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€150 million loan to MOL to cut emissions, improve environment
Hungarian oil and gas company to reach EU norms by 2005
The EBRD is lending MOL Hungarian Oil and Gas Company €150 million for investments aimed at upgrading the environmental performance of the company’s operations in Hungary. It is part of a €750 million financing package, alongside a €600 million loan MOL is raising from a syndicate of commercial banks for general corporate purposes.
Hungary has accepted all EU standards and conditions relevant for the oil and gas sector in its accession negotiations. As a result, MOL aims to reach compliance with the applicable norms by 2005. To achieve this goal the company plans to invest a total of €226 million – including the €150 million from the EBRD – over the next three years.
The largest portion will go towards refineries. A key element will be the construction of a new desulphurisation unit which will allow for production of more environmentally friendly fuels, to meet vehicle emission standards as specified by the EU for 2005. Other projects include emission reduction, transfer station modernisation and the reconstruction of several pipeline river crossings.
Under the loan terms, MOL is required to adhere to the Environmental Action Plan agreed with the EBRD and ensure that all relevant milestones are met. For its future acquisitions there is a requirement to carry out adequate due diligence and develop and implement action plans to bring new facilities and subsidiaries into compliance with international and local environmental standards and practices. This should have significant environmental, health and safety benefits.
“MOL welcomes the completion of its landmark €750 million financing package and, as a key part of this, the loan agreement with the EBRD. These transactions demonstrate the support of the banks for MOL’s strategy to become the leading oil company in central Europe and to maintain quality leadership, while meeting high environmental standards,” said Michel-Marc Delcommune, Chief Financial Officer of MOL.
Alain Pilloux, EBRD Business Group Director for Central Europe, said the Bank is pleased to provide financing intended to assist MOL in substantially improving its environmental performance. The transaction illustrates the EBRD's commitment to central European companies with regional strategies, and moreover the continuing transition and environmental role the EBRD can play in EU accession countries.
Budapest-based MOL was created in October 1991 and is a leading integrated oil and gas company and petrochemical group in central Europe. It is actively participating in regional consolidation, holding the majority in the Slovak refinery Slovnaft and most recently announcing the acquisition of a 25 per cent stake in Croatia’s oil and gas company INA.
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