Maintaining the security of domestic energy supply is a top priority of Hungary’s energy policy, the Minister of State for Energy Affairs and Climate Policy of the Ministry for Innovation and Technology said at the inauguration of the Konyár gas processing plant of O&GD Central Kft.

Pál Kaderják stressed that Hungary is required to import 80 to 90 per cent of its natural gas and oil needs, and in order to enhance energy independence and reduce dependence on imports, it is necessary to diversify procurements. “Standing on more than one leg contributes to supply security,” he said.

The Minister of State described the more effective and smarter utilisation of domestic resources as an enormous opportunity, adding that there are still major opportunities in the production of hydrocarbons with extensive traditions. He highlighted that the introduction of the system of hydrocarbon concessions in 2013 is beginning to bear its first fruit. He mentioned as an example the Konyár project of the Dutch-owned O&GD which contributes to satisfying domestic natural gas needs.

With the introduction of the concession system, the domestic exploitation market has become a multi-player scene, and companies have emerged on the market which use innovative North American technologies, the Minister of State indicated.

O&GD produces 1 million cubic metres of gas daily. This quantity covers almost 3.1 per cent of Hungary’s natural gas consumption, and accounts for approximately 18 per cent of Hungary’s domestic production which is able to meet 15 to 20 per cent of consumption needs in total.

Mr Kaderják said in the past few years they have taken steps in regulation which provide further incentives for the implementation of projects in the sector. He pointed out that in 2015 Parliament had reduced the rate of the mining fee payable on non-conventional natural gas exploitation from 12 per cent to 2 per cent, and in 2016 had reduced the minimum mining fee relating to hydrocarbon concessions from 19 per cent to 16 per cent. The Minister of State said between 2013 and 2018 the Ministry published six mining tenders, 34 applicants responded to the 55 calls for proposals, and contracts were concluded with all of them.

With the continuation of the concession system, the government seeks to increasingly offset the country’s dependence on imports with local developments and local production, he said, adding that they will release the seventh hydrocarbon exploration concession tender in the next few days. The Minister of State stressed that in the past 1 to 2 years the fall in domestic natural gas production had stopped, and it is to be hoped that there will be a slight increase in this field in the future.

With the project worth HUF 6 billion, the Dutch-owned O&GD built East Hungary’s most modern gas plant in the vicinity of Konyár. At present, the plant’s daily capacity is 480,000 cubic metres which could be increased to double that quantity later on. The company has been an active player of domestic hydrocarbon exploration since 2010; so far they have acquired one exploration licence and nine concessions in Hungary. The company conducts exploration in an area of more than 10,000 square kilometres, and has spent almost HUF 40 billion on projects in Hungary to date. It has one further gas plant in Mezőtúr.

(Ministry for Innovation and Technology/MTI)