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Budapest Business School FACULTY OF INTERNATIONAL MANAGEMENT AND Powered By Docstoc
					                   Budapest Business School
           Export- import management specialisation




                     Budapest, 2005

                                      Prepared by: FRANK Emese

                                                             Table of contents

0. Preface.........................................................................................................................................6
        1.Capital movements, foreign market entry mode...................................................................8
            1.1. Foreign Direct Investment as a mode of entry to foreign markets...............................12
       2. The history of Hungarian capital export..............................................................................14
        3.The history of MOL- till the transition period.....................................................................16
  II. Negotiation...............................................................................................................................18
        1. The activities of MOL plc. ….............................................................................................18
        2. The role of MOL’s corporate structure and operation in its capital export.........................22
        3. The role of MOL’s strategic management and mission statement in its capital export....30
        4. Advantages and drawbacks of MOL’s capital export from a corporate point of view-
             4.1.The oil market in the region …....................................................................................35
                4.1.1. General information about MOL and its strategy in the future.............................35
                4.1.2. General information about OMV and its strategy in the future.............................36
                4.1.3. General information about PKN-ORLEN and its strategy in the future................38
                4.1.4. General information about LUKOIL and its strategy in the future.......................39
              4.2. SWOT- analysis for MOL plc. …..............................................................................40
        5. Advantages and drawbacks of MOL’s capital export from an economical, cultural and
social point of view …......................................................................................................................42
              5.1. The interest of Hungary in the capital export of MOL ….........................................43
              5.2. Export incentives, export supporting in Hungary......................................................44
                 5.2.1. EXIMBANK .......................................................................................................44
                 5.2.2. MEHIB ................................................................................................................45
                 5.2.3. ITDH Hungary .....................................................................................................45
                 5.2.4. Corvinus Rt. ….....................................................................................................47
              5.3. The MOL plc. and the countries who receive its capital ….......................................47
                 5.3.1. Slovakia …...........................................................................................................48
                5.3.2. Croatia- INA ….....................................................................................................50
                5.3.3. Romania …............................................................................................................51

                 5.3.4 Poland …................................................................................................................53
                 5.3.5. Serbia- Montenegro and Bosnia- Herzegovina.....................................................56
                 5.3.6. Austria ….............................................................................................................57
              5.4. The connection between the capital export of MOL and the accession of Hungary and
the neighbouring countries to the EU …...........................................................................................58
     6.Conclusion- recommendations to Hungarian companies who wants to follow MOL plc. as a
benchmark in capital export ….........................................................................................................60

 III. Summary …...............................................................................................................................63
 IV. Appendices
      1. Tables …...............................................................................................................................66
      2. Charts.…..................................................................…...........................................................66
 V.Bibliography …............................................................................................................................71

                                         0. Preface

    I have chosen the Hungarian capital export as a topic of my dissertation, because personally I
have been always interested in the entry modes to foreign markets. In fact, I have picked out capital
exports from the different modes of entry, because since the transition Hungary has been playing a
very important role in Foreign Direct Investment movements in world economy. Till the mid-90's
our country mainly acted as an FDI-receiver, but now this tendency has changed since Hungary has
begun to export its capital in the region, to the neighbouring countries and the Western investrors
have begun to move to the East. In the field of capital export Hungary has succeded to be the first
now in Central Europe, but it is also high time to increase the amount of it and maintain the first
this position as long as it is possible, thus Hungary can become the centre of the region.This is the
motto, the mission statement also of MOL plc. That is why I have chosen this company to be a
benchmark for other companies who want to be the market leader in the region and export capital
abroad with a thoroughly planned strategy.
     The aim of my dissertation is to demonstrate through the history, structure, operation,
strategic management and mission statement of MOL plc. that what are the advantages and
disadvantages of capital export for Hungary and how could we become the centre of the Central and
Eastern -European region with the help of a thoroughly planned capital export process. Moreover I
am going to analyse this question from an economical, cultural and social point of view in both
Hungary and in the neighbouring countries. I will explain how the MOL plc. has become the No.1
enterprise with a record income in Hungary and in the region and how other companies could learn
from this success story if they decide to exoand abroad.
    Furthermore what are the interests of our country and countries in the region in the capital
export of MOL, transnationalisation and accession of our neighbours to he EU. Finally I want prove
the importance of the Hungarian capital export, realising the tendency of falling capital import,
foreign direct investments in Hungary.
    In my work, I used mainly secondary data and primary sources that were gathered from
my outside consultant at MOL and from publications, supported by reliable statistical data. The
type of my analysis is economic descriptive- prognostic, dynamic in time as it covers 15-year

   I want to say special thanks to my consultant, Bendigné Dr. Csánky Hayna, the associate
professor of the Department of Techniques of Foreign Trade, who controlled my work and
gave me important pieces of advice. Furthermore to MOL plc., especially to my external
consulate Varró László, who is a strategic manager at the company, for supplying the
appropriate data, as well as to the other employees of MOL at and to my parents who could
give me relevant information in this field of study as well. They all also consulted me on my
topic assiduously during my stay in Paris as an Erasmus- student.

                                      I. Introduction

           1.Capital movements- Foreign direct investment as a mode of entry to foreign markets

 Modes of entry and expansion

   There are many firms that want to expand to abroad. First it appeared in the case of US,
 Western European and Japanese companies, but nowadays it is a tendency also in the Central-
 Eastern European region and in the Far-East like China, Korea.
   The reasons for the expansion of a company to abroad can be numerous, these are the
 followings: -to have a bigger market,
                -to increase sales,
                -the proximity of natural resources for the production,
                -to minimze costs of labour, landand capital,
                - more favourable taxation and administration system
                -to diversify the sales and suppliers
                -to minimise the risk of competition.
           Firms that are beginning to internationalize and multinational companies that are
 expanding in nations outside their home base are both faced with the challenge of choosing the
 best structural arrangement. Four major alternatives are exporting, licensing, joint ventures, and
 wholly-owned subsidiaries.
    Here are these one by one.

  A, Exporting
  Exporting differs from the other modes in that a company's final or intermediate product is
manufactured outside the target country and subsequently transferred to it. Foreign Market Entry
Modes is the decision of how to enter a foreign market can have a signifcant impact on the

       Exporting is the marketing and direct sale of domestically-produced goods in another
country. Exporting is a traditional and well-established method of reaching foreign markets.
Since exporting does not demand that the goods be produced in the target country, no
investment in foreign production facilities is required. Most of the costs associated with
exporting take the form of marketing expenses.
    Indirect exporting uses intermediaries ( exportcompanies or agents, commissioners) who are
located in the company's home country and who take responsibility to ship and market the products.
    With direct exporting the producer firm does not use home country' s exportcompaies, although
it may utilize target country's intermediaries.
B, Licensing
    Licensing is a non-equity, contractual mode with one or more local partner firms. A company
transfers to a foreign organization the right to use some or all of the following property: patents,
trademarks, company name, technology, and/or business methods. The licensee pays an initial fee
and/or percentage of sales to the licensor. Licensing essentially permits a company in the target
country to use the property of the licensor. Such property usually is intangible, such as
trademarks, patents, and production techniques. The licensee pays a fee in exchange for the
rights to use the intangible property and possibly for technical assistance.

    Because little investment on the part of the licensor is required, licencing has the potential to
provide a very large return on investment (ROI)1. However, because the licensee produces and
markets the product, potential returns from manufacturing and marketing activities may be lost.
A special form of licensing is franchising.

C, Joint Venture

There are five common objectives in a joint venture: market entry, risk/reward sharing,
technology sharing and joint product development, and conforming to government regulations.
Other benefts include political connections and distribution channel access that may depend on
Such alliances often are favorable when:

           -the partners' strategic goals converge while their competitive goals diverge;

          -the partners' size, market power, and resources are small compared to the industry
leaders; and

     In the followings the abbreviation ROI will be used instead of Return on Investment.

    -partners are able to team from one another while limiting access to their own
    proprietary skills. Strategic imperative: the partners want to maximize the advantage
    gained for the joint venture, but they also want to maximize their own competitive

    The joint venture attempts to develop shared resources, but each frm wants to
develop and protect its own proprietary resources. (Solt- Sziva- Lukács,2000)

    The joint venture is controlled through negotiations and coordination processes, while
    each firm would like to have hierarchical control.

   The key issues to consider in a joint venture are ownership, control, length of agreement,
   pricing, technology transfer, local frm capabilities and resources, and government
   intentions. Potential problems include:
conflict over asymmetric new investments mistrust over proprietary knowledge pertormance
ambiguity - how to split the pie lack of parent frm support cultural clashes if, how, and when to
Joint ventures and wholly-owned subsidiaries entail direct investment in business sites in the
target country. Joint ventures involve two or more organizations that share the ownership,
management,risks, and rewards of the newly formedentity. Each partner contributes equity that may
take the form of money, plant and equipment, and/or technology.
D,Whooly-owned subsidiaries
 Wholly-owned operations are subsidiaries in another nation in which the parent company has
full ownership and sole responsibility for the management of the operation. Japanese automobile
manufacturers are well known for their use of wholly-owned subsidiaries in the USA in the late
1980s and 1990s (Sohn,1994).
 These four entry modes may be differentiated according to three characteristics of the modes that
have been identified in previous research (Maignan and Lukas, 1997; Woodcock et al., 1994):
a, quantity of resource commitment required;
b, amount of control;
c, level of technology risk.

  Resource commitments are the dedicated assets that cannot be employed for other uses without
incurring costs. Resources may be intangible, such as managerial skills, or tangible, such as
machines and money. The amount of required resources varies dramatically with the entry mode,
ranging from almost none with indirect exporting, to minimal training costs in licensing, to
extensive investments in facilities and human resources in wholly-owned subsidiaries. Control is

the ability and willingness of a firm to influence decisions, systems, and methods in foreign
markets. In a franchise type of licensing agreement, control over the operations is granted to the
franchisee in exchange for some type of payment and for the promise to abide by the terms of the
contract. Thus, the licensor has little direct control. In a joint venture control is shared formally
according to level of ownership, as when equity ownership over 50 percent gives one of the
partners the largest number of directors on the board. However, informal control mechanisms may
also be exerted as when one partner possesses and uses knowledge and information that the other
lacks. Wholly-owned subsidiaries are attractive to many companies because this mode enables the
MNC to expect the most control in decision-making. Technology risk is a third parameter of modal
forms and decision-making. This concept can be defined as the potential that a firm's applied
knowledge (tangible and/or intangible) will be unintentionally transferred to a local firm. In a
licensing agreement, the risk of the licensee reproducing and using the licensor's technology in the
future is fairly high.
Joint venture partners may also learn and acquire unspecified elements of the other firm's
technology in the context of their partnership. Technology risk is probably lowest in a wholly-
owned subsidiary, since the operations are under the control of only one firm.Thus, resource
commitment, control, and technology risk are highly correlated.

International capital flows

     The consequence of the international flows of capital is globalisation. This is a process in
which the national markets are converging, not only the goods and services but also the factors
of productions. The international flow of capital has the same importance today as international
economic relations. From the point of view of corporate input we can mention two types of
foreign investments which are flows of capital goods or money that are serving the maintenance
or the extension of the capital stock indirectly or directly. The former is called portfolio-
investment, the latter is the Foreign Direct Investment (FDI)2.

         In the case of portfolio investments, the investor buys the securities of foreign companies,
but it does not want to gain control or full majority proprietorship over the companies, it is just
a simple capital stock extension.

    In the followings the abbreviation FDI will be used instead of Foreign Direct Investment.

  If we examine the case of Foreign Direct Investment, the aim of the investor is to gain control
over the company by buying out a majority prorpietorship.

  The motivations for the flow of capital internationally is the same as mentioned before at the
foreign market entry modes in general.

 Foreign direct investment (FDI) is another possibilty to enter into foreign markets.

FDI is the direct ownership of facilities in the target country. It involves the transfer of
resources including capital, technology, and personnel. Direct foreign investment may be
made through the acquisition of an existing entity or the establishment of a new existing
entity or the establishment of a new enterprise (greenfield investment). Direct ownership
provides a high degree of control in the operation and the ability to better know the
consumers and competitive environment. However, it requires a high level of resources
and a high degree of commitment.

1.1 Foreign direct investment (FDI) as a mode of entry into foreign markets

    Foreign direct investment (FDI) is the movement of capital across national frontiers in a
manner that grants the investor control over the acquired asset. Thus it is distinct from portfolio
investment which may cross borders, but does not offer such control. Firms which source FDI are
known as ‘multinational enterprises’ (MNEs) or 'transnational corporations' (TNCs). The difference
between them is while multinationals have several centres, transnationals have only one in the
home country. In this case control is defined as owning 10% or greater of the ordinary shares of an
incorporated firm, having 10% or more of the voting power for an un incorporated firm or
development of a greenfield branch plant that is a permanent establishment of the originating
firm.The internationalization of a firm is reflected in its process of international market expansion
and investment over time, which can be measured in its international sales and outward FDI.

    In the years after the Second World War global FDI was dominated by the United States, as
much of the world recovered from the destruction wrought by the conflict. The U.S. accounted for
around three-quarters of new FDI (including reinvested profits) between 1945 and 1960. Since that
time FDI has spread to become a truly global phenomenon, no longer the exclusive preserve of
OECD countries. FDI has grown in importance in the global economy with FDI stocks now
constituting over 20% of global GDP. ( Franklin R. Root, 1999)

   Types of FDI:

•Greenfield investment: direct investment in new facilities or the expansion of existing facilities.
Greenfield investments are the primary target of a host nation’s promotional efforts because they
create new production capacity and jobs, transfer technology and know-how, and can lead to
linkages to the global marketplace. Greenfield investments are the principal mode of investing in
developing countries.

•Mergers and Acquisitions: occur when a transfer of existing assets from local firms to foreign
firms takes place. Cross-border mergers occur when the assets and operation of firms from different
countries are combined to establish a new legal entity. Cross-border acquisitions occur when the
control of assets and operations is transferred from a local to a foreign company, with the local
company becoming an affiliate of the foreign company. Mergers and acquisitions are the principal
mode of investing in developed countries.

     Investment is partly about taking risks, though not just any risk. In fact, transparent systems
where the judicial framework is efficient and corruption is low tend to receive more investment.
By its nature, transparency cannot be easily quantified, nor can it be isolated from other policy
aspects that impinge on FDI. Owing to the links between the regulatory structure of a country and
the transparency of its policies, the focus needs to be both on the nature of the rules and laws
applying to foreign investment and on the extent of transparency in their implementation.

   Studies indicate that business environments often remain non-transparent even after
governments have moved to enact clearer policies, simply because those measures are not actually
implemented. However, except in cases where the host government maintains an outright
prohibition on market access by foreign firms, the implementation of relevant legislation is likely to
be more important in shaping investors’ perceptions than is the actual legislation itself.

