Magyar Földgáztároló Zrt. (Hungarian Gas Storage Ltd)

Supplying security

Following months of discussion, state-owned MVM Hungarian Electricity Ltd acquired the previous E.ON Földgáz Storage and Trade companies, valued at approximately HUF260 billion.

The transaction includes all shares of the natural gas trading and storage firms, including the underground gas storage facilities and all natural gas stored there. This acquisition is in line with the Hungarian government’s plans to make all gas storage units state-owned, which will ensure security of supply and also control gas prices on a long term. “From 1st October our name became Hungarian Gas Storage; the takeover process took from March to October and the company is now 100 per cent state owned. Aside from these developments the business is the same, we still have the four storage sites with a total capacity of 4.4 billion cubic metres and still have the same customer base,” explains Mr. László Fritsch, CEO of Hungarian Gas Storage, previously board member of E.ON Földgáz Storage.

The main client of Hungarian Gas Storage is the Hungarian Gas Trade Ltd, however it also works with third party firms such as the Hungarian branch of RWE, GDF Suez, as well as ENI. “We also work with a couple of smaller companies with smaller shares on the Hungarian gas market, such as Shell, Exxon and some others,” says Mr. Fritsch. “Over the past two to three years we have tried to introduce some new products to enhance the service we deliver to our customers in order to fulfil requirements of clients from the biggest to the smallest range. The so-called virtual product enables us to satisfy injection needs during withdrawal periods and vice versa, as well as the withdrawal needs of the customer throughout the injection period. The second product we have introduced over the last 12 months is the Flex Plus, which allows customers to acquire additional flexibility and we also have products to enable customers to buy additional peak.”

Furthermore, Hungarian Gas Storage is currently attempting to implement a gas loan product that can be offered to the customers on a 30-day period. However, the product is still under approval by the responsible authorities, there are already requests from more customers to support their portfolio through this product.

In Hungary today, natural gas is one of the country’s most important energy sources, and Hungarian Gas Storage is the country’s largest commercial natural gas storing firm. As part of the MVM Group the company has adopted MVM’s values in all operations, which includes responsibility for all employees, the environment and society. On top of this, the company is customer and performance focused; open to improvements and strong on teamwork, with a core objective to ensure long-term gas supply for Hungary throughout the winter period and to participate in the country becoming an unavoidable player in Central Europe.

“Our location is highly advantageous to us as we are in the centre of Europe, which means we are able to offer flexibility not only to Hungary but to the Central European region as a whole. We keep trying to gain export deals with limited success for the time being, however this is an area we believe to grow in the future,” highlights Mr. Fritsch. “Furthermore, our location enables us to offer security of supply, which will make us crucial not only to Hungary but also to Romania, Croatia and even Ukraine.”

The company’s four primarily sandstone facilities were first built in the 1970’s and were owned and operated by MOL before being acquired and privatised by E.ON Ruhrgas in 2006. They are located near the towns of Hajdúszoboszló, Zsana, Pusztaederics and Kardoskút. Two of the sites have the majority of the gas capacity share, while the other two are much smaller, as Mr. Fritsch discusses in more detail: “Zsana is the largest site and the flagship of the company, with more than 2.1 billion cubic metres of gas capacity. The second largest is Hajdúszoboszló with 1.5 billion cubic metres capacity. Pusztaederics and Kardoskút both share 300 million cubic metres in total, with Pusztaederics particularly important in the equilibrium of the whole system, as it is the only site in the western part of the country.

“To fulfil all customer demands, our four storage sites and their technical flexibility are of key importance. It happened several times that during the summer injection period one of the sites was operating in withdrawal mode. To ensure the maximum flexibility it is also crucial to minimise the time-need of switching from injection mode to withdrawal. Thanks to the earlier developments, Zsana today can change its operation mode within less than 12 hours.”

Following this development of the Zsana site, which ran from 2007 until 2009 and enhanced mobile capacity by over 400 million cubic metres, there are potential plans to reconstruct the injection part of the Pusztaederics site. “The filling level of the storage is lower than previous years therefore we might expect challenges during the next months, however the storages are in proper technical condition so we are confident to provide the necessary security of supply for our customers,” says Mr. Fritsch.

Despite the challenges it has faced, Hungarian Gas Storage has a strategic focus for the years ahead: flexibility to help balance the difference in demand between summer and winter peak consumption, optimisation of trading tools and security of supply. On top of this, the company’s long-term plan is not to increase capacity, but to ensure its sites operational function as efficiently as possible through ongoing refurbishments.

Magyar Földgáztároló Zrt. (Hungarian Gas Storage Ltd)
Services: Gas storage