New Energy market report from Business Monitor International: "Hungary Oil & Gas Report Q1 2014"

Boston, MA -- (SBWire) -- 01/06/2014 --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. Hungary's commitment to the new South Stream gas pipeline scheme and improved regional interconnectivity should provide greater long-term supply security for natural gas.

The main trends and developments for Hungary's oil and gas sector are:

- Falcon Oil & Gas discovered a large Basin-Centred Gas Accumulation and a potential fractured oil and gas play in the Mako Trough area in south-central Hungary. RPS Energy in a report dated January 2013 estimates that eight prospects in the Algyo Play contain gross unrisked recoverable prospective gas resources of 568bn cubic feet, or 16.1bn cubic metres (bcm) (P50).
- In July 2013, Falcon completed the first well of an agreed a three-well drilling exploration programme with Serbia's NIS (owned 56% by Gazprom), to target the Algyo Play. Testing of the well will begin in November 2013, with the second and third wells planned to be completed by H2 2014. 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 12bcm. However, while prospects remain good, Ascent's recent restructuring led it to sell its Hungarian assets to PetroHungaria earlier in 2013.
- Hungarian state owned utility MVM completed its acquisition of German utility E.ON's local gas trading and storage units. The state now has control of four of the five storage facilities in Hungary.
- Hungary has invited bids from both foreign and domestic companies for seven new exploration licences, four for hydrocarbons and three for geothermal exploration, as it looks to ease dependence on imports. The hydrocarbon licences will be in south-eastern Hungary near existing fields, and the geothermal licences are in the eastern and south-eastern parts of the country, the national development ministry said in a statement. We are awaiting the announcement of the winners, which is expected within 90 days following a November 15 deadline to submit bids. The oil and gas concessions will be valid for 20 years and the geothermal ones for 35 years with extensions possible, it added.
- Over the medium term we currently anticipate gas consumption to remain flat as limited economic growth and high costs subdue demand. Imports of around 8bcm will be required over the forecast period. Efforts are being made to stabilise domestic gas production, but there is little sign of any major increase in volume.

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