2. The Hungarian capital export

   Hungary, as a country in the age of globalisation, struggling with lack of capital shortage, quite

naturally emerged first as a capital importer in the tough competition for investments even in the
period of accelerating capital flows. Even so, at the beginning of the 1990s, we could see examples
of Hungarian companies who made investments in foreign markets. The budget, however has
registered the the balance of cross-border investments and capital withdrawals only since 1993. The
registration of shareholders' capital provision began in 1996. From the beginning of the 1990s to
1996 the volume of capital export was insignificant and showed volatility. From 1997 onwards
Foreign Direct Investments started to grow. The phenomenon was due to three factors :
liberalisation of capital export regulations in January 1996; strengthening of the domestic business
sector; under pressure of a a globalising world economy, the need for company growth and
expansion. So the outward FDI from Hungary has been increasing since the late 1990s. Prior to
1997, the value of investment abroad was minimal. Since then, Hungary has become one of the
main outward investors in the region. Katalin Antalóczy, the acknowledged economist recalls in her
article that the same trend can be observed in the Portuguese, Finnish and Spanish economies, with
the difference that this happened too early in Hungary, because the capital import decreased.
       Hungarian outward FDI is highly concentrated on a small number of corporations: barely 2%
of the Hungarian companies investing abroad were responsible for around 52% of the total capital
placement in early 2001 (Antalóczy/ Éltetö 2002).
      In 2000, more than 57% of Hungarian outward FDI was directed to neighbouring countries in
the CEE region. The bulk of outward FDI derives from the manufacturing sector within which oil
refining occupies an important place, due to MOL's investments.
     „The share of Hungary’s outward FDI flowing from the oil refining sector increased from 34.0%
in 1999 to 53.2% in 2000 and accounted for 63% in 2003. In 2000, 80.4% of the oil refining
sector’s outward FDI flowed to non-EU countries in CEE, only 8.2% to EU countries while 9.9%
was invested in the USA.” (Antalóczy/ Éltetö 2002: p.9-10).
     This trend is bound to continue: the majority of Hungarian FDI is slated to flow to CEE due to
the fact that Western EU members are dominated by financially powerful Western companies.
     „In Central and Eastern Europe, Hungary was in third place in the foreign direct investment
ranking behind Russia and Poland, but at the top in terms of investment per capita.”
( flows/UNCTAD3 2004: 74-75)
      Market-seeking has been the most important underlying motive of outward FDI in acceding
countries due to their small domestic market size. ”Firms are primarily looking for business
opportunities and possibilities to exploit their ownership advantages [...] and less to institutional

    UNCTAD= United Nations Conference on Trade and Development

environments”, like country risks or trade barriers. Foreign markets are especially attractive if
competition is strong and home markets saturated (Antalóczy/ Éltetö 2002: p.8). Particularly in
Hungary, the competition’s threat through inward FDI works as a trigger of outward FDI .

        Between 1997 and 2002 the capital export of domestic companies wobbled between 240-
600 million euros. By the end of the 1990s the restructuring of capital investments in the region had
been completed. While in previous years the main destinations of investments are EU member
states and other Western European countries ( the Netherlands, Switzerland, Cyprus, Liechtenstein)
, from 1999 new countries (Slovakia, Romania) became the main destinations for capital
investments. The process indicated that while previously investments were driven by such
incentives as tax evasion and capital flight, these were replaced by new objectives, for example
obtaining and maintaining new markets positions, cost reduction. The volume of actually realised
capital investments depended on the economic situation and privatisation opportunities as well as
the efficiency of privatisation in the neighbouring countries. In the same period Hungarian capital
export became highly integrated, and there were several dominant companies which accounted for
the volume of exports. In 2002 for example, MOL's buy-out of Slovnaft equities and Danubius'
acquisition of a Czech chain of hotels accounted for approximately 60% of total capital export. In
2001, MATÁV's equity buy-outs in the Macedonian telephone company had already reached 80%
of capital investments. We have to mention also OTP bank Group who has made several
investments in Slovakia, Bulgaria, Romania and Croatia by acquisitions and by that it succeded to
increase its subscribed capital considerably in 2004. Not to forget in the pharmaceutical sector
Richter Gedeon Company who is the leader in the Central European region in this industry and has
also production facilities abroad in Russia, Romania, Ukraine and India. And Dunapack paper
manufacturer is also an important actor on the market of the region. To have a look at the amount of
FDI inflows, outflows, inward stock, outward stock of countries in the CEE region and several
Western states, see Table 1. about capital flows in Appendices and Table 2. about four Hungarian
enterprises who are in the TOP 25 Transnationals according to the numbers of UNCTAD (2004).

  In conclusion, it can be underlined that the years of 2003-2004 were highly dynamic in the
sense of capital export for Hungary. If we take into consideration the capital exports which were
actually realised and the transactions which have not been registered in the budget balance, we
may state that volume of domestic export reached a precedented 1 billion euros. This is
undoubtedly a positive phenomenon, which proves that Hungary is capable of becoming a
dominant transnational player in the region.

    3. The history of MOL plc.

  It was almost at the same time that the production of hydrocarbons (crude oil, asphalt, natural
gas, paraffin wax) started - first with traditional production techniques - close to the surface
deposits found in Transylvania and the Mura region in Hungary. But Hungary had to import
crude oil. The processing industry, on the other hand, developed by processing crude oil
imported from Romania, Galicia and Russia.

 Hungary was the second in the world who gained state monopoly over the research and
prodution of hydrocarbons thanks to the law of VI: in 1891. which stated that the natural
resources that were in the depth of ground were belonging to the state property , but its right of
research and explotation could be transferred to natural or legal persons. In addition to the
Hungarian Petroleum Industry Co. owned by the Freund family, which began operating in 1884,
there were two other refineries operating in Budapest: the Budapest Mineral Oil Plant founded
in 1891 and the Domestic Oil Refining Co. built in 1906. After that the Hungarian oil industry
remained unchanged. 1944 was the year when a state-owned, high capacity plant, the Hungarian
Oil Works Co. (MOLAJ), began operating at Szőny.
 After Hungary was defeated in World War I and signed the Trianon Peace Treaty a significant
proportion of its oil refineries in number and capacity fell outside the new borders. In 1921 only 6
refineries were in operation in Hungary. Their number and capacity, however, rose constantly until
1930 along with the Hungarian exploration, which founded the Hungarian Oil Syndicate Limited
registered in Hungary in 1921. The Hungarian treasury oil exploration was successful in the 1930s.

 The first oil explorations in Hungary had started in 1934 with British and American investors
who set up the European Gas and Electric Company (EUROGASCO) in the United States to
expand and gain monopoly in the Central- Eastern European region. On the basis of the
successful production results achieved by the well the Hungarian-American Oil Industry
Shareholding Company (MAORT) was founded on 28th June 1938 between the investor and
 Unfortunately after World War II Hungary lost 60% of its oil refining and extraction equipment.

Reconstruction started immediately after the fighting had ended. Crude oil production continued
under the same organizational structure in the Trans-Danubian region but on the Great Hungarian
Plain the ownership set-up had changed. As MANÁT had been in German ownership (assets and
rights) it became Soviet property in accordance with the Armistice Agreement concluded with
Hungary and the Treaty of Potsdam. The Hungarian Soviet Crude Oil Co. (MASZOVOL) was
established on April 8th 1946 - in accordance with the Agreement on Economic. The prestigious
Hungarian Petroleum Industry Co. was closed down, as were the Fanto United Hungarian Mineral
Oil Factories Co. and a large number of processing plants.

 On January 1st 1957, the various elements of the Hungarian crude oil industry again merged into a
unifed organization with the establishment of the Crude Oil Trust, which in 1960, also took over the
gas industry. Its name then changed to the National Crude Oil and Gas Trust (Országos Kőolaj- és
Gázipari Tröszt – OKGT). To the OKGT a new enterprise was joint, the Circulation of Mineral Oil
Co. (ÁFOR). The present corporate structure of Hungarian crude oil production came into being as
a result of several reorganizations of the companies under the contro of the Trust. In the 1960s and
1970s the exploration of new oil and gas fields were continued in the Great Plain region.

   The trust included the extraction of crude oil and gas, deep drilling, the geophysical
researches, the transportation of oil and gas through pipelines from the Soviet Union and the
telecommunication system. In 1991 the smaller enterprises were separated from OKGT, then on
1st of October 1991, the MOL plc. ( Magyar Olaj- és Gázipari Részvénytársaság) has been
founded as the predecessor of OKGT. From the 22 enterprises with 45000 employees of the
OKGT just 9 remained with a personnel of 22000 in MOL. The company had signed exclusive
contracts with the repairing, maintenance and gas service companies.


       1. The activities of MOL plc.

  MOL Hungarian Oil and Gas Company is a leading integrated oil and gas group in Central and
Eastern Europe and the largest company in Hungary by sales revenues. In 2004 its sales revenue
was 1 998, 5 billion HUF.

  The core activities of the group include:

           • exploration and production of crude oil, natural gas and gas products
           • refining, transportation, storage and distribution of crude oil products in both retail and
           wholesale markets- marketing
           • importation, transportation, storage and wholesale trading of natural gas and other
           gas products
   MOL is a market leader in each of its core activities in Hungary and in Slovakia. Its main
objective is to provide superior levels of shareholder return by fully exploiting its market
potential, by implementing a dynamic development and expansion strategy and by realizing
where possible the potential for further internal efficiency improvements. MOL shares are listed
on the Budapest and Luxembourg Stock Exchanges and traded on London`s SEAQ

  It has two main branches, the Exploration-Production branch and the Refining-Marketing
 The exploration- production branch includes the scientific reseach and production of carbo-
hydrates, the trade and the transportation through pipelines.
Referring to the transportation, Hungary needs to complete its own oil and gas production by
imports, which comes through pipelines. There are two pipelines in our country, each of them is
operated by MOL. These are : - 'Friendship'- pipeline from Ukraine ( Barátság- kőolajvezeték)
       Adria- pipeline
          They both end at Százhalombatta. Mol plc. The gas is imported through the
'Brotherhood'-pipeline ( Testvériség I.- vezeték).
Handles also most of the refinieries and the most important net of consumers.
    Exploration and production business is in position to be an engine for further growth for the
MOL Group ,primarily through expansion in international markets. It wants to focus its activities
on such regions as the CIS countries, in particular Russia and Kazakhstan, where it is already

present and on the Middle East and North Africa. In 2004, in line with this strategy, it acquired a
22.5% stake in an exploration block in Kazakhstan with significant oil, condensate and natural gas
potential. In the continuing exploration activities in Pakistan are also bearing fruit, with a new
discovery of oil and gas reserves in January 2005, and trial gas production in the Manzalai field
also starting in January.
  The further target of the Exploration and Production (Upstream) segment is to increase its
contribution to group cash flows through the production, exploration, development and acquisition
of existing and new hydrocarbon reserves at internationally competitive cost levels, focusing on
Central Europe, the CIS and Middle East/North Africa. MOL's objective in the Exploration and
Production segment is twofold.
  First, to sustain long-term profitable hydrocarbon production from the legacy Pannonian
Basin by actively managing the portfolio to optimise the asset base. On the other hand, based on
its skills, experience and competitive edge. The company is building a focused portfolio of
exploration, development and production projects in its target regions in order to increase its
hydrocarbon reserves, production capabilities and hence the level of sustainable cash flow. In
the Pannonian Basin production area, the primary focus will remain onrigorous cost control,
utilising new production and reservoir engineering methodologies and focusing on the best
prospective exploration ideas as well as on profitable field development opportunities. It also
uses its experience in enhanced hydrocarbon recovery techniques, where applicable and
profitable, in order to support medium and longer term production levels. The source for
profitable growth in the Upstream segment should be the realisation of a focused international
upstream growth strategy. This - in addition to the successful operation of existing projects -
aims to identify and exploit new opportunities for further growth in accordance with MOL’s
efficiency criteria, in order to achieve its target of increasing the upstream integration of the

  About the refining-marketing branch:

    This business segment is responsible for the supply, refining, logistics and commercial sales
of crude oil, other feedstock and oil products, and the retail sales of crude oil products and other
products,it includes the processing of the crude oil and its trade. It is also called as Downstream
business. MOL has 4 big refinieries in Hungary at Százhalombatta, Tisza, Zala and Komárom.
    A key aim for this segment is to increase efficiency through the use of an integrated supply chain
management system. Further, it aims to develop sales by providing top quality products, based on
its asset base and geographical positioning. The retail services unit is responsible for the
development of retail sales of products and services through the domestic and international filling
station network. This unit aims to improve network efficiency, increase customer focus and loyalty,
and selectively expand the branded network in the region.

    Thanks to the key developments in 2004, MOL has successed to reach a net record profit of
208 billion HUF according to the balance sheet, which showed an 109% increase of profits. Here
on Table 3. we can see its accumulation from different business segments.



                                            report 2004/IFRS

     In 2004 the segmental operating profit increased significantly, due to higher sales volumes and
favourable crack spreads, a decrease in controllable costs and positive effects of inventory holding.
The widening Brent-Ural spread also contributed significantly to the record profit of the segment.
    Due to significant investment made in our refineries overrecent years, MOL was able to produce
a favourable high value product slate from relatively lower price Ural type crude. As a result of this,
MOL's realised refining margin was significantly higher than typical reference margins followed by
the market. This record profit is due to the investments of full integration with Slovnaft Refinery

developments to meet EU2005 fuel standards,acquired a majority stake in the Austrian Roth
Heizöle GmbH, the largest privately-owned oil distribution company in the Austria, co-operation
with INA the Croatian National Gas and Oil Company and further growth in its international
filling station network in the region in Hungary, Slovakia , Romania, the Czech Republic, Poland
and in Austria as well.
But let's see these investments later.
 MOL both operates a network of wholesaling and retailing.
  MOL owns one forth of the petrol stations in the country, this is 357. Exporting is low,
because in the neighbouring countries MOL is also present now, in Slovakia the number of
petrol stations is 281, in the region there are more 174, plus the INA station, all in all it had
around 1100 petrol stations in 2004. A map symbolises well the situation of filling stations. See
Chart 2. in Appendices.
   In the followings, the dissertation is concentrating on the Downstream business of MOL plc.

       2.The role of MOL’s corporate structure and operation in its capital export

  The corporate structure of MOL plc. which is carefully designed allows the company to

operate by a fair control. Shareholders' value has an important role in the corporate policy of
MOL plc.

MOL capital and shareholder structure

 The Company’s share capital amounts to HUF 108,985,250,578 represented by registered
ordinary shares of the series “A” and registered ordinary shares of the series “C” and one piece
registered voting preference share of the series “B” with that entitles the holder there of to
preferential rights as specified in the present Articles of Association. The "B" series share is owned
by the Hungarian Government. The ownership strucure of MOL can be seen heer on Chart 1.

                            MOL's ownership structure

                                      1% 5%

                                                                   International Institu -
                                                                   tional Investors
                                                                   MOL Treasury
                                                           10%     Slovbena, Slovin-
                58%                                                Domestic depository
                                                                   MOL Employee


                                                                                  Chart 1

                                      Source:' corporate governence.

    According to the latest news the Hungarian government said it would sell its remaining 11.7
percent stake in oil and gas company MOL Rt., letting MOL itself purchase most of the package to
bemore able to concentrate on its startegic objectives.

 We can understand the link between the ownership structure and bodies responsible for corporate

governance (the Board of Directors, Executive Board, Senior Management and Supervisory Board).

Board of Directors
  Board of Directors has the role of supreme managing body of the company and as such has
collective and personal responsibility for all corporate operations. Chairman of the board is Zsolt
 The Board of Directors, as MOL’s supreme managing body with collective responsibility,
manages its activities and objectives to increase the shareholders value, improve profitability and
efficiency, ensure transparency in operation, manage risks, protect the environment, guarantee
healthy and safe working conditions, and support expanding MOL-culture in the entire company.
   The Board of Directors wants to emphasize that MOL Group and its subsidiaries form a
consistent team and it supposes the obligation and responsibility for achieving the said objectives
in MOL Group as a whole. It operates in accordance with a working plan and it usually prepares
and approves such plan at the beginning of the year, though it may modify the plan as it is needed.
Any member of the Board is entitled to initiate proposals to the working plan. The Board of
Directors will put iton the agenda and discuss it.
   It has several responsibilities towards the shareholders. The Board of Directors shall have the
responsibility for securing that the Company, in its daily operations, observes the scope of authority
reservedexclusively for the general meeting. It is responsible for preparing, convening and
appropriately holding the annual general meeting for the stakeholders. Similarly, the Board shall
convene the extraordinary general meeting if so required by law and MOL's Articles.

