Pursuant to a 2022 government decree on Windfall Taxes, Hungarian energy company MOL entered into a public authority contract with the Hungarian State represented by the Supervisory Authority of Regulated Activities.
The Contract sets minimum hydrocarbon production levels in Hungary for MOL across five categories of assets for 2023 and 2024. As long as MOL meets these minimum levels, effective royalty rates for MOL will decrease in line with the provisions of the Decree, retroactively from 1 September 2023.
“We welcome that the Hungarian State has taken into account producers’ concerns that, at the elevated level of mining royalties, investments by producers that improve Hungary’s security of crude oil and natural gas supply will not pay back,” said Zsombor Marton, MOL Group Exploration and Production Executive Vice President. “The contract concluded today will enable us to implement the investments necessary to maintain our production in Hungary, which is in the common interest not only of the signatories – MOL and the Hungarian State – but of all domestic actors.”
By signing the Contract, MOL’s extra royalty payments in Hungary are expected to decrease by up to 400-450 million US dollars in the 16 months between September 2023 and December 2024.