Hungary MOL to quit Nabucco financing, will sell stake in consortium if needed

MOL has been signalling to the Nabucco consortium since 2010 that it has serious concerns about certain elements of the project, Hernádi told reporters after the company’s annual general meeting today. As these have fallen on deaf ears MOL has decided to withdraw from the financing of the project, he added.

The company said earlier this week that it had voiced doubts several times due to the project's uncertain costs and gas supply sources and concerns over its structure and management.

Financing Nabucco has cost MOL EUR 20 million up to this day and the company decided to close its purse because it believes the consortium is not managed appropriately. Hernádi said the project that had been conceived at the end of the 1990s have not been adjusted to the altered conditions.

The Nabucco consortium includes Germany's RWE , Hungary's MOL, Turkey's Botas, BEH of Bulgaria and Romania's Transgaz.

He reiterated their previous concerns about who will pump gas into pipeline and at what prices and under what transit conditions it will reach the region.

Hernádi added that Central and Eastern Europe does need alternative supply sources since being supplied from a single pipeline carries immense risks and means a huge dependence, but vital questions about Nabucco (gas sources, costs, shipping costs) are still unanswered and this way MOL could no longer finance the consortium.

“There has not been an answer for over 10 years."

MOL will be able to get out of Nabucco’s financing if someone buys or takes over its stake in the consortium, Hernádi said.

"This is not a club where you can enter or which you can leave, but a company where we have a capital stake.

When and under what terms the shares could be sold depends primarily on whether they can find a buyer, he added.

There are ideas for alternatives to the Nabucco pipeline but none of these initiatives are at a stage where they can be called a project.

Hernádi said MOL’s management expected that the so-called Robin Hood tax will remain in the system as the budget is in no state that the new taxes could be phased out entirely. But the company has no estimates yet on how the higher rate (16% vs. 8% previously) will affect MOL since some issues have yet to be clarified also about the tax base.

• Tags:
• energy,
• natural gas,
• companies,
• pipeline,
• equity,
• mol