Executive Board
 The Executive Board provides a forum for preparing for decision-making, where CEO is Zsolt
Hernádi, Group chief executive officer is György Mosonyi and Group chief financial officer, then
group chief strategy officer is Michel-Marc Delcommune.

Senior Management
 Apart from the members of the Board of Directors, the Executive Board and the Supervisory
Board, the Executive Management consists of managers in charge of the Company`s specific
business areas.

Supervisory Board
   The Supervisory Board is responsible for controlling and supervising the corporate management
on behalf of the shareholders.
Mol is owned by different participants, which is well illustrated by the chart below. Today the
Hungarian governement owns only 12% of MOL, because it continuesly sold its shares to foreign
investors to incsrease the capital ( mol/corporate governance)

   The corporate governance is also continuesly changed in order to find the best solutions and use
the experiences of different leaders of the company in different fields of positions. MOL says that it
needs some changes because the economical environment of sector of carbo-hydrates is also
canging from year to year. For instance, Michel-Marc Delcommune was the group Chief Financial
Officer till 2004, but now he is the Chief Strategy Officer. Generally there is no resignation, rather
it is about a rotation among chief officers of different departments in order to have a better overall
overlook about the company, aggregate more opinions experiences and different views,and be able
to determine the best fresh strategies for the expansion. Also this a way for motivating the head of
the company by new challenges. In my opinion, it is a most good idea to control and assess the
operation of a huge enterprise.


 As we know MOL has several subsidiaries and strategic partners. Maintining an appropriate
overall operation needs careful planning and excellent communication among these, mainly if
MOL's strategy dictates expansion in the region in the more and more rigorous competition.

Subsidiaries of MOL are:

-Balatongáz Kft. (Ltd)

 -GEOINFORM Well-Drilling Information Provider Ltd)

- Geophysical Services Ltd. [GES Ltd.]
-KUNPETROL Kiskunhalas Service Providing Ltd [KUNPETROL Ltd])
-MOL Földgáztároló Rt.
-MOL INVEST Asset Management and Sales Company Limited by Shares
-MOL-LUB Lubricant Production and Service Ltd.
-MOL Natural gas Supply Ltd.
-MOL Natural Gas Transmission Plc.

-MOL Romania Products Petroleum Srl.
-MOL Slovenija d.o.o.
-Intermol d.o.o.
-MOLTRADE-Mineralimpex Trading Company Limited by Shares)
-MOLTRANS Tanker Road Haulage Ltd
-Petroszolg Maintenance and Service Provider Ltd
-Product Storage Company Limited by Shares

Strategic partners


   The legal form of Slovnaft, a.s is a joint stock company. MOL owns 100% of its shares. Slovnaft
is Slovakian refining and petrochemical company , a member of MOL Group. It operates in
Central Europe and carry out our activities in four countries.
   Slovnaft’s scope of activities includes processing crude oil, distribution, wholesale and retail of
oil-based products.
 Other activities carried-out by the Slovnaft Group subsidiaries include research and development
in the field of oil and hydrocarbon gases (Slovnaft VURUP), transport of oil-based products
(Slovnaft Trans), maintenance and after-sale service (Slovnaft MaO). Over the course of
many years Slovnaft kept developing to be one of the most modern European refineries and now it
aims to do it with MOL to be able to give customers products and services with the highest quality
in the region.
 Slovnaft processes Russian crude oil imported via the Družba pipeline. Slovnaft currently
produces a wide range of high-quality oil products. The products are exported mainly to the Czech
Republic, Germany, Austria, Hungary, Poland and Italy. The primary distribution of fuels is carried
out by railway, road transport, ships and by almost 500 km long product pipeline. Slovnaft sells its
motor fuels in its own network of service stations. At the end of 2004 Slovnaft operated
approximately 350 own service stations in Slovakia, Czech Republic, and Poland. Legal form of
Slovnaft, is a joint stock company.


  Following the signing of the transaction agreements in July 2003, and the subsequent satisfaction
of conditions precedent, MOL has become the strategic partner of INA, the Croatian oil and gas
group, with a shareholding of 25% plus one share.
    With the completion of the transaction the first step of the privatisation process of the largest
Croatian company has been successfully closed, enabling the partners to commence the joint daily
work and co-operation in order to create a strong alliance in the regional oil industry. The proactive
work of MOL-nominated members of the Supervisory Board and the Management Board of INA,
including the Chief Financial Officer and Corporate Service Director, has already contributed to
efficiency improvements since that time. MOL has started to share with INA the lessons learned in
transforming a company from a state-owned enterprise into an efficient, market-oriented one.
    In line with this strategy, as a first major step, MOL and INA jointly reviewed and deliberated
the focus of INA’s refinery development plan for meeting EU quality standards in refinery
production. As part of the restructuring ofthe sales & marketing activities, a supplychain
management system has been established and a new, market-based,transparent pricing methodology
has been introduced (Bálint Deák, 2004).


 Tiszai Vegyi Kombinát Rt. is a dominant chemical company and sole polyolefin producer in
 TVK is responsible for around 20 percent of the petrochemical capacity of Central and Eastern
Europe, and is the leading supplier of the region's polyethylene and polypropylene market, while at
the same time being a significant community factor in Tiszaújváros and neighbouring areas. This
dominant player in the domestic olefin and polyolefin market and its products can be found in more
than 40 countries. Nearly 50% of its products are sold abroad, most of them in various European
countries. The most significant foreign markets where it exports its products are Germany, Italy,
and Poland. As an ethylene manufacturer, it is BorsodChem Plc's most important supplier. It has a
strategic relationship with MOL Rt., whose subsidiary is MOLTRADE Mineralimpex Rt.-TVK's
most important base material supplier. Similarly to MOL and Slovnaft, since the 1st of July, 2004,
TVK’s functional units have also been integrated at the Group level thereby providing increased

support to the business processes. Integrated operations provide the opportunity for more efficient
production planning and scheduling, for optimising production cycles, product portfolio and
inventories, and for better satisfaction of consumer requirements. TVK is almost doubling in size,
the number of consolidated TVK staff numbers are close on 2,200, and is reaching a scale that will
guarantee the company a long term leading position in the Central and East European region,
further strengthening its presence in the European Union.

For MOL this partnership is indinspensable to fulfill its mission statement and to create a good
relationship with the most important Central European suppliers, particularly if it is a domestic
company. Why?

  Because it can reduce its costs on one hand , the other hand it can reach more easily the other
markets and have new relations, it is a factor that helps MOL to be the market leader in the region.
(, 2005)

 How does MOL harmonize its overall operation with its subsidiaries and strategic partners?

 In order to hold together these numerous partners and subsidiaries, MOL operates a well-
functionning self-assessment management method.

 The objectives specified for 2005 on the MOL Group level were allocated to individual group
members. Fulfillment of objectives within individual companies will result in fulfillment of the
whole MOL Group objectives.

 MOL's the self-assessment method

  MOL uses the self-assessment method, it compares its operation with the Model of Business
Excellence (EFQM) or its Core Quality Management Requirements.

Assessment of compliance with Core Quality Management Requirements

  Within the framework of self-assessment, organisational units regularly review their activities
and the results achieved. The self-assessment method provides an overall perspective of the
effectiveness of the organisation and the degree of maturity of the quality control system, as well as
being able to help identify areas of the organisations needing improvement.

Core Quality Management Requirements is determined with regard to two criteria: leadership,

 Compliance examined with core requirements, during which the company was in a position to
identify its strengths and areas to be developed.

Company's aim is to continue to enlarge the criterion system of the Core Quality Management
Requirements, and encourage organisations to carry out self-assessment under EFQM.

MOL also evaluates its suppliers in order to be more updated and to be able to give high-quality
products to its customers.

  The pre-qualification of supplier, the assessment of competency and the continuous measurement
and analysis of performance is considered by MOL as one of the key responsibilities.
 Its motto is: "The quality of output is determined by the quality of inputs."(,2005)

  The fundamental principle is the following: only those suppliers will be contracted that have
been pre-qualified or certified for the activity that is the subject of the contract.

  Company's aim with the supplier Qualification System is to ensure that through consistent
application of the system, MOL-Group obtains the products and services necessary for operations
from suppliers that satisfy the following criteria:

       -High quality, cost efficiency, precise delivery strive for long-term partnership.

MOL's supplier Qualification system defines the processes that ensure the consistent measurement,
evaluation and classification of the suppliers' performance. The link between the differents
operations can be seen well below on Chart 2.

                                      Operational Integration                    Chart 2.



   MOL sees as a factor of success hard work and continuous self-improvement: as the foundation
of competitiveness, it values performance as well as commitment to continuous development.
It believes that team players and partners: as individuals,teams and companies, they all work
together for the success of the Group and cooperation is essential to maximise the value of
operations. Since, the regional competition is more and more tough, MOL has to communicate well
with its strategic partners, subsidiaries and suppliers. This is the only solution with which a
constant development and market position can be sustainable.
   All in all MOL carries out a well-planned operation through up- and downstream
communication within the companies branches (exploration-production ; refining-marketing) so the
wholesaling and retailing, continous discussion with its commercial patners, it pays constant
attention to the market and economic environment that is always changing. Moreover it rotates the
positions of the different chief executives in order to be able to see the company from various views
and concepts. The final step is the self- assessment method that enables the company to see its
strenghts and weaknesses and manage them. Operation is lead by a thorougly planned and clear,
straight mission statement and strategic management objectives, that I am going to analyse in the
following part of my dissertation.

 3. The role of MOL’s strategic management and mission statement in its capital export
   MOL Plc. continues to be one of the leading integrated oil and gas companies in Central Eastern
Europe, the market leader in Hungary. Its main objective is to provide superior levels of shareholder
return by fullyexploiting the marketpotential, by implementing a dynamic development
and expansion strategy and by realising where possible the potential for further internal
improvements in efficiency. (, 2005)

 In the view of the supervisory board the operations and measures adopted by the board of
directors offered material contribution to the successful implementation of the first phase of the
published three years’strategy and supported the fulfillment of objectives of maximising
shareholder value and becoming the leading integrated oil company in the region.
As György Mosonyi emphasised it:
„ The consolidation of the Central-European region has stepped into a new phase.” ( György
 He meant that in spite of the fact that MOL was first oil company who had started to expand in
the region, nowadays the regional competition and expansion have become harder. That is why
MOL has to plan its strategy carefully in advance and create a straight mission statement.
 Regional expansion constitutes a key element in MOL`s strategy. MOL is devoted to become the
most significant oil company in Central Europe. Accordingly, it demands devotion and marketable
knowledge from all of its employees. MOL expects its staff to do its job to the best of its ability,
which MOL rewards with generous remuneration packages. MOL tries to reach this vision by
excellence of employees, focus on objectives and dynamismin work.
Staff members are outstanding professionals who make every effort to continually update and
broaden their knowledge. Their performance is characterised by consistent high standards. MOL
seeks to contribute to achieving the overall strategic and business objectives of the company.
It is open to innovations and take a flexible attitude to change. MOL plc. works effectively in a
multicultural environment and takes advantage of the potential multiculturalism has to offer.
It believes there is an opportunity in every challenge.
  MOL thinks that a concrete mission statement improves its regional competitiveness. Positive
outlook for the future; commitment to increase dividend MOL is confident that it will successfully
meet its strategic targets for 2006 and in the future too. The globally competitive downstream asset

base and expanded petrochemical production capacity will enable the group to take maximum
advantage of a continued favourable operating environment. This, together with its continued drive
to improve efficiency and harvest the benefits of deeper integration, should help the company
create significant value for its shareholders. MOL’s Board of Directors is committed to increasing
the dividend and is considering a future level of payout closer to the industry average whilst taking
into account the financial flexibility of the company and available growth opportunities.
 Its vision as an integrated oil company its ambition is to become the most respected multinational
oil company from Central Europe, with a market capitalisation of at least US$ 10 billion and
operations extending over an area bordered by the Baltic, the Mediterranean and the Black seas. Its
core purpose is to transform energy resources and know-how into the essential conveniences and
enjoyment for people in their everyday lives on the road and in their homes.

  Core values are: the drive for value-creating growth is key for our shareholders and provides new
opportunities for its employees and other stakeholders. Pace setter and improvement agent: as
companies, teams and individuals MOL strives to be a determining factor in the development and
improvement of businesses and of the Central- Eastern European region.
  Cooperation is essential to maximise the value of our integrated business .
  MOL is permanently conrtols quality and company of choice: it provides outstanding quality for
competitive prices. It wants to strive for quality in its products and services as well as for
professionalism in daily work, it wants to be the company of choice for its stakeholders.
 Health, safety, environmental and social commitment: it wants to fulfill the responsibilities
towards employees, host communities and societies, therefore it aspires to perform beyond the
legally required standards of the countries in which it is present and in the European Union.

Strategy for 2006-2010

 According to a recent meeting on 28th November 2005, where MOL valued the first nine month
of 2005 and determined its strategy for the future, its plans are the followings for 2006- 2010.
Indeed MOL changes its srtategic management in this year because it planned and made its startegy
for a three-year period, but now it has changed to five years. As György Mosonyi the Group Chief
Executive Officer stated, the competition now is so strong that they needed to see further in the
future, so as to make futher plans in advance. The title of the presentation was „ Setting the pace
from new Europe”, in other words it means by demonstrating unlimited dynamism and openness to

change MOL will set the pace by achieving outstanding growth above average profitability and
superior returns from its portfolio wise managing strategic, financial and operational risk in
integrated manner at group level.
Furthermore the MOL group has a firm commitment to remain a leader in corporate governance
and corporate social responsibilities in a „ New Europe” where Central Eastern European countries
are converging to the West and in the field of oil market a new era was born.
    If we turn it in to figures by 2010 EBITDA4 3.5 billion represents double digit annual growth,
total annual efficiency improvement of 285 million as a result a ROACE5 - increase 15%. Include
tripling of hydro-carbon production doubling refined product sales to achieev the high returns that
shareholders are used to.
The performance of MOL in this and future years, represent plans, targets or projections, they are
subjected to changes.
MOL as a leading European one of the best performing integrated energy companies
in the world. In the future it also wants to be leader in core markets of Hungary, Slovakia and in
Croatia via INA, state of the art asset base serving a high growth in downstream regions.
        In 2005 it succeded to continue highly successful regional partnerships: Slovnaft, TVK, INA.
The management worked with outstanding track record in operational integration and efficiency
      With the strategy 2006-2010 MOL is bound to maximise the potential from growth in„New
Europe” while providing superior returns. It would reach this objective by triple hydrocarbon
production, double refined product sales, growth, strong efficiency improvement in all businesses,
maximise potential from integration and with efficiency.
     Based on its disciplined transaction track record and proven transformation and integration skills
it will continue to develop the group with a focus on growth and efficiency while closely managing
risk at group level. Furthermore it intends to remain a pace setter in corporate governance and
sustainable development in „New Europe”.
    MOL has delivered the results it promised: leading regional Petchem position, 200 new retail
stations in the region, double crude oil production, USD 50 million Slovnaft integration synergies,
$175 efficiency improvement, $ 1 billion EBITDA ( Earnings Before Interest, Taxes, Depreciation
and Amortisation), 17% increase of corporate ROACE ( Return on Average Capital Employed).
Also in the first nine month of 2005 it had well timed investments in high quality refining assets,

    EBITDA= Earnings Before Interest, Taxes, Depreciation and Amortisation
    ROACE= Return on Average Capital Employed

significant increase of international crude production, consequent implementation of supply chain
philosophy, successful integration, exceeding efficiency & synergy targets. Also it should
underline it, that there is a positive outlook for the macro environment to 2010 in Upstream and Gas
branches, the oil price is expected to remain above 30 USD/bbl for the next five years, Europe is
expected to be short of gas from 2008 onward, and the supply gap will be filled with multiple
sources of gas, including Caspian gas. In Downstream and Petrochemicals it seems that there will
be a shortage in upgrading capacity and quality focus in EU.
 It is expected to support continued strength in refining margins. The eastern frontier of the EU
will remain a fast growth region with reasonable political stability, due to continuing convergence
of the accession area. The next accessions are due in 2007.
2005 Q1-3 Favourable market environment expected to continue to
Differentiated strategies for each business unit from 2006

 MOL endavours to different strategies for each of its business units in order to be more precise
and attentive.Srategies are the following in each of them:
 In Upstream business it wants to expand further in the Balkans and in Eastern Europe and
construct a focused but robust portfolio based on a small number of key production centres in core
markets. The objective is to develop an efficient retail network of 1500 filling stations, moreover
the maintainenance of the outstanding profitability of current core position while expanding
from„New Europe”.
 In Downstream it expects that costs will reduce. On the oher hand key target is to contribute over
40% of Group EBITDA with adequate reserve and production levels in reference environment. This
is feasible through stable cash generation from domestic utility activity, the utilisation of unique
geographic allocation to generate additional non-regulated transmission income with thoroughly
planed logistics.
   MOL also wants to be among the first oil companies who implement Enterprise Risk.
Management. Which would be a concept across the Group to assess and manage the strategic,
financial and operational risk in each business unit next year.
 MOL plans to have further annual USD 285 m efficiency improvement by 2010 and
maintain capital discipline while investing USD 5.4 bn in 5 Years
for organic growth and maintain financial flexibility while increasing dividends.
It would like to put emphasis on creating value-partnerships across 'New Europe' and beyond. On
Table 4. we can overview the targets of MOL plc. for 2006-2010.

