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Mol signs contract on acquiring 62% of strategic gas storage company

Hungary's Mol announced today that on January 3 it acquired 62% ownership in the Hungarian Hydrocarbon Stockpiling Association (MSzKSz), to develop a strategic gas storage facility with 1.2 billion cubic meters capacity.

The planned gas storage facility will be developed from a producing gas field Szőreg-1 owned by Mol Nyrt. The necessary capital expenditure is Ft 150 billion, which includes the Ft 65 billion purchase price of the field which is sold by Mol to MSzKSz, Mol said. The development is expected to be completed by 2010. The Szőreg-1 field has 2.4 billion cubic meters of cushion gas. In 2006 the field produced more than 450 million cubic meters gas and 32,000 tons crude oil.

Mol said that the Ft 65 billion purchase price will fully compensate for the cashflow not earned from the production. Mol said that the planned investment fits well into its strategy, and the return on the investment is in line with its targeted return. Mol was declared the winner of a tender to build the reserve in November. E.ON Földgáz Storage was second in the tender. Earlier estimates put investment costs in the range of Ft 100 billion – Ft 150 billion, not including the price of gas stored for reserve.

According to unofficial estimates, MSzKSz would collect annual revenue of Ft 12.7 billion from fees for operating the reserve. Legislation approved last spring requires the construction of a strategic gas reserve with capacity of at least 1.2 billion cubic meters by 2010. (Mti-Eco)