news letterOur mobile application

Weekly newsletter

What Could the Gigantic Oil Field Finding in Ormánság Bring to the Poor Villages?

Ábrahám Vass 2019.06.18.

An American-Hungarian company silently started the extraction of what could be Hungary’s largest oil field found over the last three decades. The case first made headlines last week, when economic site G7 published a report which led many to speculate about the consequences that this exploration would bring to this rural, poorer, less developed area.

The field was found in Eastern Baranya county close to the Dráva river, in a region called Ormánság. A private American firm called Aspect Energy is behind Hungarian Horizon Energy Ltd. (HHE) who possesses the concession. HHE has long been present in the area, having first researched land twenty years ago near Barcs. In 2015, they gained the concession rights of the nearby Lakócsa field and have since done exploratory drillings in other parts of that area which led to these latest findings.

Taking over market leadership?

Up until February, 6,000 barrels of oil have been extracted in the area. With the installation of nearly thirty more planned wells near Pettend and Istvándi, the amount of crude oil expected to be extracted is 11,000 barrels per day, which nearly equals leading Hungarian oil and gas company MOLʼs average of 13,000 barrels per day in 2018 domestically. As a matter of fact, these two figures combined cover less than tenth of Hungary’s total consumption.

According to G7.hu, however, the final amount could even be higher, estimating 14,200 barrels per day, as each well will be able to extract around 475 barrels per day. The planned volume of a large collection facility soon to be built on the outskirts of Kétújfalu would also make this possible. In addition, another HHE pipeline from Drávapalkonya would also be built. From the collection facility, a long pipeline would carry the oil to nearby town Szigetvár, where a large oil transfer station would be set up for rail transport.

G7 also notes, that while HHE probably hasn’t paid more than Huf 200 million (Eur 631 thousand) for the concession, the mining fee calculated on the highest possible key (30%) would almost certainly generate billions of forints of revenue for the Hungarian state.

Damages, such as deterioration of air quality, caused by flaring, also worries many. Photo by Tamás Sóki/MTI

Environmental and social concerns

While business tax payable by the firms might easily ameliorate things in the villages, leftist daily Népszava reported that according to current information, only Kétújfalu, Gyöngyösmellék, and Várad can count on this form of income; two other nearby villages, Istvándi and Pettend, extremely hit by deep poverty, however -to this date- cannot. Furthermore, since oil companies bring their own qualified specialists and engineers, and other jobs highly automatized, it would hardly help with one of the micro-region’s biggest issue: reliable and long-term employment.

In addition, although wells will be surrounded by trees, and wouldn’t create much noise, locals have already complained about the environmental concerns and disturbances: cracks on the walls, noise made by trucks and exploratory drillings, and deterioration of water and air quality. Although up until now, road damage caused by the trucks were reportedly repaired by the company. This adds to the environmental concerns caused by the installation of such a large-scale infrastructure in such perilous areas like oil and natural gas extraction sites.

featured image: one of the wells near Kálmáncsa; via MTI/Tamás Sóki