Proposed mining royalty changes in Hungary are not expected to have material impact on MOL’s profitability in the medium term

MOL Plc. hereby informs capital market participants that the proposed amendment of the Mining Act (as accepted by the Hungarian Government and put forward for parliamentary discussion) which intends to raise the generally applicable rate of hydrocarbon mining royalty from 12% to 30% and to modify the formula for the supplementary royalty (payable after production from natural gas fields put into production before 1998), while certainly not a positive development for the domestic hydrocarbon industry, will have only a limited impact on MOL, as such changes will be relevant only for those fields put into operation after December 2005. This is due to an agreement which was signed by the Hungarian Government and MOL based on the Mining Act in December 2005 with a 15 year duration. This agreement stipulates contractually the royalty rate and calculation on all fields put into production before end of 2005 and accordingly, MOL’s royalty payment obligation until 2020 from such fields will be based on the royalty regulations, which were in place in the time of the aforementioned agreement. Therefore, the amended royalty rate and calculation will not have a material effect on the profitability of MOL’s exploration and production business. This agreement also includes a clause which secures a right for both parties to terminate the agreement in case of a change of control in MOL.

MOL intends with other mining companies through industry associations to initiate negotiations on possible changes before passing the proposed bill in order to mitigate the longer-term impact of the proposed legislation, especially with a view to maintain a strong motivation for all interested oil and gas companies to explore for new hydrocarbon resources in the country and to secure stronger financial incentives for higher cost/higher risk exploration and development techniques.