MOL and Rossi Beteiligungs Ltd. to build a biodiesel component plant

MOL Hungarian Oil and Gas Plc. (MOL) hereby announces that in order to ensure the supply of the biodiesel component (fatty-acid-methyl-ester, FAME), it intends to buy 25% plus one share in Rossi Biofuel Ltd. from Rossi Beteiligungs Ltd. According to the preliminary agreement signed on 27 July 2006, MOL will purchase 25% plus one share in Rossi Biofuel Ltd via a capital increase issued at nominal value, resulting in a new share capital of Rossi Biofuel JV of around EUR 4.5 million. The completion of the transaction is expected in the next 3 months.

According to the EU directive 2003/30/EC, by 2010, member states should ensure biofuel content of 5.75% in motor fuels placed on their market. In EU countries, governments may facilitate the implementation of the biofuel programme using different instruments. In Hungary, according to Parliament decision, blending of biofuels will be promoted by differentiation in excise tax. The targeted share of bio-component blending is min. 4.4%. In case of diesel oil, a lower excise tax rate for fuels containing at least 4.4% biodiesel component will be applicable from 1 January 2008.

At the beginning of the year, MOL invited companies to bid for the contract to supply the required feedstock of bio-diesel component (FAME) or vegetable oil for bio-diesel production. 23 bids were submitted through the tender and 11 qualified. The supply contracts with 6 companies, including Rossi Biofuel Ltd., will cover the Group's FAME demand of over 200 kt p.a. for 5 years.

International demand for biofuels is growing more rapidly than demand for traditional oil products and the planned return in this area is in line with MOL's strategic return target. As a result, in addition to the supply contracts, MOL Group has decided to move into the production of the biodiesel component (FAME). MOL intends to purchase 25% plus one share in Rossi Biofuel Ltd., which is to construct a biodiesel component production plant with a nominal capacity of 150 kt per year at a MOL site in Komárom. The plant is expected to go on-stream in Q4 2007 and will sell most of its production (120 kt FAME p.a.) to MOL.

International trends indicate that demand is gradually moving towards cleaner fuels, and in the longer term, renewable energy sources. As a result, MOL Group is focused on the reduction of environmental pollution as part of its product development policy. For example, the Group has been producing and selling exclusively sulphur-free fuels since 1 July 2005. MOL has also started to produce and blend bio-ETBE, a biofuel component produced from vegetable alcohol, into motor gasolines. Today's agreements will ensure long-term supply of biodiesel component. MOL, as the quality leader company in the region will continue to pay outstanding attention to the future developments and the realization of emerging opportunities in the areas of renewable motor fuels.