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EBRD approves gas development loan for MOL

The European Bank for Reconstruction and Development (EBRD) has announced it is helping Hungary enhance its energy security by providing a €200 million loan to MOL, Hungary’s leading energy company, to finance the completion of a strategic gas storage facility in the southern part of the country.

Situated in close proximity to Croatia, Serbia, Romania and Bosnia and Herzegovina, the gas storage facility will also play an important role in mitigating risks of gas shortages in the wider central European region.

The proceeds of the eight year loan will be used to complete the conversion of the Szőreg 1 reservoir into an underground storage facility. Upon completion, expected by January 1, 2010, the strategic gas storage will be able to ensure a continuous supply of gas for at least 45 days at a peak capacity of 20 million cubic meters per day. In addition to providing a strategic buffer for possible energy shocks, the new storage facility will also be used for commercial purposes.

This will increase Hungary’s commercial gas storage capacity by 20% and promote higher competition in commercial gas storage sector, currently dominated by one player, the EBRD said in the related press release. (press release)