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Mol's Slovnaft unit to establish biofuel venture in Slovakia

Bratislava-based Slovnaft AS, 98% controlled by Mol Nyrt, the largest oil company in Hungary, will set up a venture with Envien AS, a Slovak company, that will build a € 30 million ($38 million) plant to make bio-components for diesel fuel, spokeswoman Hana Simkova said. Slovnaft will invest about € 1 million to acquire 25% plus one share in the venture and cover a proportionate part of the project's investment needs, she said in a phone interview from Bratislava. The plant will process rapeseed to make about 100,000 tons of bio-components a year. As much as 70% of that will go to Slovnaft. The factory, to be located in Leopoldov, in western Slovakia, will start production by early 2008, Simkova said. Demand for biofuels has been rising amid soaring crude-oil prices and growing government regulation aimed at reducing greenhouse emissions.

Mol is negotiating on purchasing 220,000 ton bio-diesel component and vegetable oil per year between 2008-2012 with seven suppliers. Product development offers of Mol Group have been focusing for many years now onto securing major improvement in the effects of our key products onto the environment. We deem very important to give support to any initiative that has emerged with the purpose or intention to apply renewable energy resources under competitive conditions. In addition to the primary target, wider consumption of the renewables in the transport and traffic segment can also facilitate reducing the EU energy dependency, and offer new opportunities for the sustainable rural development. As far as motor gasoline is concerned practical implementation has already started. Mol has replaced the MTBE component (as the "standard" component in the tradition motor fuel) with bio-ETBE, which is produced in Mol's plants from ethanol of biological origin. Mol started the blending operations in summer 2005, and 70 % of the motor gasoline distributed by Mol already contains an average 2 % bio-ethanol.

Developments have begun also with gas oil. Mol issued an invitation to bids in January 2006 for supplying the required feedstock, specifically for supplying vegetable oils as feedstock for bio-diesel and bio-diesel component. There were 23 bids submitted to the tender, and 11 were qualified. Mol is negotiating with seven potential suppliers, and the contracts will be soon signed. We can find six Hungarian bidders among the said suppliers, and they would supply for the Hungarian and export needs, and the one Slovakian bidder would supply feedstock for the Bratislava Refinery. The contracts will ensure for Mol to cover all demands that may emerge after 2008 and until 2012, and thus we will be able to secure our presence in the relevant target markets with our top-quality diesel oil in compliance with the relevant EU Directives, i.e. with 5.75 % bio component. (Bloomberg,