Project description
and objectives:
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The EBRD is providing a €200 million unsecured corporate loan for the completion and conversion of a Szőreg-1 reservoir in the depleting Algyő oil field, Hungary into underground gas storage facility (“UGS”). The facility is ca 80% complete and will have 1.9bcm mobile and 25mcm/day peak capacity and is planned to be used for both strategic and commercial purposes after planned commencement of operations in January 2010 (strategic) and in March 2010 (commercial).
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Transition impact:
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The project will have positive demonstration effect by showing the viability of transferring the responsibility of developing, building and operating a gas storage facility that will serve both strategic and commercial purposes to a Joint Venture of an association of private sector gas traders and a private company. There could also be positive effects on competition in the provision of commercial gas storage and regional gas supply flexibility, as the construction and operation of the proposed facility will provide an alternative option to the existing monopoly. Enhancement of standards of corporate governance and business conduct will also be sought.
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The client:
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Magyar Olaj- és Gázipari Nyilvánosan Müködö Részvénytársaság, commonly referred to as MOL Hungarian Oil and Gas Public Limited Company (“MOL” or the ”Company”), a leading Hungarian vertically integrated oil & gas company and one of the leaders in the Central European oil & gas sector.
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EBRD finance:
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€200 million corporate loan.
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Total project cost:
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€611 million.
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Environmental impact:
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As a result of an Initial Environmental and Social Examination, and in line with the Bank’s Environmental and Social Policy (2008) the project was screened as ‘B’ for the following reasons:
- This is a brown field development. There has been significant oil and gas field development at the site over the past 40 years; there are over 1,500 wells, existing oil gathering stations, treatment plants and a very large gas processing station immediately adjacent to MMBF.
- The proposed project is not a significant expansion of the existing facilities (approximately 20%).
- The local environmental setting is not sensitive and has been used for oil & gas production for 40 years.
- There is no topographical relief and there is no risk of erosion. There is some farming in the area and agricultural productivity can be preserved through top soil stripping, preservation and use in re-cultivation.
- The installed wells (used for both injection and production) take very little land and coexist with surrounding land use, shown by agricultural use returning immediately adjacent to the well heads.
- The potential impacts can readily be identified and mitigated.
The project is being constructed at a former oil production field, and construction is about 80% completed; therefore, the due diligence focused on environmental management and planning as well as performance to date during project construction and development. Independent environmental consultants reviewed the project and proposed an Environmental and Social Action Plan (ESAP) and Stakeholder Engagement Plan (SEP). One of the main findings of the consultant is that the project has been developed and implemented to comply with National and EU standards.
Further, there is a high level of compliance with the EBRD PR’s. The Company has also developed a formal grievance mechanism to receive and facilitate resolution of concerns and grievances of the affected community. The few areas where additional actions are required to achieve full compliance have been addressed by the consultant and appropriate actions have been incorporated in the ESAP. These actions include the following:
- Additional measures relating to spill control contingency plan to protect the relatively shallow groundwater.
- Ongoing measures for monitoring soil and groundwater contamination.
- Implementation of measures for protection of endangered bird habitats and plant species.
- Noise level monitoring.
- Monitoring of NOX emissions of the gas turbines and compressors during the injection phase.
- Decommissioning plan.
- The project will disseminate information on environmental and social issues to the public in a more targeted and appropriate manners this will be monitored in accordance with the provisions of the SEP and the ESAP.
The ESAP has been adopted by the company and the implementation is covenanted in the Loan Agreement and will be monitored by the Bank.
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Technical
cooperation:
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None.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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László Szabó
Head of Capital Markets
Phone: +36 1 464 1033
Fax: +36 1 464 4775
E-mail: szabovl@mol.hu
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EBRD contact:
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Natalia Lacorzana, Operation Leader: lacorzan@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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Public Information
Policy (PIP):
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The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations.
Text of the PIP
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Independent Recourse
Mechanism (IRM):
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The EBRD has established the IRM to give local groups that may be directly and adversely affected by a Bank project a means of raising complaints or grievances with the Bank, independently from banking operations.
Guidelines for Making a complaint and the Rules of procedures
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