Boston, MA -- (SBWIRE) -- 11/09/2012 -- BMI View: While national energy group MOL has great plans for the Central European region, maximising the impact of its downstream assets, it can do little to ease Hungary's growing dependence on imported oil and gas. Independent explorers have made some recent progress in locating untapped (largely gas) reserves, but the upstream picture remains relatively unattractive.

Main trends and developments we highlight for Hungary's Oil and Gas sector are:

- Falcon Oil & Gas has discovered a large Basin-Centred Gas Accumulation (BCGA) and a potential fractured oil and gas play in the Mako Trough area in south central Hungary. An independent report estimates potentially recoverable contingent resources at42.6mn barrels of oil equivalent (boe), based on a minimum 90% probability.

- Falcon in July 2012 concluded negotiations on a significant exploration programme with its partner, Serbia's Naftna Industrija Srbije (NIS). It covers the drilling of three exploration wells on the shallow Algyo play. The first well should be spudded in Q412, with the second and third in early 2013.

- Explorer Ascent Resources has estimated that around 50% of the tight gas in the Petisovci- Lovaszi area (on the Hungary/Slovenia border) can be recovered. Proven and probable reserves are almost 12bn cubic metres (bcm). Recent drilling success means that Ascent can now proceed with the re-development of the Petisovci field. The company is studying options that would see it bring gas production onstream at Pg-10 and Pg-11A during the first half of 2013.

- Over the medium term, an increase in overall gas consumption from an estimated 12.6bcm in 2012 to around 16.4bcm in 2016 is expected, followed by growth to 19.1bcm by 2021 - implying that net gas imports could reach 18.1bcm by the end the period. Efforts are being made to stabilise domestic gas production, but there is little sign of any major increase in volumes.

- Hungarian oil consumption fell from its peak of 198,000 barrels per day (b/d) in 1990 to a low of 135,000b/d in 2003. It has since recovered slowly, reaching an estimated level of 143,000b/d in 2012. We expect a gradual recovery - held back by the near-term economic outlook - with consumption reaching no more than 153,200b/d by 2016 and climbing to 163,600b/d by 2021. Domestic production is not expected to rise from recent levels, with steady slippage more likely. This will lead to higher import volumes, reaching 139,800b/d by 2021.

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