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EBRD loan will finance Zsana underground gas storage facility in Hungary
The European Bank for Reconstruction and Development (EBRD) is contributing to a better balanced supply of natural gas in Hungary during periods of peak demand. A US$ 55 million (ECU 45 million equivalent) debt facility, signed today between the EBRD and MOL Magyar Olaj-és Gázipari Rt., a Hungarian integrated oil and gas company, will finance the construction and putting into operation of an up-to-date underground natural gas storage facility at the depleted Zsana natural gas field in south-eastern Hungary.
Peter Reiniger, Director of the Country Team for Hungary, said: "This investment will assist MOL to complete the construction of Zsana, which is a priority capital investment for the company and an important tool for a balanced natural gas supply during the winter peak periods. The Bank's financing uses an innovative flexible structure which offers MOL different types of debt financing instruments over the disbursement period. We expect to syndicate a significant portion of the facility to international banks in early 1995, effectively introducing MOL to the international banking market."
Zsana and other natural gas storage facilities are needed to assist MOL in balancing peak demand for gas with constant pipeline transmission capacity and domestic production and import supply. Gas is injected into the storage facility in the summer, then extracted and pumped into the national distribution network during the winter. With the completion of Zsana, natural gas storage capacity will rise from the current 1.8 billion cubic metres to 2.4 billion cubic metres
The total capital cost of Zsana is HUF 9.6 billion (approximately ECU 73.1 million at today's exchange rates), of which the EBRD's financing will represent approximately 62 per cent. The remainder of the cost is being financed by the World Bank under an existing loan facility approved in 1989.
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