corridor.
In order to achieve the aims described above, FGSZ launched the preparation works of the construction of the Hungarian-Slovakian interconnector and also conducts further negotiations regarding the Slovenian interconnector. The former would facilitate the creation of the North-South Gas Corridor while the latter would contribute to the possible construction of the Hungarian-Slovenian-Italian transmission system.