Strategic Hydrocarbon Stockpiling in Hungary by dfhdhdhdhjr

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									      Hungary and the liberalized
             oil market

                 Ottó GRÁD
              Commercial director
                   HUSA




08/12/2010                          1
Basic information on
Hungary 2010

Territory                                93,000 km2
Population:                              10,100,000
GDP                                      18,000 USD/person
Economic growth                          0.5 %
Inflation                                4.3 %
Foreign investment in the oil industry
                        (1990-2010)      5,000,000,000 USD
Domestic energy demand                   1,055 PJ
   of which covered by liquid fuels      43 %
Car park                                 2,800,000
Fuel    demand:
        Diesel                           1,995,000 tons
        Gasoline                         1,438,000 tons

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Production of Oil and Natgas
in Hungary

            10000

             9000

             8000                                Natgas

             7000                                Crude

             6000
     Mtoe




             5000

             4000

             3000

             2000

             1000

                0
                    1937

                           1940

                                  1943
                                         1946

                                                1949

                                                       1952

                                                              1955

                                                                     1958
                                                                            1961

                                                                                   1964

                                                                                          1967

                                                                                                 1970

                                                                                                        1973
                                                                                                               1976

                                                                                                                      1979

                                                                                                                             1982

                                                                                                                                    1985
                                                                                                                                           1988

                                                                                                                                                  1991

                                                                                                                                                         1994

                                                                                                                                                                1997

                                                                                                                                                                       2000
                                                                                                                                                                              2003

                                                                                                                                                                                     2006
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Development of Act & Standard
 Taxation
 2006         Excise tax refund in percentage of bio content          max. 5.0 V/V %
 2007         Excise tax incentive for motor fuels 0.03 € / litre min. 4.4 V/V %
                                                                       E 85                 Excise tax incentive (ethanol content)
 2008         Excise tax incentive for gasoline                        0.06 € / litre min. 4.4 V/V %
                                     for diesel                        0.02 € / litre min. 4.4 V/V %
                                                                       E 85                Excise tax incentive (ethanol content)
 2009         Excise tax increased
              Excise tax incentive for gasoline                        0.02 € / litre min. 3.1 E% (ethanol content)
                                       for diesel                      0.02 € / litre min. 4.4 E% (bio diesel content)
              New regime:
              Minimum energy content must be calculated in monthly basis. If less -> PENALTY / 0.13 € /MJ /

 2010         Excise tax increased
              Excise tax incentive for gasoline                       0.02 € / litre min. 4.8 V/V %         (EUR/HUF rate is changing)
                                     for diesel                       0.02 € / litre min. 4.8 V/V %

 Hungarian Standard / MSZ /
 2006         Motor gasoline                                          S cont. max. 50 ppm                   direct ethanol     max. 5.0 V/V %
              Diesel                                                  S cont. max. 50 ppm                   FAME               max. 5.0 V/V %

 2007         Motor gasoline                       E5                 S cont. max. 10 ppm                   direct ethanol     max. 5.0 V/V %
              Diesel                               B5                 S cont. max. 10 ppm                   FAME               max. 5.0 V/V %
              E 85                                                    ( 8 cars can use today )
              B100                                                    no sale

 2009         Motor gasoline                       E5                 S cont. max. 10 ppm                   direct ethanol     max. 5.0 V/V %
              Diesel                               B7                 S cont. max. 10 ppm                   FAME               max. 7.0 V/V %

 2010         Motor gasoline                       E10                Introduction is delayed


 08/12/2010                                                                                                                                     7
Act on Excise Tax today

1. Exists (with modifications) since 1993 and based on
   92/12/EC directive
2. It deals with tobacco, alcohol and fuels (No separate oil
   tax act like “Mineralölsteuergesetz” in Austria)
3. Tax obligation is generated at production of fuel
4. Obligation of tax payment when the fuel is released for
   free circulation
5. Bonded warehouse plays an important role




