Hungary's MOL, MVM sign trade agreement for Caspian region oil supplies, including Shah Deniz condensate
BAKU. May 23 (Interfax) - Hungary's MOL Group has signed an oil trading agreement with energy company MVM, providing for joint supplies of oil and condensate from the Caspian region to Turkey's Ceyhan terminal via the Baku-Tbilisi-Ceyhan (BTC) pipeline, from where the feedstock will be delivered to MOL's markets.
"MOL Group and the MVM energy group have signed an oil trading agreement to further diversify energy supplies in the region [Central Europe], particularly for landlocked countries such as Hungary and Slovakia. Under this cooperation, MOL will be able to increase the volume of alternative oil processed at its refineries by up to 160,000 tonnes per year. Both companies will transport oil and condensate from the Caspian region to the Ceyhan terminal in Turkey via the Baku-Tbilisi-Ceyhan (BTC) pipeline, from where it will be delivered to MOL Group's markets," MOL said.
MOL has been working with Azerbaijani oil for several years, the group said. In 2020, the company acquired a stake in the Azeri-Chirag-Gunashli (ACG) oil field block, from which it supplied 5 million barrels of oil to Central Europe last year. MVM entered the Azerbaijani market as an investor in 2024, acquiring a 5% stake in the Shah Deniz gas condensate field production sharing agreement (PSA).
"To further diversify the region's energy supply, MOL purchases an average of 100,000 barrels of condensate per month [equivalent to one tanker shipment] from the Shah Deniz field. The commercial cooperation between MOL and MVM provides for additional supplies equivalent to approximately two tankers of Azerbaijani oil per year, on top of the monthly shipments MOL already handles," it said.
"In recent years, MVM Group has implemented several initiatives to diversify natural gas supplies to Hungary and neighboring countries. We are proud to now also contribute to strengthening oil supply security. MVM's acquisition of a stake in Shah Deniz is not only a sustainable financial investment but also a contribution to the region's energy security, as part of the produced condensate is delivered to Central Europe. The partnership between MVM and MOL is an example of an efficient logistics model between Hungary's two largest energy companies. The agreement fully aligns with the country's strategic goals for energy security, as well as MVM's long-term strategy until 2035," MVM Group Strategy and Transactions Director Reka Martini was quoted as saying.
MOL has been systematically working to diversify energy supplies to the region in recent years. The company has tested 14 different alternative crude grades and continues to enhance the technological flexibility of its refining capacity.
"MOL's position is clear: the more oil sources we can secure for landlocked countries in the region, the more reliable and affordable fuel supplies will be. We have been investing for years in modernizing processing technologies and infrastructure, as well as building a diversified procurement portfolio. The commercial agreement with MVM is an important step forward, providing us with a predictable and manageable solution," MOL Downstream Executive Vice President Gabriel Szabo said.
MOL has been using Azerbaijani oil at its refineries for several years. In March 2023, the company delivered a shipment of Azeri Light crude from the ACG block, in which it acquired a stake in 2020, to its Slovnaft refinery. The shipment volume was 80,000-90,000 tonnes. It was shipped from Ceyhan and delivered to Bratislava via the Adria pipeline. Before 2023, the Slovnaft refinery successfully tested various crude grades from the Middle East and the Caspian region, but processing feedstock from its own field marked a key milestone for the company.
"The international cooperation between Hungary's two leading energy companies has not only economic but also strategic significance, as jointly chartered tankers directly contribute to strengthening the country's energy security," it said.
As reported, Hungary's MOL currently holds a 9.57% stake in the Azeri-Chirag-Gunashli development project and an 8.9% stake in the Baku-Tbilisi-Ceyhan pipeline project in Azerbaijan. In addition, on September 20, 2024, the State Oil Company of the Azerbaijani Republic (SOCAR) and MOL Hungarian Oil and Gas signed a memorandum of understanding on exploration, development, and production at the onshore Shamakhi-Gobustan block.
Hungary's MVM Group also acquired a 5% stake in the Shah Deniz project from Azerbaijan's Cenub Qaz Dehlizi (CQD) and a 4% stake in the South Caucasus Pipeline Company (SCPC, the operator of the South Caucasus Pipeline) from Azerbaijan Gas Supply Company Limited (AGSC). The agreement was signed on June 5, 2024, and the deal closed on August 30.
