Falcon Oil&Gas Ltd., the Canadian energy company that found natural gas in Hungary, said it's confident it can start production at the field, estimated to hold 600 billion cubic meters of the fuel.
„Naturally, we will produce here,” György Szabó, the head of the company's local unit, said in a phone interview yesterday. „This is our most rigid conviction. That's why we continually finance this project.” Szabó said the company will find a way to reduce production costs, denying a report yesterday by the Budapest-based newspaper Világgazdaság that the cost of pumping gas from the field might deter Falcon. Repeated phone calls to Világgazdaság's offices were unanswered. The company's shares traded at C$3.25 ($2.76) at 1:04 p.m. in Toronto, rising from a low of C$2.90 after the Világgazdaság report. The stock closed at C$3.59 yesterday, valuing the company at C$1.65 billion.
Falcon, based in Denver, has spent $150 million to explore the field in Makó, in southeastern Hungary near the Romanian border. The company has a 35-year production license and has built a pipeline connecting its first well with the pipeline network of Mol Nyrt, Hungary's largest energy company. The find gives Hungary Europe's third-largest natural gas reserves, behind Norway and the Netherlands and on par with Romania, according to Bloomberg data. It equals about 40 years of consumption in Hungary, which uses more of the fuel per person than any other European country except the Netherlands. Hungary's government, which has missed its budget deficit target every year since 2001 and is struggling to cut the European Union's widest deficit, is set to get as much as Ft 100 billion ($504 million) a year in mining fees, Világgazdaság said January 8. The country yesterday reported that its 2006 full-year budget shortfall was Ft 2.03 trillion. (Bloomberg)