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Tax Warehouse



1. Untaxed fuels are stored (possibility for wholesale)

2. Two basic versions:         production (refinery)
                               storage (depot)




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Payment of Excise Tax


1. Due at the gate of the warehouse - if fuel is transported to
   filling station.
2. Not due if fuel is transported to another warehouse.
    Warehouse A to warehouse B.
    The keeper of warehouse A is responsible until the fuel arrives
     at warehouse B (if it is „lost” an the way he pay the tax).
    When arrives keeper of the warehouse B gives a certificate to
     the keeper of the warehouse A who is now exempted from tax
     obligation and B is obliged.)
Important!     Warehaus is the taxpayer


08/12/2010                                                             7
Excise Tax in EU

1. Fixed by the national parliaments (27 states, 27 taxes)
2. Minimum is stipulated on EU level (302 € for 1000 l
     diesel and 359 € for 1000 l of gasoline)
3. No approximation of national values, just
   increase of the minimum of diesel tax
4. Today in case of gasoline min 348€ (RO) max 720€ (NL), in case
     of diesel min 274€ (LIT) max 652€ (GB)
5. It generates massive tank tourism



08/12/2010                                                      8
Quality


1. Standards of the oil industry has been the same as the
   corresponding CEN standards for at least 20 years (e.g.
   EN 228 and MSZ EN 228)
2. In the nineties there were products sold in big volumes
   that had Hungarian standard but European one not (e.g.
   leaded gasoline)
3. Standards are not mandatory with exception if an act or
   decree refers to them. (In the majority of cases the
   regulation refers just for the “important” parameters.)




08/12/2010                                                   9
Bio-fuels in the system


 „Austrian system”
 (applied in Hungary prior to July 1st, 2009)
 Each drop of fuel has to contain 4.8 V% biofuel for favourable
 tax. „Bio-free” and 4.7 V% biofuel contaning fuels are the same
 from the point of view of tax. Easy to control.

 „German system”
 (applied in Hungary from July 1st, 2009)
 No compulsory bio-fuel content in each drop. 4.8 V% must be
 reached on annual basis in average. Complicated control but
 each liter of biofuel is taken into account.

08/12/2010                                                     10
HUSA – the Strategic Stocks

1.      Independent organisation
2.      Activity based on laws
3.      Today two chambers
4.      National and International tasks (IEA,
        EU -2009/119 EC new directive-)
5.      Market player
6.      Roll in regulation of the markets

08/12/2010                                       11
Membership

      Pursuant to the Acts all companies or persons
         conducting crude oil and/or oil product trading – that is
          subject to the law – and
         who have authorisation as universal service providers of
          natural gas and/or importing, trading with natural gas
      are obliged to become a member of the Association.

      Number of member companies in 2010:
                Registered (incl. lube importers)   cca. 800
                Active                              cca. 50

08/12/2010                                                            12
Governance

 General Meeting
            The supreme decision making body of the Association
            All active members take part
            Tasks, operation principles and voting rights laid down in the Act
            Two „chambers”: oil and gas section

 Board of Directors
      The Strategic – non-Executive – Management of the Association
            2 members delegated by the Minister of National Development
            1 member delegated by the Minister for National Economy
            1 member delegated by the Hungarian Energy Office
            10 members (representing the industry) elected by the General
             Meeting (6 by oil and 4 by gas section)
08/12/2010                                                                        13
Governance (cont.)
  Supervisory Board
       Ensures legally sound operation
                2 members delegated by the Minister of National
                 Development
                1 member delegated by the Minister for National
                 Economy
                3 members representing the oil industry elected by the
                 General Meeting
  Executive Management
       Operative, executive management
                headed by the General Director, elected by the General
                 Meeting
                14 members operative staff
08/12/2010                                                                14
Operation

   The Association
 was established as a non-profit organization with a registered
  capital of „0” HUF
 Is operating under the supervision of the Minister in
  accordance with its Articles of Association (approved by the
  Minister)
                Minister may cancel unlawful actions of the Association
                May assume direct control in case the Association fails to perform
                 its responsibilities
                Representatives of the Ministers have veto right when submitting
                 budget proposal to the General Meeting