4. Advanatges and drawbacks of MOL's capital export from a corporate point of view -

 In the forth point of my dissertation I am going to write about the oil market in the region through
a SWOT-analysis ( Strengths, Weaknesses, Opportunities and Threats) and I will mention also the
process of transnationalisation in the region.
  MOL is the biggest company in Hungary. Nevertheless size is not a virtue in itself, the magnitude
depends on many factors. In the previous years MOL was very successful due to the fact that it was
the first oil company in the region who recognised the importance of regional expansion,
transnationalisation and imagined for itself a role of regional market leader. It realised that despite
the traditional national prejudices of the neighbouring countries,there is a possibility of mutual
economical cooperation and exploitation of common advantages. It has closed a successful
acquisition with the Slovakian Slovnaft and it bought the quarter of the Croatian INA, altough in
the INA- project there is still so much to do. The enlargemenet of the net of filling stations is on a
good way, and the development of the refining-marketing branch is also helped by other smaller
acquisitions. The improvement of the exploration-production branch is fullfilled by exctraction of
Western-Siberian oil fields and the drillings in Kazahstan and Pakistan.
 On the other hand we should see the escalating competition and concurrency. Even if eight
countries of the region has become the member of the European Union since 1st May 2004,
surprises do not come from the so-called 'dangerous' Balkans. The risk is a part of business, it is
only possible to expand, where there a lot of open questions, because the consolidation of the
Central-European region has stepped into a new phase. ( György Kertész, 2004)

4.1. Oil market in the region- SWOT-analysis

  In the East-Central European oil market now there are four big competitors: MOL, OMV, PKN-
Orlen and LUKOIL. Indeed LUKOIL, the Russian oil company has just arrived to the scenario of
the region. In some cases they are mentionned to be partners, but this is hard to imagine since it is
unlikely that they will be able to agree on the repartition of the market.
 Here I will introduce the participants one by one, then I draw down a SWOT-analysis for MOL in
the respect of the information gathered about its competitors.

4.1.1. MOL
 It was the first company in the region who recognised the importance of market enlargement and
since 1999 its aim has been to create a regional integrated oil company. This conception has been
valid since then with some smaller or larger modifications.
 MOL has started its expansion in 2000 with the acquisition of Slovnaft. It was an inevitable step
in fact, because of the oil refinery in Bratislava. This refinery is so close to Hungary that the
majority of the Hungarian market could be easily supplied by Bratislava. Thus a competitor with a
stong capital power not only could have interfered in the expansion plans of MOL, but it could
have jeopardised the position of MOL in the Hungarian market!
   MOL plc. was very wise to make this important decision, in spite of the fact that analysts said
that the price paid was too high and the economic environment in the proceeding years would not
be appropriate, because there is a n overcapacity of oil refineries in the region. Luckily, they did
not have right. All the refineries in the region are needed since demand is increasing. The
competition is harder and harder, that is why altough MOL had not planned any greenfield
investment, it changed its mind and today greenfield investments are an important part of the
expansion of MOL.
 Now MOL wants to reduce its part in the gas business and concentrate on and invest more in the
oil branch in the East Central European which is more profitable. Instead of more drilling, it will
put the emphasis on economic extraction/ production.It can mean that it can buy those Russian
oil- wells in which the 'giants' are not interested anymore. This solution is desdained by geologists,
but in this business the risk is almost 0.
  Presently Mol owns the 100% of the Slovakian Slovnaft ( filling stations in Slovakia and in the
Czech Republic) , 25%+1 share of the Croatian INA, it bought the Shell filling stations in Romania
and it has several more filling stations in Poland and in Austria.

Thus the MOL has a market leader position in Hungary, Croatia and in Slovakia and a
considerable part of the market also in the Czech Rebublic and in South-Poland via Slovnaft,
moreover in Romania through the purchased Shell filling stations. As I mentioned before, recently
MOL is present in Austria too with 20 filling stations. In 2004 Mol had negotiations with PKN in
order to establish a strategic partnership and to buy the refinery of Gdansk, but these efforts
stopped due to the hesitation of the Polish governement who does not know exactly what it plans
with PKN in the future. They changed their plans and management continouesly, so MOL decided
to stop the negotiations and wait for a better period.
 According to the declarations of te heads of MOL, it rather seems that the Hungarian oil company
wants to expand in the Southern regions in the next few years. The simple reason for this is the
25%+1 share ownership in the Croatian INA. The first plan is to increase this ownership.
In 2003, two years before MOL plc. Paid $505 million for the quarter plus one share of INA. It is
quite sure that for the majority ownership ( for the next 25%) MOL should pay more than this
amount. Nevertheless the acquisition of INA seems to be as important as the acquisition of
Slovnaft was in 2000 in the competition for the market and the stabilisation of the position in the
Carpatian Basin.
As the latest announcements MOL in the futue will want to concentrete on smaller acquisitions
and on greenfield investments in order to make the existing position operate more efficiently. For
instance these will include the the construction of new filling stations in Serbia and Slovenia,
where MOL wants to have a 20% market share at least. For this reason they have founded an
affiliated company in Serbia and started the buying up of real estates.
Unfortunately during the privatisations of the Czech Unipetrol, the Serbian Beopetrol and the
Romanian Petrom Mol did not succed to win any of the tenders, since it was afraid to offer too
high bids and in the case of Petrom ( which was finally bought by OMV) MOL should have sent
more than ten thousand employees and made a restructurig and total modernisation of the
formerly publicly owned company. (Zsolt Berger,2004)

4.1.2. OMV

   The annual revenue of MOL is just fewer with €2 million than the revenue of OMV, the Austian
oil company who also made several acquisitions in the precedent years.
 In 2003 it spent $1,2 billion for acquisitions. It disposes 35% of the Romanian PETROM. The

acqusition in Romania of OMV in 2004 has redrewn the map of the market. Now it can be seen
what are the regions where the four oil companies are in a market leader position and also the battle
zones. The Austrian company is in a leader position in Austria and in South-Germany, but it also
has stronger positions in Hungary, Romania and the Czech Republic.
   The question is that will OMV have enough power to expand besides the recently purchased
35% part of Petrom, where there are 50 thousand employees and PETROM has to be restructured
and updated basically. Austria’s largest listed industrial company considers itself as a leading oil
and gas group in Central Europe. Its Explorations and Production activities are present in 18
countries on five continents. Its Consolidated sales are estimated to EUR 9.88 billion, its EBITDA
to EUR 926 million. Its market capitalization is EUR 12 billion. It disposes 6,495 employees plus
in Petrom there are 50,737 employees.
It has important stakes in the following companies:
35% stake in Borealis A/S ; 50% stake in AMI Agrolinz International GmbH;1 0% stake in the
Hungarian MOL group ; 45% stake in BAYERNOIL Raffineriegesellschaft mbH; 50% stake in
EconGas GmbH; 51% stake in Petrom SA.
   OMV’s CEO Wolfgang Ruttenstorfer stated: “Our successful expansion has enabled us to
achieve the growth targets set for 2008 way ahead of schedule. OMV has resumed the leadership
position in Central Europe and we are committed to further growth in the next five years. OMV
until 2010 will be the most successful company in capitalizing on the EU ‘growth belt’ in oil and
gas and securing the future supply through a strong upstream position.”(

   OMV is the largest oil and gas group in Central Europe, it has 2,457 filling stations in 13
countries and a market share of 18% in the Danube region. This means further expansion from
mature into growing markets in order to increase its lead to other regional competitors. It will want
to continue to pursue organic growth as well as growth through acquisitions. In Exploration and
Production it will concentrate on international opportunities in six core regions, in Refinnig
&Marketing wants to lead the market in the lucrative EU growth belt.

 OMV aims to be the best integrated mid-size oil and gas company producing a quantity of oil and
gas of 50% of its refinery capacity.
   By 2010, OMV’s Exploration and Production business wants produce 500,000 boe/d in six core
regions. A focus will be added on Russia in addition to the Danube and Adriatic, Northern Africa,
the North Sea, the Middle East/Caspian and Australia/New Zealand as a new core region for
OMV’s E&P activities.

 OMV is set to meet the challenges of a growing gas market and intends to make full use of the
rising gas demand in Central and Eastern Europe. In the retail business, OMV aims to lead the
Danube region as the premium brand, leading in quality and further expanding its convenience
business. Its declarated strategy is is to have 2000 filling stations by 2008, with which it would own
a 20% market share in the region.

4.1.3. PKN-Orlen
 MOL has better results than PKN with 30-40%, but PKN has a wider net of filling stations. For
PKN is more difficult to create an integrated oil company because it does not extract gas and crude
oil. The top management in the previous years changed a lot of times. It is also a disadvantage that
the company is rather influenced by the changes of the governement. In fact one of its weaknesses
is that it rather looks like a socialist corporation than a multinational company.
It was not long time ago, after MOL that PKN Orlen formulated its strategy of expansion.
 Today PKN ORLEN’s retail network comprises approximately 2,700 outlets offering services in
Poland, Germany and Czech Republic. In Poland petrol stations operate under two brands: ORLEN
and Petrochemia Plock. Clients in Germany are served at stations branded ORLEN and STAR,and
in the Czech Republic at outlets bearing the BENZINA logo.

Chech filling stations are from the privatisation of the Czech UNIPETROL. PKN ORLEN is
Poland's and Central Europe's largest refiner of crude oil and marketer of world-class petroleum
and related products. It operates a network of approximately 1,900 petrol stations in Poland,
around 500 outlets in North-Eastern-Germany and some 300 station in the Czech
   Aiming to become the regional leader, it wants to ensure long-term value creation for its
shareholders by offering customers products and services of the highest quality. All its operations
adhere to ’best practice’ principles of corporate governance and social responsibility.
  It aims to expand in the Central-European region, but its objectives are often bottlenecked by the
governement who has much power to control the company.

4.1.4. LUKOIL

Lukoil, the Russian giant has just appeared in the market recently. It is the leading vertically
integrated oil company in Russia. The company's main activities are oil & gas exploration and
production, and production and sale of petroleum products.
  LUKOIL has an outstanding portfolio of production assets. It is the first on the list of TOP25
TNCs of Central Eastern Europe (, ( see Table2. in Appendices). Main production
flows come from the company's key operating regions, which are West Siberia (about 54% of
company reserves) and Perm Oblast. LUKOIL is also the only Russian oil company with
significant hydrocarbon reserves in two new oil & gas provinces, Timano-Pechora and the
Northern Caspian. It hopes that the rapid launch of production at fields in these provinces in the
next few years will assure successful long-term growth for the company. Geological prospecting
by LUKOIL is mainly concentrated in West Siberia, the Timano-Pechora oil province and the
Yamal region.
The Russian oil company is carrying out international exploration and production projects in
Azerbaijan, Kazakhstan, Egypt, North Africa and Columbia.
LUKOIL owns significant oil refining capacity both in Russia and abroad. In Russia the company
owns four large refineries. Aggregate capacity of these facilities is 40.8 mln tons of oil per year.
LUKOIL also has refineries in Ukraine, Bulgaria, and Romania.
  By the end of 2003 LUKOIL's sales network covered 17 countries of the world, including
Russia, the CIS (Azerbaijan, Belarus, Georgia, Moldova, Ukraine), Europe (Bulgaria, Hungary,
Cyprus, Latvia, Lithuania, Poland, Serbia, Romania, Czech Republic, Estonia) and the USA.
LUKOIL sales network consisted of 10 marketing entities operating in 60 regions of Russia. The
  LUKOIL is the second largest private oil Company worldwide by proven reserves. The
Company has around 1.5% of global oil reserves and 2,1% of global oil production. LUKOIL
dominates the Russian energy sector, with 19% of total Russian oil production and 19% of total
Russian oil refining.
  It aims to support long-term economic growth, social stability, prosperity and progress in the
regions where it operates, as well as caring for the environment and ensuring sustainable use of
natural resources.
 It wants to achieve consistent and long-term growth in its business, transforming LUKOIL into a
leading global energy company. It wants to be a reliable supplier of hydrocarbons on the
international energy market. The company has more than 150,000 employee.(
   LUKOIL sets itself the objectives to create new value, maintain business stability and provide
shareholders with high return on their investments through asset value appreciation and cash

dividends. LUKOIL will use all available means to achieve these objectives, including further
efforts to reduce costs, operating efficiency increases, improvement of product and service quality,
and application of the latest technologies.
  It enjoys the support of the Kreml, what is not suprisisng, since it has payed for the first half of
this year approximately 3,4 billion tax to the Russian governement, in other words this covers 4,1%
of the taxrevenues of the Russian budget. It marches strongly for the Balkans. It has the biggest
chance for winning the 23% of Greek Hellenic Petroleum along with the privatisation and it
already bought the 79,5% of the Serbian Beopetrol in the summer of 2004. It also possess 87% of
the Romanian Petrotel, 58% of Bulgarian Neftochim and 51% of the Ukranian Odessa. Thus it has
major refineries in Bulgaria and Serbia from which they will able to supply the filling stations of
Beopetrol and the stations in East- Hungary that they want to found. Things are getting more
complicated by the fact that American ConocoPhilips has negotiation with the Russian
governement about the 7% of LUKOIL. The Russian oil company wants to expand beside of its
Balkanic filling stations in the North of the region.It is very interested in the refinery of Gdansk,
trhe Grupa Lotos.
Its main strategic objective in the future is not only to be an oilproducer, but to be able to increase
the marketing of oil products to 60% in its own filling station network. For this reaon it has started
a hard expansion in the South-Eastern European region.

