Gas & Power projects
POWER AND HEAT GENERATION
In December 2007, MOL Group, together with its strategic partner CEZ, the Czech Energy CompanyMOL Hungarian Oil and Gas Public Limited Company, signed a joint venture agreement to carry out three major investments in the Group’s Duna and Bratislava refineries: two combined cycle gas turbine technology units (CCGT), each with an installed capacity of 860 MW, which would result in a net electrical efficiency of 58% and thirdly, the revamp of the existing thermal power plant (TPP) in the Bratislava refinery.
The amount of energy produced will be able to create sufficient steam and energy sources to meet Duna and Bratislava refinery requirements. In addition, as a result of this strategic cooperation's original objectives, not only will MOL Group will be enabled to enter and gain significant share of the very attractive power market but further synergetic benefits could add value to the new value chain.
Preparatory work on the two 860 MW CCGT power plants developments is now proceeding smoothly. Based on the results of the last year’s cooperation, significant progress has been achieved: In the first half of 2011, the Hungarian CCGT received all the permits necessary to start construction. In October 2011, the main contracts were signed with Tecnicas Reunidas S.A. for construction and with Siemens AG’s service company for ensuring plant operations and maintenance of equipment.
With the signing of the contracts, the first phase of the investment started. The second phase, the construction – subject to the final investment decision by MOL Group and CEZ – is expected to be launched by the end of the first half of 2012. Total investment costs will be approximately EUR 600 million, 15% lower compared with preliminary feasibility study expectations due to lower actual implementation costs. This power plant will have one of the most modern technologies in the power generation with high efficiency and the lowest marginal cost.
The focus of the Slovak CCGT project was on support activities related to the submission of a Territory Decision request to the Regulatory Office for Network Industries (URSO), in line with an approved and valid Environmental Impact Assessment (EIA) at the end of 2010. The TPP project, that was launched in Bratislava in 2010 in now proceeding according to schedule. The Flue Gas Desulphurization unit will be completed by the first quarter of 2012. With this investment, the TPP will comply with stringent long-term EU norms regarding sulphur dioxide (SO2) and dust.
From 2013, after the capacity increase of the power plant in parallel with the environmental investment, the TPP will satisfy more effectively the Bratislava refinery’s full electricity and heat demands due to the higher efficiency of the new equipment.
With two years operational experience, the underground gas storage facility, with a total mobile gas capacity of 1.9bn m3 (of which 1.2bn m3 is strategic and 0.7bn m3 commercial) has proved to be a reliable part of Hungary’s domestic gas infrastructure which guarantees security of supply. In its second full-length commercial period the facility’s injection and withdrawal units ran smoothly.
MMBF has succeeded in delivering satisfactory business solutions to challenges caused by changes in the domestic regulatory environment with regard to the strategic underground storage business. The risks associated with the activity have increased slightly, the changes have had no effect on the commercial storage business. The company’s ability to generate cash flow remains secure.
MMBF’s financial status also remains stable. The redemption of one of its investment loans, which was issued by the European Bank for Reconstruction and Development, with a value of EUR 200m, is on schedule.
Besides its core business, MOL Group UpstreamExploration and Production Segment. Portfolio Development strives to make use of existing, but so far untapped, resources such as geothermal energy and highly inert gases.
MOL intends to investigate the energy utilization potential of gas reserves with high inert content in a pilot project. After completing the permitting and implementation phases, the pilot small scale power plant will start operations with an electric capacity of 0.6 MW, in the first quarter of 2012. A number of similar investments aiming at utilizing low calorific value gases are under preparation on a much larger scale than the pilot project. The total portfolio of gas-powered engines and turbines planned for installation close to inert gas fields will enable MOL to establish sizeable market presence in the small-scale power plant sector.
In 2011, geothermal project development was influenced by some external, mainly regulatory, changes. Pursuant to the Government decree of 29 June 2011, complex environmental impact and sensitivity analyses were carried out in 4 areas which made the announcement of concession tenders and the launch of our effective geothermal strategy implementation possible. Meanwhile CEGE Ltd. specified its financial and geological model and now awaits the publication of geothermal concession tenders in the first part of 2012.
MOL Group at a glance
Historical summary of financial information
Key group operating data
Management Discussion and Analysis
Integrated Risk Management Function
Table of contents