08/12/2010                                                                            15
The Stocks
   Stocks formulate the property of the Association.
 Volume
        Oil and oil products: the volume of the stocks are calculated
         according to the international (EU) requirements, based on the annual
         internal consumption (excl. internal production)
        Natural gas: the volume of stocks are fixed (as a minimum) in the Act
         as 1200 million m3; together with the release capacity of 20 million
         m3/day through 45 days.
 Right to release
   It is the Minister of National Development who decides to release with
   regard to the following:
                Price has to be set according to the market (to cover reinjection
                 costs),
                Recipients have to be appointed at the same time + notification to
                 the IEA and EC (in case of Oil and products)
08/12/2010                                                                           16
The Stocks – oil

     Volume calculation is based on a threefold obligation
                IEA      net-import in the preceding year
                EU       domestic sales in the preceding year
                HU       special demand of Stockpiling law (Heating oil)
     Structure
         Three main categories + crude are applied according to EU
         Directives (the new one will be adopted till 31/12/2012)

     Actual Stock composition
                Crude Oil
                Diesel
                Automotive gasoline

08/12/2010
                Heating oil for power-generation                           17
The Stocks – natural gas

   Volume
                It is set in the Act: 1200 million m3 as a minimum
                Release capacity should be at least 20 million m3/day
                 for at least 45 days
                The whole stock is available since the end of 2009 in
                 one storage (1200 million m3 in the Strategic Storage
                 of MMBF)




08/12/2010                                                               18
Financial position

Most important characteristics:
 Volume of assets:             cca. 200 billion HUF
 Market value of the Stocks: cca. 1 000 million EUR
 Total outstanding debt:       cca.   500 million EUR
 Budget is reset every year, but longer term outlook is produced
  regularly
 Budget has to be calculated to cover all expenses, so
  membership fee is set according to the actual financing needs
 Membership fee is collected as taxes (direct execution)


08/12/2010                                                          19
Storage activity
    System
         Rented storage capacities – oil and oil products
               Third party storage companies
               jointly or fully owned storage facilities
         Project company (27,54% ownership) – natural gas
               Long term custody agreement
    Contract
             Long term contracts (10 - 15 years, and 30 years in terms of
             natural gas)
               Price formula for a year (indexed)
               Take or pay
    Task
                 Minimizing costs
                 Geographically balanced coverage
    Objective
                 Acquisition of Oil Storage Companies
                 Cost optimization
08/12/2010                                                                  20
Future

Possibilities for further development:

   Increase the activity in geographical terms (cooperation with the
    neighbour countries)
   Have foreign partners (offering strategic storage as a service for
    other states)




08/12/2010                                                               21
Budget

EXPENSES                                       INCOME
Storage cost 75-80%                            Contribution (membership)
                renting fee of capacities     fee
                 and custodies                        Members are obliged to
                periodical replacement of             pay fee,
                 products                             Neutrality in terms of
Financing cost 18-23%                                  competition
                acquisition loans                    Collected by the member
                                                       companies through retail
                interest on stock financing
                                                       price ( end users)
                 loans
Cost of Operation 1–2%                         Dividend

08/12/2010                                                                    22
HPA - Hungarian Petroleum
              Association

 Founded             December 13th, 1991

 Address             23 Csalogány Budapest, H – 1027

 Phone               +36 1 201 7127

 Fax                 +36 1 213 2025

 E - mail            hpa@axelero.hu

 Home page           www.petroleum.hu

 President           Dr. József TÓTH

 Vice presidents     Jenő DORI HORVÁTH ( MOL )
                     Balázs ERÉNYI ( SHELL )

 Secretary-general   Dr. György WILDE


 08/12/2010                                            23
Members of the Hungarian
Petroleum Association
      AGIP *              MOL *
      CASTROL             MOLTRADE-Mineralimpex *
      CONOCO              OMV *
      ESSO *              SHELL *
      LUKOIL              TESCO
      MABANAFT            TOTAL*


      Storage Companies
      IPRV                Köolajtároló
      OPAL                Petrotár
      Terméktároló                              * Founders

08/12/2010                                                   24
ÁMEI - Inspection Company

                              ÁMEI RT
       (Petroleum Products Quality Inspection Company)

                           www.amei.hu
   fully accredited
   independent
   one of the most modern labs in Europe
   on he basis of a tender continuously delivers data on fuel quality for
    Brussels („fuel quality monitoring”)



08/12/2010                                                              25
             www.husa.hu
             Thank you for your kind attention!




08/12/2010                                        26

								
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