New initiative to establish a joint transmission company to operate an integrated Central and South-East European gas pipeline network

MOL Plc. announces its support for the initiative of its subsidiary, MOL Natural Gas Transmission Co. Ltd., to unite Central and South-Eastern Europe’s gas pipeline networks within a new and independent regional gas transmission company.

Unbundling gas transmission assets that are currently held separately, and combining them into a new company under joint ownership and management, could create significantly higher value for shareholders than operating separate systems.  The new company would have one of the longest gas pipeline networks in Europe (27,000km) and would be well positioned to leverage international capital markets to finance major projects. Consumers would also enjoy the benefits of an integrated platform for gas supply and a greater overall security of supply.

Gas transmission companies in Slovenia, Croatia, Bosnia-Herzegovina, Serbia, Romania, Bulgaria and Austria have all been invited to participate in discussions regarding the proposed new business entity. The initiative is open to other market players in the region as well.

The concept is based on the cooperation of equals. Retaining a governance structure in accordance with the energy policy objectives of all participating nations would be vital to implementing a successful project. Discussions between all the parties would seek to address how ownership and management of the company could be spread amongst the participating companies and countries. The involvement of national regulators will also be necessary to prepare precise operating regulations, identify technical conditions and secure safe, efficient, trouble-free and profitable operations of the gas transmission systems.

A jointly–owned regional gas transmission company would operate with significantly improved capital efficiency and capacity utilisation as a result of system inter-connections. The combined entity would realize synergies from integrated asset operation as well as from procurement and project implementation. As the leading blue-chip, gas infrastructure company in the region, it would have better access to the international capital markets for the future financing of major European-scale projects, such as the planned Nabucco pipeline.

The proposed discussions would also consider whether the new company could increase its capital base through an Initial Public Offering (IPO) in due course. This could allow participating countries to accelerate the development of transit gas systems between several countries as compared to relying purely on state funds with known limitations in the region.