4.2. SWOT-analysis for MOL plc.
   Now here is the SWOT-analysis for MOL plc. as a summary of the facts reported before about
the concurrents and the oil market in the region. SWOT-analysis is a scan from the internal
(strengths and weaknesses) and external environment (opportunities and threats) of the company,
which is important in strategy-planning.
     Till today MOL has reached record results and top listings on the Stock Exchange. The
   question is that is it able to conquer the 'Wild East'? It was the first among the competitors, who
   found out the startegy of expansion in the region, it has a time advantage, it could plan further.
   A second advantage is that MOL has a more flexible ownership structure than the other
   companies where there are considerable amounts of the shares belong to the state. Thus capital
   can be dealt more easily. Through its proximity and center position it easily reaches the market.
     MOL does not dare to risk shareholders' value, smaller than OMV, PKN- ORLEN and Lukoil,

governement support is less than in the cases of the competitors.
 It is not a real weakness, but MOL said it did not succed to win in the tenders through the
privatisation of the Czech Unipetrol, the Romanian Petrom or the fusion with the Polish OKN-
Orlen, because the ownership structures of the companies were very different. In my opinion it
should not be an objection for MOLl, rather it should try to find solutions for eliminating the
problem of the gaps in ownership structures.
  2004 was a conspicuously favourable year for the oil market, because it experienced a boom
with high refinery benefits, these tendency continued in 2005 also and maybe in 2006.
Since the fronts has evolved in the region and the possibilities became less, MOL has to adopt a
strategy of organic growth. It means that MOL has to make precise financial analysis and
calculations concerning any strategic decisions, rather than jump into the realisation of large
actions. Now MOL wants to reduce its part in the gas business and concentrate on and invest
more in the oil branch in the East Central European which is more profitable. Instead of more
drilling, it will put the emphasis on economic extraction/ production. It can mean that it can buy
those Russian filling stations in which the 'giants' are not interested anymore.
With the rotations in the management, MOL's strategy did not change, only the tools has
become shaded.
 In the region there are two more significant oil companies for sale: the Serbian NIS and the oil
refinery in Gdansk, whose name is Grupa Lotos.
The hardest battle in the future will be for the Balkans where the four oil companies appeared
along with the privatisation and the multinationals can be also interested in it. At the moment
the position of Lukoil is the best in the Serbian region thanks to its part in the Greek Hellenic
Petroleum, it can easily gain a web of filling stations in Albania and Montenegro. But MOL has
also good chances in Serbia through INA.
The top management of MOL envisages three possible opportunities for the expansion.The first
is the organic growth in other words the enlargement of the filling station network. The second
solution can be non-organic growth, that is the bigger oil companies that are still for sale and
also the smaller ones that could complete the activities of MOL in other markets. The best
example for this the Roth filling station network in Graz that MOL bought in 2004. These two
strategies are the best possibilities if they are used together. The third way is definitely the
efficiency increasing, namely the reduction of costs. The region where there are the most
possibilities for MOL for the expansion is the Balkans through INA, where the demand for oil

       products is rising constantly.
           Not forget to mention a possible fusion with PKN. PKN-ORLEN has offered to MOL a
       srtategic partnership by exchanging the state-owned shares, then due to the changes in the
       Polish governement PKN withdrew from the deal. Now they are still contemplating on this idea.
       If this fusion became true, an oil company could born from the Baltic- sea to the Adriatic-sea,
       whose size would exceed the size of any oil companies in the region.

          The acqusition in Romania of OMV in 2004 has redrewn the map of the market. Now it can be
       seen what are the regions where the four oil companies are in a market leader position and also
       the battle zones. The Austrian company is in a leader position in Austria and in South-
       Germany, but it also has stronger positions in Hungary, Romania and the Czech Republic. So
       Mol should strengthen its positions because OMV gets closer and closer also on the domestic
       Another threat is that are the prices of MOL shares will be as high and the ownership structure
       will be as strong as not to be the target of acquisition to affray the acquisitors? Besides the
       acquisitions and activities MOL has to hold an equivalence to save the prices of its shares and
       the interests of its shareholders. Now the competition is so strong that it is an extremely difficult
       task for the four competitors.

           MOL uses the S-O strategy6 now, that is to pursue opportunities that are a good fit to
       company's strengths.

    5.Advantages and drawbacks of MOL’s capital export from an economical, cultural and social
point of view

            The continuous globalisation of the world economy poses new challenges for the governance
      of economic activities. This is particularly the case in the area of Foreign Direct Investment.
      Investment and trade liberalisation have provided greater freedom to transnational corporations
      to organise their production activities across borders in accordance with their own corporate
      strategies and the competitive advantages of host-countries. Countries today view inward foreign

    From the SWOT-matrix MOL uses combination of the S-O strategy, because it employs it sstrengths to exploit the opportunities.

   direct investment as an important means of integrating their economies with international
   markets and expect it to contribute to their economic development. This is the just the case for
   MOL plc. who exported its capital in numerous countries. In this section I am going to analyse
   the advantages and drawbacks of MOL' s FDI for the host-countries and as well for Hungary
   from an economical, social and cultural point of view.

    5.1. The interest of Hungary in the capital export of MOL from an economical, cultural and
   social point of view

   The market in Hungary is pinching, the larger Hungarian companies have grown beyond the
domestic area , they need other territories. MOL is one of the biggest company in Hungary.
In spite of the fact that many economists value FDI as a mostly disadvantageous pnemonenon, in
the case of MOL plc. and other companies it is not true.
 They state that the advantages that the host-countries get from the exporter- country, are
drawbacks in the mother country. They claim that if a company invest in abroad, it does it so,
because it wants to have a bigger market and reduce its expenses. Due to that fact it delocalises its
production to other countries where the factors of production such as land, labour and capital are
cheaper. The macroeconomic consequences of the delocalisation are the followings in the home-
country: switching from domestic suppliers to host- country suppliers in the home-country,
incresing unemployment, decreasing demand and according to law for the repatriation of profits
host-country can earn more than the home-country. These generalisations were only true for the
American companies who totally ceased there production in the USA and delocalised it to Latin-
America, India and to the Central- European countries in the 1980s, 1990s from the consideration
of cost reduction.
 Despite of these statements this is not true in the case of MOL plc. and the greater Hungarian
companies who export capital. Why? Owing to the fact that Hungary does not delocalise its
production, only it is about an expansion to new markets, because the Hungarian market is
saturated. MOL plc. does not want to primarily reduce the costs of factors of production by capital
export, since it produces in the countries where it is present ( and Hungary, Slovakia, Croatia and
the Middle-East). It does not delocalise, since it needs the production everywhere to be able to
operate with full capacity. Thus there is no need for cutbacks of employees, in contrast with it

creates more and more labour in every countries. The same applies to the domestic suppliers, who
remian the same. In the respect of the repatriation of profits, MOL is a transnational company, not a
multinational one. It means that decisions come from one centre, from Hungary, thus it is evident
that the repatriation of returns happen in a way that is the most advantageous for the home-country.
On the other hand MOL takes the interests of its subsidiaries and startegic partners into
consideration, because it knows that there is a common goal. The common goal represents apart of
the mission statement of MOL, that is to become the leader oil company in the region. MOL is
aware that it is only possible if it regards the advantages of its partners too, because in the long run
this can bring the leadership not only for MOL as a company, but also for Hungary in the Central
European region.

 5.2.Export incentives,supporting in Hungary

   Hungarian firms who decide to export products or capital as MOL, can have the help of
specialist financial, economic institutions in Hungary who give advise or long-term loans in foreign
economic questions. The four more important organisations are Hungarian EXIMBANK, MEHIB,
ITDH Hungary and Corvinus Ltd.


  Eximbank Ltd. is a specialised financial institution, a bank which offers financing, guarantee and
risk-sharing products to promote the export transactions of Hungarian companies. It is the member
of the state-owned Hungarian Development Bank Ltd. Eximbank’s share capital is HUF 10.1
billion. Its borrowings are backed by the budget of the Hungarian State, which acts as a guarantor.
Eximbank’s mission, in its emerging role within the MFB Group, is to provide Hungarian
manufacturers and service providers with the financing support they need in order to be competitive
in the international markets. The bank finances viable, export-oriented projects right from the initial

investment through the launch of production to the final export of the finished products, while
utilising the guarantees and subsidies that the state is able to provide. It supports and stimulates the
manufacturing and service-provision activities, as well as the foreigntrade and international
business operations of Hungarian enterprises, by providing them with access to favourable
financing opportunities, in compliance with international legislation.
  Eximbank was prepared for the EU accession, having fully harmonised the legislative
background to its operation with the relevant international regulations.
        Through bilateral government treaties MFB Bank Group intends to participate in the
implementation of the government’s “Szülôföld” [Birthland] program, aimed at developing
Hungarian-owned enterprises in regions that lie beyond the country’s borders, but which are
predominantly inhabited by ethnic Hungarians, and in the financing of related infrastructure
projects. In 2005, the Bank intends to become more actively involved in financing schemes
provided jointly with other international export credit agencies. (

5.2.2. MEHIB

MEHIB, the Hungarian Export Credit Insurance Company is also a state-owned institution, whose
aim is to share the financial risks of export and inland transactions. It wants to encourage and
promote the external economic relations with special emphasis on the exports of Hungarian
commodities and services, on strengthening the external competitiveness of exporters and on
facilitating the credit availability for the exporters.

 MEHIB is prepared to provide EU conform solutions to the growing demand for insurances
related to the export of goods and services to developing countries, to foreign direct investments, as
well as to developed markets facing increasing risk. Its task is to reduce the risk of exporters abroad
and on the domestic market and to assure their financial security. The company operates in two
main business areas (providing non-marketable and marketable insurances), each one well
separated from the other in both legal and professional terms, as well as financially. Consequently,
MEHIB is able to provide complex services to exporters, which is an advantage on the Hungarian
market. Mostly export transactions to the CIS countries, dominantly Russia that are usually assured

5.2.3. ITDH Hungary

ITDH Hungary is the information and consultation centre for foreign investments in Hungary.
 It offers the following sevices: investment promotion, trade development , marketing and
communications services and business services.

 Its activities focus on investment stimulation and the trade development, with special regard,
within the latter, to be boosting of the export capacity and the market entry of Hungarian Small and
Middle Enteprises. The implementation of these tasks is supported by the extensive domestic and
foreign office networks of the institution, and not in the least by its information database covering
numerous areas.

 ITDH develops and executes tasks on the basis of the medium-term external economic strategy of
the government, the medium-term strategy of the attraction of foreign capital, the directives
applying to Hungary’s preparation for the accession to the EU, government decrees relating to the
deprived regions and the government programme envisaging the improvement of the operating
conditions of SMEs.

 The ITDH co-operates on a continuous basis with the self-governments, the chambers of
commerce and the professional associations concerned, as well as with MEHIB, EXIMBANK,
Corvinus Rt. and MT Rt. in order to ensure that small and medium-sized enterprises take part in the
programmes concerned and have access to ITDH’s complex services in large
 ITDH’s current domestic network, composed of nine offices, covers the relevant regional demand
and, therefore, its future operation will also be governed by the principle of regionalism.

5.2.4. Corvinus Ltd.

   Corvinus International Investment Ltd (founded in 1997), the only state-owned development
finance institution in Hungary set up to co-invest with Hungarian companies abroad and equipped
to ensure sufficient financial resources for its partners’ investment projects.Corvinus is ready to
provide capital for companies in- or outside of Hungary which have the potential to increase
shareholder value.

     The main criteria of each investments prescribed by Corvinus is to only finance economically
feasible projects. Investments are made at market conditions. The business plan of the partner and
that of the invested company shall be realistic and well founded. It invests equity into foreign
ventures owned by Hungarian companies for a given period of time and with an agreed return. It
has several specialised programs that offer the same service but in different areas: Equity
investment, (Investment policy, Capital Program for Foreign Investments, Carpathian region capital
program, Capital program fot Internationalisation of SMEs, „Individual” Capital Investments),
Shareholders loan, Shareholders' surety, Advisory Services.

5.3. The MOL plc. and the countries who receive its capital

   MOL is operating in many patrs of the world with a downstream or upsrteam activity ranging
from the Central- Eastern European region to the Middle-East . As my dissertation is mainly
concerned with the expansion and Foreign Direct Investment of MOL in our region in the refining
and markting (Downstream) business, I would like to examine and put emphasis on these in this
section. Thus I am giong to write about the importance of capital export of MOL in the Cenral-
Eastern European countries and then how it develops our region from an economical, social,
cultural point of view. On the map ( Chart 3. below) you can see the regional expansion of MOL
with the number of filling stations country by country. MOL has 357 filling stations in Hungary,
281 in Slovakia, 412 via INA plus 1 MOL station in Croatia, 74 MOL plus 61 former SHELL
stations in Romania, 42 Slovnaft stations in the Czech Republic, 23 Slovnaft stations in Poland and
2 Ukraine. Furthermore 9 MOL stations plus 6 of INA, 36 INA in Serbia-Montenegro and 20 Roth
staions in Austria. All in all it takes 1233 filling stations in the region that are led by MOL-Group.

                                   MOL filling stations                    Chart 3.


5.3.1. Slovakia

    I have chosen Slovakia in the order of the FDI- reciever countries of MOL, since Slovnaft is
   the most important partner of MOL.
   Slovakia as an FDI receiver is just catching up with its two more developed neighbours Hungary
and the Czech Republic, who enjoyed the advantages of attracting FDI in the last decade.

 According to the statistical data the biggest investors in Slovakia in 2004 were Hungary and
Austria, while over 77 percent of the investments flew to the Bratislava region. Core of the FDI will
continue to target the Bratislava region, which leaves the problem of a widening gap between the
wealthier west and the poorer east unresolved.

  The amount of FDI has shown a rapid growth in the first half of 2004, €300 million.

Optimism is growing and the analysts claim that current development is sustainable, they see this
trend to be sustained as Slovakia is becoming an increasingly attractive place for FDI, particularly

for manufacturers looking to set up or expand their operations in Central Europe and the EU at

 The major reasons for the increased FDI are the recently adopted comprehensive supply side
reforms such as tax reductions and markedly improved business environment that provide the
country with inherent competitive advantages, such as a relatively inexpensive yet productive
labour force, good geographic location, and reasonably well-developed infrastructure, to come to
the fore.

         MOL Hungary started to buy Slovnaft Slovakia in 2000. This transaction was one of the
biggest takeovers on the CEE markets. Firstly MOL bought a strategic stake of 36.2 % in Slovnaft ,
then with options it reached a majority ownership after four years.
AkThe obvious factor that made Slovnaft a good deal for MOL was its price. MOL purchased a
36.2% stake for $262m in 2000, at a time when Slovnaft had completed an investment programme
to develop its domestic asset base, but was under financial pressure because projects had been
delayed. In 2003, November, MOL increased its stake by 31.6% for $360m. In the spring of 2004,
MOL, having made some additional open-market purchases, tendered for the remaining 30% for
$233m. It ended up paying about $30m more than that.

 All in all MOL paid almost $900m for the whole of Slovnaft. The ‘fair value’ of Slovnaft at the
time was around $1 billion. It was a great deal, because some $45m of cost savings have already
been achieved in 2004, and another $50m are expected by the end of 2005. Through its subsidiary
Benzinol, a.s., in 2000 Slovnaft operated 317 public service stations under the trade marks
Slovnaft and Benzinol with the acqiusition, MOL has got new markets also in Poland and the Czech
Republic.( report2004)

  As I mentioned before, analysts said that the sum that had been paid for Slovnaft was too high,
because they saw a refinery overcapacity in the region and they thought MOLwould close one its
refineries, so why it wanted to buy the refinery in Bratislava. (Zsolt Berger, 2004)

  In fact they were not right, because today MOL operates all of its refineries on full capacity, the
demand has increased, they have gained a greater market and could make considerable savings. Not
to forget that this purchase was an inevitable step to rescue the Hungarian market against a possible
competitor who could have bought also Slovnaft and threathened the domestic positions of MOL.
MOL controls 40% of the market in Slovakia, 44% of the Hungarian market.

