The proposed project would finance the Company's environmental improvements and performance enhancement investments over the next three years to finish the process of reaching standards compliant with EU requirements. The project would include the environmental improvement of the Danube Refinery and other refining facilities, enhancements in Logistics and in the Exploration and Production Division, improvement to filling stations and the reduction in the emission of gas turbines and modernisation of gas transfer stations.
The proposed project would develop a structured programme, which would raise the profile and priority of the environmental improvements and enhancements in the ongoing process of meeting EU requirements. The project would also be visible and should invite replication among other industry participants or companies in other sectors affected by environmental considerations.
MOL is a leading integrated oil and gas company in Central Europe. Headquartered in Budapest, MOL is active in the exploration and production of crude oil and natural gas reserves; oil refining, wholesale and retail marketing. It also operates Hungary's natural gas transmission and underground storage systems.
A senior loan in the amount of €150 million over seven years.
The project has been screened B/1, requiring an environmental analysis of the proposed investment programme and an environmental audit of MOL's production and logistical support facilities as well as corporate environmental management practices. The project would likely result in significant environmental, health and safety benefits. In particular, as a result of this project, key production facilities (Danube Refinery and other refining facilities) and logistical infrastructure would finish the process of achieving compliance with Hungarian and EU environmental requirements by the end of 2005. An Environmental Action Plan (EAP) has been agreed with MOL and is currently being finalised to allow for effective implementation and monitoring by the Bank. The EAP will include measures to reduce atmospheric emissions, modernise the existing water supply and sewage systems, prevent spills and soil or groundwater contamination, replace or modernise existing pipelines, introduce energy efficiency measures and improve safety. A key element of the proposed programme would be construction of a new gas oil desulphurisation unit which would allow for production of less environmentally damaging fuels to meet vehicle emissions standards as specified by EU for year 2005.
MOL would be required to implement and adhere to the Environmental Action Plan (as agreed with the EBRD) in all aspects and ensure that all relevant milestones included in the Environmental Action Plan are met in a timely manner. As a condition of the Bank's financing, MOL would be required for all its future acquisitions to follow on carrying out adequate due-diligence and develop and implement action plans to bring the acquired facilities and subsidiaries into compliance with the international and local environmental standards and practices. The environmental due-diligence confirmed that MOL has a satisfactory environmental management system in place. Several of its facilities has been ISO 9001 and ISO 14001 certified. Environmental liabilities associated with past operation, are known and well documented, like at MOL's storage facilities. MOL has implemented and carried out a comprehensive clean-up programme, which will continue for the next years.
Mr Zoltan Szerencses, Head of Resource Allocation
Magyar Olaj- es Gazipari Reszvenytarsasag,
1117 Budapest, Oktober huszonharmadika u.18, Hungary
Telephone: +36 1 464 1070
Fax: +36 1 464 4741
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