Interview with Sándor Fasimon
Executive Vice President,
Exploration & Production Division
How does MOL Group plan to counterbalance the production decline of its legacy assets?
Production from some of our Central European legacy assets started as long ago as the 1930s. As a result, production levels are declining today as part of the trend towards natural field depletion. However, it is important to note that the EOR/IOR techniques implemented have proved successful in counterbalancing this process to some degree. Nevertheless, MOL Group is aware that to maintain the competitive edge of its upstream portfolio, we must also enter into new exploration and production assets with substantial upside potential. This is precisely why we focus on large-scale projects such as those in the Kurdistan Region of Iraq, Russia, Kazakhstan and Pakistan.
What regions would MOL Group’s future upstream acquisitions target?
Although Central Europe remains the home base of our operations, MOL Group already has a well-established presence in the CIS region, strategic partnerships and vital assets in the Middle East, as well as stakes in North African and Sub-Saharan African projects. In addition, as part of our exploration-led strategy, we have identified a number of other regions which meet MOL Group’s selection criteria regarding geological potential, investment requirements, country risks and geographic distance. Right now we are actively monitoring opportunities, both in regions where we are already present as well as in areas new to us.
Which assets would you consider to be the flagships of MOL Group’s upstream portfolio?
There is further value in Kazakhstan’s Fedorovsky Block, where appraisal activities are underway. The start of production is currently scheduled for 2015. I think the time has come to unlock the potential of this asset. Our interests in the Kurdistan Region of Iraq’s Akri-Bijeel and Shaikan Blocks are also of vital importance to MOL Group’s exploration and production activities. These possibly company-maker projects can provide huge exploration upside potential in a region of strategic geopolitical importance. Following two major discoveries in the last few years, the projects are currently in the appraisal phase.
Speaking of the Kurdistan Region of Iraq, what are MOL Group’s plans for the coming years?
Our work programme for our assets in the Kurdistan Region of Iraq includes an intensified exploration and appraisal programme with two exploration and seven appraisal wells planned for 2012-2013. In the Shaikan Block, the appraisal programme is nearing completion and early production is ongoing. In the Akri-Bijeel Block, exploration activities will take place in parallel with the appraisal of the Bijell discovery. The construction of surface facilities for early production in the Akri-Bijeel Block is scheduled for the second half of 2012, while we further assess marketing options.
How have the events of the “Arab Spring” affected MOL Group operations in the region?
While the “Arab Spring” affected a number of countries in the Middle East and North Africa, from MOL Group’s perspective the most profound impact was on our Syrian operations. MOL Group is in daily contact with its Syrian partners and has taken all necessary steps to comply with EU sanctions. We do all we can to ensure minimal losses, the safety of our employees remains our primary concern. On 27 February 2012, INA published it had delivered force majeure to the General Petroleum CompanyMOL Hungarian Oil and Gas Public Limited Company of Syria. MOL Group continuously monitors daily developments in Syria and we hope for a speedy and peaceful resolution of the current situation as soon as it is reasonably possible.
How do the Exploration & Production Division’s activities contribute to MOL Group’s successful performance in the field of sustainable development?
Contributing to social and economic development in the countries where we operate has always been a primary MOL Group concern. In Pakistan, we take part in several high-impact social programmes: for example, MOL Group has supported eye hospitals, free medical camps, water schemes for the local population, the construction of school facilities as well as plantation programmes. In the Kurdistan Region of Iraq, our focus has been on investing in the future. We sponsor the European education of several local students and have even donated school satchels to elementary school children, for instance. Other points of our focus naturally include ensuring the safety of our operations and minimising their environmental impact. Furthermore, we stress the importance of human capability development through employee training.
How would you describe the Exploration & Production Division’s outlook for the coming year?
I believe 2012 will be an exciting year both for the oil and gas industry in general, as well as for MOL Group in particular. With the industry recovering from the crisis, we expect a number of new upstream opportunities to open up and for new trends to emerge. MOL Group will do its best to meet the challenges of the post-crisis environment. First, we wish to compensate for the production decline of some of our assets. Second, we intend to take on new projects and to increase our booked reserves. Overall, I am convinced that 2012 will be a year of challenges and opportunities and I am pleased to say I believe MOL Group is ready to face both.
What plans does MOL Group’s Exploration & Production Division have for the longer term?
Most of our existing assets are scheduled for drilling in the next three years as a way of transforming our exploration assets into production. This would entail capital expenditure in excess of USD 3 bn to unlock the potential of key organic growth projects. Annual production growth rates are expected to exceed 3-4% from 2014 onwards. Our new, exploration-driven strategy will provide the basis for long-term growth. We aim to add further high-impact assets to our portfolio, while, of course, remaining open to non-organic growth opportunities as well.
MOL Group at a glance
Historical summary of financial information
Key group operating data
Management Discussion and Analysis
Integrated Risk Management Function
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