Gas Midstream

Gas Midstream

The structural modification, influencing the former Gas and Power segment, called Gas Midstream from Q1 2011. Energy generation was transferred to the Downstream segment, regarding the determinant internal sales within the MOL Group to the Downstream segment, while INA’s gas wholesale trading subsidiary has been also reclassified to this segment.

The most important profit contributor to the Gas Midstream segment’s operating profit excluding special items remained the FGSZ Ltd, however the temporary freeze of gas tariffs by 1 July 2010 carried over negative effect for the H1 2011 result of gas transmission business. Prirodi Prin (the gas distributor company of INA) accounted HUF 5.1 bn loss in Q4 2011, due to the increasing import price and the application of the maximum level of the natural gas price for the eligible customers.

Fourth quarter 2011 results

Operating profit of FGSZ Ltd increased by 23 % compared to the same period of last year. Price regulation of July 2011 was changed in line with the tariff amendment principles specified by laws, resulting in an increase of revenue on domestic transmission, while in Q4 2010 tariff freezing of July 2010 caused lower operating profit.

Increased transmission volumes reflects seasonality, transported volumes on the Romanian and Croatian interconnector show increasing tendency. Revenues increased accordingly, moreover, foreign exchange rate development also had a positive impact on transit revenues. Compared to the base quarter recognition of previous investments in regulatory asset base also increased revenues.

Full year 2011 result

Operating profit of FGSZ Ltd. increased by 6% as higher revenues were able to increased expenditures.

Realized revenue on domestic transmission was HUF 74 bn which is HUF 7 bn (10%) higher than the base period. Revenue on capacity booking increased compared to the base period mainly due to surplus daily and monthly capacity bookings, recognition of Croatian interconnector pipeline in tariffs and due to the latest adjustment of the domestic tariff system, from H2 2011 new tariffs were calculated in virtue of the actual capacity bookings.

Revenue from Serbian and Bosnian natural gas transit was HUF 19.5 bn which shows a HUF 2 bn (11%) increase compared to the base period as southward transit transmission volumes increased by 4% and favourable change in foreign exchange rate had a positive impact on revenue of transit transmission. Revenue from capacity booked on the Hungarian- Romanian interconnector increased by 51% compared to the base period because capacity booking started from July 2010.

Operating costs were HUF 7,4 bn higher than the base mainly due to increased natural gas consumption of the transmission system, increased natural gas price and due to depreciation recognised on the Hungarian- Croatian interconnector recently capitalized.

MMBF Ltd.

Operating profit, excluding special items of MMBF Plc. was HUF 13.4 bn in 2011. The company accounted capacity booking fee on the 1.2 bn cm strategic gas storage and on 700 mcm commercial gas storage. In addition to storage activity, MMBF has sold the oil and condensate production of Szőreg-1 field with profit.