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Hungarian multinational oil and gas company MOL Group has signed an authority contract with the Hungarian State that sets minimum levels of hydrocarbon extraction in Hungary for five categories for 2023 and 2024. As long as the company meets these levels, the extra mining fee is expected to be reduced by a maximum of USD 400-450 million retroactively over the 16 months between September 2023, and December 2024.
Under the government decree on extra-profit taxes, MOL has concluded an official agreement with the Hungarian State represented by the Supervisory Authority for Regulated Activities, MOL Group announced on the Budapest Stock Exchange website on Tuesday.
The contract sets a minimum level of hydrocarbon production in Hungary for MOL for five asset categories for 2023 and 2024. As long as MOL meets these minimum levels, the actual mining fee burden will be reduced retroactively, as set out in the regulation.
Zsombor Marton, Managing Director of MOL Group’s research and production unit, said in a statement that they were pleased that the Hungarian State had taken into account the producers’ concerns. As for their concerns, the increased level of the mining fee would not compensate for the investments in production that would improve Hungary’s security of oil and gas supply. The contract will allow them to make the investments necessary to maintain their production in Hungary, which is in the common interest not only of the signatories but of all domestic operators, he stressed.
In its statement, the Supervisory Authority for Regulated Activities stressed that
the production of two billion cubic meters of natural gas in Hungary is within reach.
They recalled that in order to maintain the cuts in utility costs, the government is committed to increasing affordable domestic production. Under the government’s decree,
an official contract model will be in place from September 1,
whereby mining companies can commit to further investment and increased production in return for a more favorable and predictable banded system in the royalty payments.
The Supervisory Authority for Regulated Activities, as the authority supervising the Hungarian mining sector, has successfully negotiated with the major players in the Hungarian hydrocarbon industry and the Hungarian Mining Association on the introduction of the new public contracting model, they said. As a result, an agreement was concluded with Mol Plc., Magyar Horizont Ltd. and O&GD Central Ltd., under which Hungarian natural gas production may continue to increase in 2023 and 2024, the authority concluded.
Via MTI, Featured image: Facebook/MOL