  If we regard the social and cultural advantages for Slovakia in the capital export of MOL, in the

Bratislava area still lives a Hungarian minority of around 710 thousand (see Table 5. in

    In Slovakia stereostypes and a historical opposition against minorities still exist. From this
point of view it is an extraordinary advantage for both parties. As the Hungarian minority is still in
a 'secondary' position in the country compared to the Slovakians, Hungarian companies like MOL
can ease, narrow this cultural gap. In other words, for the Hungarian minority it is more possible to
get a job at a Hungarian company, and also for MOL it is a great deal to employ people who speak
both languages and have double-cultural view. As a result, through better communication with
employees and also with external environment such companies like MOL who bring a significant
amount of capital in the country, can reach a higher public esteem for itself and a better acceptance
for Hungarians.

  The capital flowing into the country will develop the infrastructure and economy of the given
regions, by that the the purchasing power, the GDP/capita and the standard of living will rise too.
For Hungary it is an opportunity as well. Due to the proximity of the capitals, Hungarian FDI can
start a so- called 'shopping tourism' from Slovakia to Hungary. petrochemicals sales by
integrating its distribution and market.) MOL has also expanded Slovnaft’s petrochemicals
sales by integrating its distribution and marketing into that of TVK, Hungary’s largest
petrochemicals concern, in which MOL has a controlling stake.ny Slovna

5.3.2. Croatia

   The purchase of the 25%+1 share of the Croatian national oil company INA happened in 2003.
    MOL offered 505 million dollars, while the Austrian offer from OMV was 420 million dollars.
It was one of the biggest privatisation jobs in Croatia. INA is strategically important to the
Croatian economy and employs some 17,000 staff. The Government of Croatia is the sole owner of
the share capital of INA except for MOL plc. who plans to buy more stake in the next years. MOL
has recommended raising the amount of capital to be invested in INA oil as part of a programme
running until 2007 by $500 million to $2.1 billion. MOL wants INA to become a major oil
company in southern Europe. However, MOL sees a need to invest more in INA's network of filling
stations, environmental protection and information technology. INA would be able to finance an
investment programme of such a size on its own, but MOL would readily contribute to the
programme if necessary. It owns 401 retail service stations in Croatia, 51 in Bosnia, and 5 in
Slovenia. In addition, INA supplies gasoline and oil to over 200 service stations owned by others,
moreover two fuel refineries and two lube refineries in Croatia . In connection with this retail

petroleum products business, INA owns and operates storage depots, railroad facilities, and oil
tankers. According to recent estimates MOL covers the 60% of the market in Croatia.

 For MOL INA means strategic importance because it can be a link to other markets in the South-
Eastern European region. For instance, recently MOL-INA in a consortium has bought the 67% of
the Bosnian Energopetrol. It was not a great step, but for MOL this acquisition will have a graet
significance if it gains 50% in INA.

   From an economic point of view in 2006, most of the favourable tendencies of 2005 will
continue according to the analyts' expectations. Considering the political aspect, as it was
mentioned earlier, accession treaties were launched as a negotiation process with the EU in March
 In Croatia, monetary policy is expected to remain strict, thus the role of the consumption will
decrease further in economic growth, while the effects of large public investment projects also
diminish this year. That is the reason why the Croatian GDP will grow at a slower pace than in the
previous year, approximately 3.2-3.5% in real terms.
 Since 2000, the following measures were taken to improve the investment environment:
introduction of investment incentive legislation, reduction of payroll and corporate taxes, revision
of the privatisation framework, and the drafting of plans for the liberalisation of the energy sector.
These created a favourable envirinment for FDI of MOL in comparison to other countries in the
 Similarly, as in the case of Slovakia, Croatia gets the same advantages from the partnership and
the invested capital of MOL. Mainly the economic cooperation will progress between the two
          Croatians have used amount for investments mostly for the development of infrastructure,
          tourism and for the preparation of EU- NATO accession. For example the Croatian seacoast
          is a popular tourist destination for Hungarians.

5.3.3 Romania

        In Romania MOL Romania S.A., completed a closure of the transaction with SHELL
Romania S.A. MOL’s acquisition of the remaining Shell filling stations increased the number of
outlets there to over 130, bringing the company another step closer to the targeted 15% retail
market share. In Romania, the integration of the 22 filling stations purchased from Shell Romania
has been completed, and as a next step, MOL purchased 100% share of Shell Romania Ltd.

   In the Southern Region, MOL wishes to optimise the processes by the integration of MOL
Romania and Shell Romania and by the acceleration of the network development in order to ensure
further cost-efficient operation. As a result of the Shell Romania Ltd. acquisition, Romanian
subsidiary will achieve national coverage with its 135 filling stations and nearly 12% market share.
   Due to last year parliamentary elections in Romania, Béla Markó, chairman of the Democratic
Federation of Hungarians in Romania7 is in a fortuitous position. Following the elections, he is
now deputy prime minister in the government of Calin Tariceanu. This can bring certain advantages
for the Hungarian minority which includes approximately 1, 930, 000 inhabitants and for the
Hungarian transnational companies who want to invest in the country.
  MOL also tries to operate in favour of the Transylvanian region. Not long time ago it delocated its
headquarter from Bucharest to Cluj Napoca ( Kolozsvár) to have a better proximity to Hungary ,
serve the interests of the Transylvanians and improve this region infrastucturally and economically,
since Bucharest is definitely the most developed city. MOL has also rotated the Managing Director
of MOL Romania, who is now Károly Robák, the manager responsible for the Romanian operations
to have a clearer cultural view and better communication. Indeed the situation is the same as in the
case of Slovakia- Slovnaft, both parties benefit from this decision. (György Kertész, 2004)
       Romanian GDP grew more than 8%, which is outstanding in the economic history of Romania
since the transition. The excellent performance is mainly due to the robust growth pace of the
agriculture sector (almost 20%). (
     In 2002, Romania had the second largest share in Hungarian FDI outflow, however, in case of
Romania, generally smaller investments occurred. The main Hungarian investors were MOL,
Dunapack, TVK, Zalakerámia and the Danubius Group. This year, the stock FDI that came from
Hungary increased to EUR 150 million in Romania (now, it is approximately EUR 700-750
million). With the help of inward FDI Romania wants to assure the increase of fix or circulating
capital, increase the number of jobs, increase the efficiency of equipments or increase labour
productivity. Romania should increase its competitiveness at the level of the Member EU countries
in the short time remaining till the accession at 1st January 2007. It would also like to become a
member of the NATO.
  In order to attracting, promoting and increasing of foreign investments, in Romania it was setting
up the Romanian Agency for Foreign Investment (ARIS) who time, assists and mediates the
contracts and negotiations between foreign investors and the local authorities in order to implement
the foreign investments’ projects. ARIS resembles to the institutions like ITDH and Corvinus Rt. in

7 Romániai Magyarok Demokratikus Szövetsége- RMDSZ

   From the economic aspect, in Romania domestic demand remains the main engine in 2006.
Both private consumption and gross fixed capital formation will play an important role. The latter
will boosted by inflowing foreign direct investment related to privatisation process and greenfield
investments. The closing date of accession will make Romania - more attractive, thus the increase
of FDI is expected in the future. On the other hand, the base effect that supported the outstanding
growth last year will be eliminated this year, thus economic growth will fall back to approximately
5-5.2% in 2006.
 Favourable measures taken by the new centrist government approved a significant tax reform
aimed at reducing the size of the black economy and boosting foreign direct investment in the EU
candidate country. The former income tax bands ranging from 18 percent to 40 percent, and the 25
percent corporate tax were replaced by a 16 percent flat rate tax. With this move Romania has
joined countries in Eastern and Central Europe like Slovakia, the Baltic states, Ukraine, Serbia and
  The proponents of the flat tax rate usually emphasize the simplicity, efficiency and fairness of the
system. Concerning the efficiency, the implementation of a flat tax definitely reduces the time and
costs of completing a tax form. Taxpayers could save time and money that is currently paid to tax
advisers, while fiscal specialist would be able to switch to a more productive form of the economic
development. However foreign investors still see the bureaucracy and lack of communication with
state institutions as their main problems in Romania. So it is something to be developed.

5.3.4. Poland

 MOL has several filling stations in Poland through the acquisition of Slovnaft (see map Chart X.
among Appendices) and by that created a platform for expansion into underdeveloped Southern
Poland. Unfortunatly few of these produce loss, so in the future MOL will probably sell them if this
trend continues.

  On the other hand, I want to highlight Poland, there is another expansion possibilty there for
MOL because negotiation of MOL with the Polish national oil company and the governement
showed a possibilty to create a strategic partnership. Poland’s attempt to consolidate its oil sector
has been slow, mainly due to political squabbling. PKN Orlen, of which around 28% remains
controlled by the Polish government, signed a declaration of intent on strategic co-operation with
Hungary's MOL in November 2003. A merger between the two companies could create a large

regional company, able to compete with other large oil firms. For Poland, it could allow the country
to lessen its dependence on Russian crude oil because MOL owns a diversified oil import . Since
1999, MOL has also negotiated a co-operation with PKN Orlen, the largest crude oil refiner and

manufacturer of petrochemical products in Poland . In November 2003, MOL and PKN Orlen
signed a ”memorandum of understanding”, whereby the parties agreed to examine the potential for
partnership. For MOL, this could furnish entry into Poland, the largest market in the region, with
significant growth potential. An agreement between MOL and PKN Orlen would represent the most
significant regional consolidation step in Central Europe. ( report 2004)
  However, the eventuality of the expected merger between the two companies was far from
certain. For political reasons, Poland was reluctant to give up control of its trategic asset . Finally,
with the listing of MOL on the Warsaw Stock Exchange, PKN Orlen announced in December 2004
that it was no longer interested in a merger. There is still a hope that PKN will make an offer again
for MOL, but this the question of the future and the political changes in Poland.                     (
Zsolt Berger,2004)

   In MOL’s advanced degree of internationalization as compared to PKN Orlen, three of the four
standard motives of internationalization can be identified: market seeking, resource seeking and
strategic asset seeking.
   For MOL this merger would be ideal because PKN Orlen has a monopolistic position in the
Polish oil sector; the company is the largest manufacturer and distributor of fuels in Poland.
However, as opposed to MOL, PKN Orlen is not involved in upstream operations in the domestic
market. In December 2002, PKN Orlen acquired 494 filling stations in Germany. As a result of the
transaction, which involved the purchase of BP, Aral and Eggert petrol stations for EUR140mn, the
company acquired a nearly 3% share of the North-German market in terms of the number of
   PKN Orlen acquired these stations as part of its strategy to develop a pan-regional retail network
and totake advantage of the opportunities occasioned by Poland’s accession to the EU. Through the
experience gained in Europe’s largest fuel market, PKN Orlen wishes to strengthen its position in
the region, while creating a solid foundation for developing PKN Orlen’s further presence in the EU
In June 2004, it also purchased a 63% stake in the Czech oil firm Unipetrol, consisting of over 20
companies, including refineries, 335 filling stations in the Czech Republic and a pharmaceutical
  These mergers and the inflowing FDI in the past year has been one of remarkable contrasts for

the Polish economy. In Poland, where FDI rose by more than $1.1billion to a record $7.5 billion,
foreign investors were obviously attracted by the large domestic market (the second after the
Russian Federation in terms of GDP and the third largest after the Russian Federation and Ukraine
in terms of population). A surge in growth supported by EU accession in the first half of 2004
subsided in the middle of the year. Inflows of greenfield FDI, the equity market, and corporate and
financial sector profits were strong, but overall investment picked up only modestly. And
employment grew for the second year in a row, though unemployment remained exceptionally high.
On the price side, inflation jumped in mid-2004 but retreated to low month-on-month rates by end-
year helped by a sharp reversal of the previous zloty depreciation. Fiscal developments were also
mixed: the appreciation, together with renewed privatization, temporarily halted the upward trend
of the public debt ratio, even as the fiscal deficit increased.( Kalotay, Kálmán, 2003)

 These volatile developments reflect the uncertainty that has hindered sustained high growth.
Particularly with an election on the near-term horizon, the public is looking for a clear direction for
policies aimed at realizing the potential of Poland's substantial assets-a young and plentiful supply
of labor, a credible record of low inflation, a strong external balance, and EU membership, to name
a few. To be sure, risks to economic stability are low; but reducing uncertainty about public policies
is key to getting investors to make the long-term commitment needed to expand employment and
raise living standards.

  To conclude Poland to keep up competitiveness of PKN Orlen, has to enter new markets and to
incorporate strategic assets to strengthen its vertical integration in the oil product market. However,
PKN Orlen has thus far undertaken only preliminary steps on the way to regional consolidation to
internalize these locational advantages. The potential merger with MOL could develop the
infrastructure of the South-Poland and would strenghten position of both companies in CEE and
prevent them from takeovers. Moreover Poland could reduce its dependence on Russian oil import.

   Polish people also need to reduce the strong interdependence between the governement and the
biggest national companies through privatisation, because this is the only solution to

create more workplace, reduce the quite high quota of unemployment and ameliorate the pace of
econmic growth again.

5.3.5.Serbia/ Montenegro, Bosnia and Herzegovina

       Here we can read about about the two countries jointly because they are on almost the same
economic level and the plans of MOL can be analysed jointly in the former 'Small-Yugoslavia'.
Owing to the shock of the last Balcanic war in 1999, many of the foreign investors stepped back to
export capital to the Balcans. The Kosovo conflict influenced some potential investors interested in
South-Eastern Europe to postpone decisions. Indeed, some countries in the subregion reacted to the
crisis with an increased openness to FDI and a greater focus on privatization, and some major
privatizations were accelerated. Hungary was wise enough and despite of political instability, it
dared to make some investments in the South- Eastern European region. It knew it could gain
competitive advantage by its proximity to the SEE7 countries and by the accession to the EU on 1st
May, in 2004.
  Today it can be seen that not by allmeans the Balkanic region is the most instable part of Europe
froma political perspective, as we could see the case of negotiation of the merger of MOL and
PKN-Orlen with the Polish governement.
     Starting from 1998, Hungary became a significant foreign investor in the Southeast European
region. Some large Hungarian enterprises gained a foothold in mainly Bulgaria, Croatia, Macedonia
and Romania. This process is unique among the CEE countries. In the future, the increase of the
foreign activity is expected to continue due to the progressing of the privatisation process, the high
economic growth and the improving business climate.
 It is clear that this process is has not ended yet, the privatisation process of these economies is still
not finished. The large Hungarian companies are planning to expand further in the future. In 2005
MOL plans to increase its share in Croatian oil company (INA). Thus in Serbia, MOL will be
expected to tender to Naftna Industrija Srbije (NIS), while in Bosnia- Herzegovina, the MOL-INA
consortium was interested in Energopetrol. Finally the government of Bosnia's Muslim-Croat
federation agreed on 14 October to sell 67% of fuel retailer Energopetrol to a consortium of
Hungary's MOL and Croatia's INA. In Serbia MOL has filling stations through the Croatian INA.
As I mentined before, this acquisition will have a greater importance ion the Balcanic expansion, if
MOL gains minimum 50%stake in INA. (Bálint Deák, 2004)
  In both countries economic growth is also supported by the developments in the euro zone, as
interest rates are expected to rise slowly. The increasing competition in the almost fully privatized
banking is also putting a downward pressure on interest rates, which in turn is supporting economic
growth. (

    At the same time, despite the favorable growth performance, unemployment remains a serious
problem. The unemployment rate was estimated to be 42 percent in 2004, and it was expected to
stay about the same at the end of 2005. However, the employment statistics are highly unreliable
and the gray economy is still quite large in Bosnia-Herzegovina and in Serbia, giving jobs to
people, but not becoming visible in the statistics. Another problem is that in Serbia still exist some
xenophobia against minorities, such as Hungarians.
  There are also refugees returning to the country as a result of stabilization, and they are
contributing to the increase in the number of unemployed. Therefore high unemployment is
expected to remain a serious problem in the Balcans.
 If the FDI inflow could continue in the SEE region, these problems could be solved,since people
would get legal employment, so grey market and unemployment could decrease together. MOL also
plans to to start greenfield investments by constructing new MOL filling stations. Again I can
emphasise the same in thing as in th case of Slovakia and Romania, that it would ease these contary
feelings of Serbians and give more possibilities for the minorities.

