The success of Hungarian oil and gas company MOL is based on its transformation into a regional leader and a player on international markets, MOL supervisory board chairman György Mosonyi said at an event organized by the American Chamber of Commerce (AmCham) in Budapest on Tuesday.
In a review of the company's last ten years, Mosonyi said MOL's management realized in 1999 that the company had achieved everything it could within Hungary's borders. At the same time, the region's energy industry markets were undergoing a consolidation, which created the opportunity for expansion in neighboring countries, he added.
The government's decision to issue MOL's shares when it was privatized was of key importance, he said. Thus the company was exposed to market forces which contributed to its open and transparent restructuring and its increased competiveness, he added.
At the time, MOL set as goals for itself double-digit annual growth, exceeding that of all of its competitors in the sector. It sought to be the most profitable company in the sector and raise its market capitalization from $3 billion to $10 billion within five years.
Achieving the goals was supported by the restructuring of the company's portfolio, the establishment of a system for corporate excellence and the decision to put the commerce division in the forefront, Mosonyi said.
MOL acquired a stake in Slovakian peer Slovnaft and later in Croatia's INA, but it lost out to Austria's OMV in a bid for Romania's Petrom in the first part of the ten-year period, he said.
When the period of consolidation in the region ended, MOL concentrated on its exploration and production division as oil prices rose. Today, production generates 60-70% of MOL's revenue, and about half of EBITDA is from foreign operations, he added.
MOL management defined the criteria for success at the start of the company's growth phase, he said.
"It was then we decided that representing shareholders' interests, taking decisions based on economic rationality, remaining committed to society and to the company's workers, and keeping both the written and unwritten rules of business ethics was the key to success," he added.
The makeup of energy resources is likely to completely change in 20-30 years as fossil fuels are used up. Until a substitute technology is available, the goal will be to use hydrocarbons more efficiently, he said.