5.3.6. Austria

    In Austria too, MOL strengthened its position, further increasing its penetration of the end-user
market by acquiring 75% in Roth Heizöle GmbH, a company with a significant position in the
Austrian fuel wholesale market. It was inJuly, 2004 when the company acquired a majority stake in
the Austrian Roth Heizöle GmbH, the largest privately-owned oil distribution company in the
country, with yearly fuel sales of approximately 400,000 tons, and filling stations and logistic
facilities in the Linz and Graz regions. After MOL opened a wholesale depot in September, 2003,
in Korneuburg, near Vienna, this was a further step to increase the direct supply of middle-size and
small end-users active in the industrial, agricultural and transportation sectors, as well as of local
filling stations. Existing customer contacts of Roth Heizöle in the Linz and Graz area provide a
complimentary fit to the markets of the MOL Group, supplied from the Korneuburg depot. With the
acquisition of Roth Heizöle, the MOL-Group achieved nation-wide wholesale coverage in Austria,
and strengthened its position in this key export market. Roth Heizöle GmbH also possesses three
major storage depots and the required logistics for the transport of petroleum products. Its name is
as a subsidiary is MOL-Austria. As OMV has a 10% stake in MOL plc. and diposes a high market
share in Hungary, it was a clear strategy from MOL to gain a market share also in Austria.

Austria is an ideal country to be studied, since the geographical and cultural proximity and the
former Austrian- Hungarian Monarchy, but we do not have to present it, because it is a common
knowledge that it has a quite stable economy and politics. It is a member of the European Union a
long time ago.
 As OMV has a 10% stake in MOL plc. and diposes a high market share in Hungary, it was a clear
strategy from MOL to gain a market share also in Austria.
   The real interests for Austria in the inward FDI, is that it can create stronger econmoic links
with the CEE countries. With the further accession it can reach new markets with more than 200
million consumers. The best example OMV for this aspect is OMV, who believes that can achieve
organic growth by its strategy and can have a better access to these markets.
    In the past few years we can highlight it also that the difference of economic and infrastructural
development between East- Austrian regions and West – Hungary vanished. Some parts of Western
Hungary, for instance Győr- Moson -Sopron, are yet more developed than Easter- Austria.
According to the analysis of the Austrian KMU-Forschung research institute, western-Hungary and
Slovenia have caught up with Styria at „breakneck speed”. Between 1995 and 2000, the economy
of Western-Hungary developed five times as fast as the economy of Styria, in the case of Slovenia
the ratio was twofold. According to the researchers of the institute, Győr-Moson-Sopron county has
already outdeveloped Styria’s eastern regions.(

5.4. The connection between the capital export of MOL and the accession of Hungary and the
neighbouring countries to the EU

   The enlargement of the EU presents some challenges for companies from new member countries
in CEE. Besides introducing some positive developments – like the possibility of diversifying their
resource base– the new situation also poses some threats to the national interests of the new
member countries.
The common economic space of the EU will lead to more competition from Western companies,
while on the other hand Russian oil and gas companies are trying to establish a foothold in the
enlarged EU to benefit from the European internal market. This has additionally increased the
pressure of competition for the energy companies in the new EU member states.
   Companies, therefore, have developed strategies to cope with these negative aspects of EU
enlargement and to keep their competitive edge. One strategy is internationalization or
transnationalisation. Regarding MOL plc. and the Polish oil company PKN Orlen have had the

market access, i.e. the access to the common European economic space, as ownership advantage
since EU enlargement. However, the companies have undoubtedly faced more competition from
Western companies. The challenge for both companies is to keep up their competitiveness to
survive independently.
   Energy companies in the new EU member states in CEE find themselves between a rock and a
hard place. Integration into the West- European pipeline and delivery network should have enabled
CEE countries, especially those at the forefront of the EU accession, to diversify their energy
supplies. However, diversification of their energy suppliers was more difficult for CEE countries
than expected. Their energy dependence on Russia is still very strong. Instead, CEE energy
companies have had to and must continue to cope with this new situation caused by the EU
enlargement, which means first and foremost more competition. MOL and PKN Orlen, for instance,
have tried to grow and become regional leaders to avoid take-overs by Western or Russian
 Russian companies – though stuck on the sidelines of the EU – have, nevertheless, tried to benefit
from the EU’s single market. For them, the markets in CEE are familiar and not yet completely
dominated by Western companies. While the companies in new EU member countries, such as
MOL and PKN Orlen, have the market access, Russian energy companies have, their resource base,
the necessary assets – one might think – for a partnership successful enough to withstand
international competition. Additionally, historically motivated distrust and geopolitical thinking
makes co-operation and compromise difficult.
       These problems can be solved with potential partnerships, like in the case of MOL-INA,
MOL- Slovnaft or as PKN negotiated with MOL about the idea of a strategic cooperation. Another
possibility for the CEE countries is to cease the given privatisation opportunities in the countries
who have not yet been joined t to he EU. This is very important, because after the closure of the
accessions further advantages could be gained from the mergers of the companies from neighbour
countries. One is that they will be able to save their own market from outsiders like Russia or
Western competitors.
 Secondly as borders will disappear, they will be able to develop together the so-called EU-
regions, but it is only feasible if their economies interact with each other on a high level. For
example the idea of „Czech-Slovak-Austrian-Hungarian super region to be born” comes from
Austria. This would primarily serve the realization of collective economic, infrastructural projects.
The „middle-Danube region”of about 6 million inhabitants is already one of the most developed
parts of Central-Europe already existing bilateral initiatives. Plans are that the participating regions

will open a representative bureau in common in Brussels.

6.Conclusion- recommendations to Hungarian companies who wants to follow MOL plc. as a
benchmark in capital export

    Hungary was the first Central- European country who started to receive inward FDI from the
end of the 80's due to fact that it had the basis of political stability and despite of socialism, it had
already managed to create good economical relations with the West. Its infrastructure,
advantageous taxation, cheap and highly skilled labour and location attracted Western investors into
the country. Hungary was also the first in terms of the amount of received FDI. However, in the
last years the FDI-inflow began to decrease as the conditions are not so favourable and cheap as
they were 15 years before. Thus investors has moved more to the East. Hungary and its enterprises
had to replace somehow the inward capital and expand the saturated domestic market. FDI- outflow
seemed to be the best solution as its returns can finance companies' operations and gives a bigger
market. Hungary is to become a net capiatl exporter.
  The competetive advantages of Hungary like proximity, cultural knowledge ( even the same
language), existing economic relations and common interests have been dictating one major
tendency since then. This tendency was first to export FDI in the more developed CEE countries,
who are almost on the same economic level as Hungary like the Czech Republic and Slovenia or
Croatia. In the second round the less developed ones whose politics are a little bit still opaque
were Slovakia and Poland. Thereafter Romania, Bulgaria who are going to join to the EU in the
near future finally the Balkans. MOL followed this tendency too, it gained first the25% of INA,
recently has acquired Slovnaft, then the Shell filling staions in Romania, and now it keeps an eye on
the Balkans. Possibilities in the form of privatisations are still there in the EU- acceding states
until political stability and economic situation will be perfect, because in an opaque economy
prices are lower if it about Foreign Direct Investment is coming in to the country. There are less
conditions to accomplish for the investors. Leader position of our country is sustainable if
Hungarian companies can follow a similar tendency and strategy alike MOL.
    MOL plc. is an appropriate role model, because it achieved to become highest- profit and
biggest company in Hungary, moreover the leader in the region in its sector.
    To justify the mentionned tendency of the Hungarian and CEE FDI-inflows and outflows, see
Table 1. FDI-inflow from 1998-2004 in the Appendices again.

   In the previous sections we could read several solutions and internationalisation strategies of
how MOL reached a market leader position in the Carpathian Basin. On the basis of these I am
going to conclude these and make some recommendations to other Hungarian companies who
wants to expand in the region. So what is the key to succes for MOL?
  MOL’s internationalization was succesful because it planned in advance its steps. Companies
before capital export have to consider the motives for internationalising. The main standard motives
for internationalization are market seeking, resource seeking, efficiency seeking and strategic asset
seeking (Buckley 1988; Dunning 1993, 1998; Hanson et al. 2001).
   For MOL the motivations for expansion were the followings: (1) market seeking, (2) resource
seeking, (3) efficiency seeking and (4) strategic asset seeking. The meanings of these are the
              (1)Market seeking: to have an access to bigger market. Since MOL overgrew the
       domestic market, it had to expand.
           (2)Resource seeking: Physical resource-seeking applies to transnational corporations
       seeking access to raw materials abroad, to obtain security of supply.
              Exploration and production business is in position to be an engine for further growth
       forthe MOL Group ,primarily through expansion internationally. It wants to focus its
       activities on such regions as the CIS countries, in particular Russia and Kazakhstan, where it
       is already present and on the Middle East and North Africa. MOL also bought several
       refineries abroad ( Slovakia, jointly in Croatia and the refineries that belong to Austria from
          (3 )Efficiency seeking: Cost efficiency, reducing costs. Foreign operations to reduce input
       costs are strongly associated with the manufacturing industry, for example lower labour
       costs in the foreign country. MOL cut its cost by HUF 25-30bn in the last few years in
       order to improve its efficiency, and the company's future expectations are also favourable.
       The saved money can be converted into Research& Development, marketing, product
       andservice development or other acquisitions. Besides it will increase the shareholder value.
              (4)Strategic asset seeking: ‘Strategic asset or capability seeking’ describes attempts to
       secure the input of key elements in the production process such as technology, professional,
       managerial, and financial skills, knowledge of various types, and marketing expertise.
       Mol uses its strategic manament in every country by rotating the management. It produces
       with highest technology and quality standards everywhere.
 Comments while MOL’s internationalization was mainly driven by resource seeking motives until

1999, the company changed its business strategy focusing more on downstream acquisitions in CEE
countries. MOL shifted its focus more to strategic asset seeking. As a result of MOL's expansion
policy, its sales revenues have increased significantly.
   The motives can also determine the form of interationalisation, as well as the given countries
political, economical, legal and cultural environment will influence the choice. Also timing is very
important. Timing of the first internationalisation and timing in the future, in other words the
planning of the strategic steps and constant seeking for possibilities in the region. MOL is so
successful, because now it has a strategic plan and mission statement for a five-year period.
 The forms of internationalization can be joint ventures, acquisitions, co-operations, marketing
subsidiaries. MOL has employed almost every form depending in the possibilities in the given
country. For example in Slovakia it purchased 100% of Slovnaft, this an acquisition; it owns
25%+1 share of the Croatian INA in a joint venture; in Romania the Shell filling stations are in the
form of subsidiaries. Finally with PKN-Orlen MOL planned to create a strategic partnership by
exchanging the state-owned shares.
  Foreign direct investment arises when three conditions are satisfied . First, the firm must possess
specific ownership advantages (tangible or intangiblethe) not available to other firms, such as a
superior technology, patents on particular products, a brand name, a trademark or other indication
of product quality. MOL has the brand name it produces its high-quality goods and services with
with brand new technology.
 Second, the foreign market should offer some locational advantages – specific in their origin to
particular locations and which can only be utilized on-site, like natural resources, most kinds of
labour, and proximity to markets, but also the legal and commercial environment in which the
assets are used (market structures, legislation etc.) – that make it more profitable to serve the
foreign market via local production rather than exports or imports (e.g. high tariff barriers on
exports or anti-dumping regulations). For Hungarian companies it is a real advantage that Hungary
is situated in the absolute centre, so it has the proximity to Central- European countries. On the
hand, all in the neighbouring states have considerable Hungarian minority, which sould be
expolited as manpower.
   As a response to the increased consolidation in the industry, MOL has changed its strategic
direction since 1999. It has decided to withdraw from its geographically diversified international
exploration portfolio, taking into account the long lead-time and higher risk involved. Instead, the
company plans to use its competitive advantages and focus its activities on Russia and CEE, using
its historical, technical and cultural knowledge of the region. MOL has further decided to

concentrate on refining and marketing and aspires to regional leadership .
 On the whole, on the basis of the capital export of MOL, we can recommend to other Hungarian
companies who want to internationalise, have take many things in consideration. First it has to
determine its mission statement and motives for internationalisation. After a thorough market
research and country analysis an enterprise have to choose an internationalising form by measure its
financial and non-financial sources. Then internationalisation can begin.
  If Hungarian companies can follow this method, they can be the leader on the market and as a
result Hungary can become the economical- logistical-cultural centre of the Central- European
region. The conditions for this are well-strucured internationalisation strategies that can build good
relations with the neighbouring countries. Additionally factors like good communication between
the mother company and its subsidiaries/ different headquaters (this is usually given in the
neighbouring countries by the language and similar culture) and regarding the interests of the host-
countries can lead to a higher return and stronger position on the market to a Hungarian
capitalexporting company. Nevertheless these companies and Hungary will have prosperous
advantages if the all the borders open thanks to accession of the neighbours. The higher purcsahing
power will attract consumers to the Hungarian market. For the realisation Hungarian companies
should exploit of facilities/ privatisation possibilities on time and think in advance to bear the
competition in the coming years.

III. Summary

     On the whole, I have chosen the capital export of MOL as a topic of my dissertation, because it
is a very actual topic and it has theoretical-practical importance. In my analysis, I used mainly
secondary data from publications and reliable statistical data for example from UNCTAD. Primary
sources were gathered from MOL plc., personally I interviewed there Mr. László Varró ,my outside
consultant at MOL, who is a startegic manager there and he is also a specialist in the field of
transnationalisation. According to its character, my dissertation is descriptive, according to its
function in the management it is objective-seeking, according to its range it is a partial analysis of
MOL plc. From the point of view of approachement it has an economic vision which examine the
economic process from a value-side and eventually it is a dynamic analysis that covers a 15-year
period. Apart from the interviews my own method of research contains also a SWOT-analysis on
the basis of the oil market in the region as a qualitative data. These are demonstrated by reliable
statistical quantitative data based upon the announcements of the United Nations Conference on

Trade and Development (UNCTAD).
     Why we can say that it is an important, up-to-date question?
     According to economic experts this is not a unique phenomenon. They say that the same trend
can be observed in the Portuguese, Finnish and Spanish economies, with the difference that this
happened too early in Hungary. The capital import decreased. On the other hand, the increase of the
capital export indicates, that there are already a number of companies operating in Hungary which
are fit to become large regional, transnationals or multinational companies. Such companies are for
instance: MATÁV telecommunications,MOL plc., the pharmaceutical company Richter, OTP
Bank or Danubius Hotel Group.
  The aim of this work has been to demonstrate through the history, structure, operation, strategic
management and mission statement of MOL plc. that what are the advantages and disadvantages of
capital export for Hungary and how could we become the centre of the Central and Eastern
European region with the help of a thoroughly planned capital export process. Moreover I analysed
this question from an economical, cultural and social point of view in both Hungary and from the
point of view of neighbouring countries. I explained how the MOL plc. has become the No.1
enterprise with a record income of 208 billion HUF in the year 2004 - when it doubled the amount
of its profit- in Hungary and in the region and how other companies could learn from this success
story if they decide to expand to abroad.
    Furthermore what are the interests of our country and countries in the region in the capital
export of MOL, in the transnationalisation and accession of our neighbours to he EU. Finally I
wanted to prove the importance of the Hungarian capital export, realising the tendency of falling
capital import, Foreign Direct Investments in Hungary.
      Finally I have got the following results in conclusion:
    After the partly privatisation of ÁFOR, MOL was finally founded in 1991. Its activites are put
into two main branches: Production&Extraction and Refining&Marketing. Since 1991 the state-
owned stake has reduced considerably, but this resulted in a stronger corporate structure, which
mainly includes investors. Thus MOL 's objective on a corporate level is to increase the shareholder
value for them.
   On that score MOL plc. sees the key in the expansion to foreign markets. That is why its
operations, corporate structure and strategic management are harmonised to each other. Its startegy
and mission statement - that is to become the most significant oil company in Central Europe - are
well-defined in advance for five years. Thus it has to strongly rely on its different branches in all
the host-countries. MOL has found the solution for this in the rotation of managements among

different fields of activity and different states. Thus it can collect a broader view through various
opinions and experiences with which the company is able to make a more objective self-
   If we analyse the advantages and drawbacks of MOL from a corporate point of view, we can
realise that there is a fierce competition on the Central Eastern European market, where MOL has
three competitors: the Austrian OMV, the Polish PKN-ORLEN and the Russian LUKOIL. From the
description of these and the SWOT- analysis it is clear that every of them aims to cover a
considerable part of the market and see the potential in expansion, so there is a transnationalisation
process. Till the last year MOL expanded successfully by acquiring the 100% of the Slovakian
Slovnaft, the 25%+1 share of the Croatian INA, the Shell- filling stations in Romania, Roth
stations in Austria and 67% of the Bosnian Energopetrol in the downstream business. In the future
MOL plans to conquer the Balcans via the strategic partnership with INA and several other
privatisation possibilities exist in the East, but these are decreasing. MOL also negotiated with the
Polish governement about a feasible partnership with PKN, that could certainly give competetive
advantages for both parties as joined forces.
     The mother country and the host-countries can benefit from FDI from many aspects.
Our country's assets like more developed economy, proximity, central location and the significant
Hungarian minority are given for the challenge to be centre of the of the region. Additionally, the
common interests of all the states have significant role in the attraction of foreign investments. Such
an interest is the accession of Romania and Bulgaria to the EU in 2007, as well as the exploitation
of the consequences of this like common infrastructural improvement in the so-called EU- regions
in the coming years.
   All in all MOL plc. can be a good role model to follow. Sources, advantages and intstitutions
are present to help the process of the outflow of FDI. The more Hungarian companies and Small-
and Middle Enterprises are willing to export capital abroad and exploit these advantages in the
given time, the more the ideal leader position will be obtainable for Hungary in the Central
European region.

                                                  IV. Appendices


Table1.: 8FDI- inflows, outflows, inward stock and outward stock of 13 European countries (1980-
2004)                                                          Source: UNCTAD 50;15 (2005)
Table2.: TOP 25 TNCs of Central- Eastern Europe Source: UNCTAD(2002)
Table3.: Key financial data for MOL's business segments
Table4.: MOL's strategy 2006-2010's Strategy 2006-2010(2005)
Table5.: Hungarian populations in Europe      kissebsegek

Chart1.: MOL's ownership structure               Source: structure(2004)..............21
Chart2.: Operational Integration                 Source: 2006-2010 (2005)…................27
Chart3.: Map of MOL filling stations             Source: (2005)...................45

    Table 1. FDI- inflows, outflows, inward stock and outward stock of 13 European countries (1980-2004)

              C ATEGORY
              ( millions of
EC ONOMY      dollars)            1980          1990          2000          2001          2002          2003          2004
           FDI inflows                 239           653          8 ,8 4        5 ,9 2         356          7 ,3 5        4 ,8 7
           FDI inward stock           3 ,1 6      1 0 ,9 7      3 0 ,4 3      3 4 ,3 3      4 3 ,5 1      5 3 ,8 4      6 2 ,6 6
           FDI outflows                101            1 ,7        5 ,7 4        3 ,1 4        5 ,8 1        6 ,7 8        7 ,1 6

Austria    FDI outward stock           530          4 ,7 5      2 4 ,8 2      2 8 ,5 1      4 2 ,4 9      5 5 ,9 6      6 7 ,4 2
           FDI inflows                      -             -        146           119           265           381           497
           FDI inward stock                 -             -        398           517           782          1 ,1 6        1 ,6 6
&Herzegovi FDI outflows                     -             -            ..            ..            ..            ..            ..
na         FDI outward stock                -             -          40            40            40            40              1
           FDI inflows                     ..            4           1 ,1        813           905             2 ,1       2 ,4 9
           FDI inward stock                ..          12         2 ,2 6        2 ,5 8           3 ,7       5 ,0 9        7 ,5 7
           FDI outflows                    ..           -3             3           27            28            27         -2 2 8

Bulgaria   FDI outward stock               ..        114             87            97          126           147           ***
           FDI inflows                      -             -       1 ,0 9        1 ,5 6        1 ,1 3        2 ,0 4        1 ,0 8
           FDI inward stock                 -             -       3 ,5 7        4 ,2 4        9 ,9 1      1 0 ,4 8      1 2 ,9 9
           FDI outflows                     -             -            4         155           539           108           314

Croatia    FDI outward stock                -             -        875           967          1 ,8 3        2 ,0 5        2 ,4 3
           FDI inflows                      -             -       4 ,9 9        5 ,6 4        8 ,4 8           2 ,1       4 ,4 6
           FDI inward stock                 -             -     2 1 ,6 4      2 7 ,0 9      3 8 ,6 7      4 5 ,2 9      5 6 ,4 2

Czech      FDI outflows                     -             -          43          165           207           206           546
Republic   FDI outward stock                -             -        738          1 ,1 4        1 ,4 7        2 ,2 8        3 ,0 6
           FDI inflows                3 ,3 3      1 5 ,6 1      4 3 ,2 5      5 0 ,4 8      4 9 ,0 4        4 2 ,5      2 4 ,3 2
           FDI inward stock          2 6 ,6 7     8 6 ,8 5      2 5 9 ,8     2 9 5 ,3 2    3 8 6 ,5 5    5 1 0 ,8 8     5 3 5 ,2
           FDI outflows               3 ,1 4      3 6 ,2 3     1 7 7 ,4 5     8 6 ,7 7      5 0 ,4 4      5 3 ,1 5        4 7 ,8

F rance    FDI outward stock         2 3 ,8 8    1 1 0 ,1 3    4 4 5 ,0 6    5 0 8 ,8 6    5 8 6 ,1 2    7 2 1 ,5 5    7 6 9 ,3 5
           FDI inflows                 333          2 ,9 6     1 9 8 ,2 8     2 6 ,4 1      5 0 ,5 2      2 7 ,2 7     - 3 8 ,5 6
           FDI inward stock          3 6 ,6 3    1 1 1 ,2 3    2 7 1 ,6 1    2 7 2 ,1 5    2 9 7 ,7 9    3 8 6 ,5 1    3 4 7 ,9 6
           FDI outflows                  4 ,7     2 4 ,2 4      5 6 ,5 6      3 9 ,6 8      1 5 ,1 7       - 3 ,5 7      - 7 ,2 7
Germany    FDI outward stock         4 3 ,1 3    1 5 1 ,5 8    5 4 1 ,8 6    6 1 7 ,7 6    6 9 5 ,7 7    8 4 0 ,9 2    8 3 3 ,6 5
           FDI inflows                     1         623          2 ,7 6        3 ,9 4        2 ,9 9        2 ,1 6        4 ,1 7
           FDI inward stock                ..        569        2 2 ,8 7      2 7 ,4 1      3 6 ,2 2      4 8 ,3 2      6 0 ,3 3
           FDI outflows                    ..          16          621           368           278          1 ,6 5         538

Hungary    FDI outward stock               ..        197          1 ,2 8        1 ,5 6        2 ,1 7        3 ,5 4        4 ,4 7
           FDI inflows                   10            89         9 ,3 4        5 ,7 1        4 ,1 3        4 ,1 2        6 ,1 6
           FDI inward stock                ..        109        3 4 ,2 3      4 1 ,2 5      4 8 ,3 2      5 5 ,2 7      6 1 ,4 3
           FDI outflows                  12              5           16           -9 0         230           196           806

Poland     FDI outward stock           321           408          1 ,0 2        1 ,1 6        1 ,4 6        1 ,8 6        2 ,6 6
           FDI inflows                     ..            0        1 ,0 4        1 ,1 6        1 ,1 4        2 ,2 1        5 ,1 7
           FDI inward stock                ..            0        6 ,4 8        7 ,6 4           7 ,8     1 2 ,8 2      1 8 ,0 1
           FDI outflows                    ..          18           -1 1          -1 7           16            41            70
Romania    FDI outward stock               ..          66          136           116           144           208           301
           FDI inflows                      -             -          25          165           137          1 ,3 6         966
           FDI inward stock                 -             -       1 ,3 2        1 ,4 8        1 ,6 1        2 ,9 8        3 ,9 9

Serbia and
           FDI outflows                     -             -            ..            ..            5          -3 5             ..

Montenegro FDI outward stock                -             -            ..            ..            ..            ..            ..
           FDI inflows                      -             -       1 ,9 3        1 ,5 8        4 ,0 9         669          1 ,1 8
           FDI inward stock                 -             -       3 ,7 3        4 ,8 4        8 ,5 3      1 1 ,8 6        1 4 ,5
           FDI outflows                     -             -          21            35              5           22         -1 5 5

Slovakia   FDI outward stock                -             -        325           446           486           627           618
           FDI inflows                      -             -        136           370          1 ,6 9         337           516
           FDI inward stock                 -             -       2 ,8 9           2 ,6       4 ,1 1        4 ,4 5        4 ,9 6
           FDI outflows                     -             -          65          145           153           466           498

Slovenia   FDI outward stock                -             -        268               1        1 ,4 9        1 ,9 5        2 ,4 5

Table 1.: FDI- inflows, outflows, inward stock and outward stock of 13 European countries (1980-2004)

Annex table A.II.2. The top 25 non-financial TNCs from Central and Eastern Europe,a ranked by foreign assets
                          (Millions of dollars)
Ranking by
Foreign                                                                                              Assets
assets   Corporation        Home country        Industry                                Foreign                   Total
1          Lukoil JSC        Russian Federation Petroleum and natural gas               5 354.0               22 001.0
2          Novoship Co.      Russian Federation   Transportation                         962.9                 1 093.9
3          Pliva d.d.        Croatia              Pharmaceuticals                        689.1                 1 382.0
4          Norilsk Nickel Russian Federation       Mining                                502.0                 9 739.0
5          Primorsk Ship. Russian Federation      Transportation                          331.8                  384.2
6          Gorenje g.        Slovenia             Domestic appliances                     312.8                  632.8
7          Hrvatska El.      Croatia               Energy                                 272.0                2 357.0
8          Mercator d.d.,    Slovenia             Retail trade                            224.6                1 040.0
9          Krka Group         Slovenia             Pharmaceuticals                        180.7                  577.9
10         Far Eastern Sh. Russian Federation      Transportation                         123.0                  377.0
11         Petrol Group      Slovenia             Petroleum and natural gas               108.5                  623.5
12         Richter Gedeon Hungary                  Pharmaceuticals                        105.6                  742.7
13         Malév Airlines Hungary                 Transportation                          105.0                  280.0
14         Podravka Group Croatia                 Food and beverages/ pharmaceuticals     102.4                  485.8
15         MOL Plc.           Hungary             Petroleum and natural gas                 95.9               3 243.2
16         BLRT Grupp         Estonia             Shipbuilding                              66.2                 116.0
17         Zalakerámia Rt. Hungary                Clay product and refractory                65.0                 120.0
18         Intereuropa d.d. Slovenia              Trade                                     45.0                  216.0
19         Merkur d.d.        Slovenia            Trade                                     43.3                  500.5
20         Petrom S.A.        Romania             Petroleum and natural gas                 31.5                4 558.0
21         Budimex Cap.       Poland              Construction                              23.8                  372.6
22         Croatia Airlines Croatia               Transportation                            23.4                  316.1
23         Finvest Corp.      Croatia             Forestry                                  22.2                   71.9
24         Iskraemeco d.d. Slovenia               Electrical machinery                      20.7                   85.2
25         Policolor S.A.     Romania             Chemicals                                 17.2                   31.0

Averages                                                                                    393.1                2 053.9
Change from 2001 (in %)                                                                      5.4 %                 52.1 %
                                                          Source: UNCTAD survey of top TNCs in Central and Eastern Europe.

      MOL's strategic goals for 2006-2010     Table4.

Source: (2005)

         Hungarian populations in Europe /person/ (2000)
                                                         Table 5.
        Country, region          Total         Carpathian Basin
1. Hungary                     10,360,000              10,360,000
2. Slovakia                       710,000                  710,000
3. Ukraine                        220,000                  200,000
4. Rumania                      2,100,000                1,930,000
5. Yugoslavia, Croatia,           465,000                  455,000
6. Austria                         70,000                    5,000
2-6. total                      3,565,000                3,300,000
7. other European countries       200,000
2-7. total                      3,765,000                3,300,000
8. Europe total                14,125,000              13,660,000

                                         V. Bibliography

          1. Newspapers:
  1, Antalóczy, Katalin: Magyarország és Közép-Európa a világ működőtőke-áramlásában-
  Fejlesztés és Finanszírozás,04/2002. p.3-10
  2, Berger, Zsolt: Regionális expanzió. MOL-eredmények I-III. Negyedév, Manager Magazin
  12./2003 p.46-48
  3, Berger, Zsolt: Határtalan lendület, Manager Magazin 10/2004, p.31-39
  4, Csáki, György; Szalavetz, Andrea: A működőtőke vonzási képessége, mint a versenyképesség
  mércéje, Külgazdaság 04/2003p.47-63
  5, Deák, Bálint: Közös fellépés az INA-val, Világgazdaság 29/11/2004
  6, Dunning, John H.: Location and the multinational enterprise. A neglected factor?, Journal
  of International Business Studies, 29/1/1998 p.45-66
  7,Kertész, György-Nyomáskay, Kálmán : Regionális vezető szerepre tör a MOL, Figyelő,
  33. /1999. p.22-25
  8,Kertész, György: Új fázisba lépve, Manager Magazin 10/2004. p.28-30
  9, N. Vadász, Zsuzsa: A működőtőke-export- Magyarország régiós első, Világgazdaság
         2 . Publications:
   1, F. Foley, James: The Global Entrepreneur: Taking Your Business International,
       Dearborn Trade (1999) p.51-102

   2, Good-Barnes- Strange-Tanova: International business,

       National Institute for Research and Investment- Kopint-Datorg Foundation: revaluating
       economic reforms in Central and Eastern Europe since 1989 (1996) p.35-94

   3, Kalotay, Kálmán (2003) Outward foreign direct investment from economies in transition in
the global context, Journal for East European Management Studies, 8/1, p.6-24.

   4, R. Root, Franklin: Entry Strategies for International Markets, Jossey-Bass; Reprint edition
(1998) p.115-138

   5, Solt-Sziva- Lukács: A nemzetközi gazdaságtan alapjai, Budapest (2000), p.109-145

   3, Studies, presentations
1, Antalóczy, Katalin/ Éltetö, Andrea (2002) Outward foreign direct investment in Hungary:
motivations and effects. Budapest: Institute for World Economics of the Hungarian Academy of
2, MOL quaterly news till 2004, Company data (2005)
3, MOL strategy 2006-2010-presentation on 28th November, 2004

 4, Internet:
    1,     FDI in Hungary 10/10/2005
    2,     Magyar kissebségek/ Hungarian 12/10/2005
    3,     ITDH- Export 15/10/2005
    4,     About MOL - -02/09/2005
    5,     MOL annual report 2004 report2004 09/09/2005MOL
    6,     Mol strategy 2006-2010 -    28/11/2005
    7,     Company Information-
    8,     PKN-Orlen annual report 2004 - 03/11/2005
    9,     TVK Company information-
    10,    Major FDI indicators- 01/11/2005