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Strategic upstream developments: key takeaways from CEE experts

Upstream activities are playing an important role in the energy supply of our country and the region. The 58th CEEC conference, held in Budapest in early May, offered a valuable platform for the representatives of the upstream industry to introduce themselves, reinforce partnerships and explore contemporary trends and challenges.

MVM CEEnergy was one of the key sponsors, reflecting the importance of the upstream area in the company’s life. In addition to MVM CEEnergy, Aspect Energy as the host and MOL Group were the other main sponsors of the event.

upstream
Csaba Lantos, Hungary’s Minister of Energy. Photo source: CEEC, FotóMűvek Kft.

After the organisers extended their welcoming remarks, Csaba Lantos, the Minister of Energy Affairs, delivered the opening speech. He talked about the Hungarian energy sector, addressing its complexities and achievements. Hungary, being a landlocked country, depends on pipelined natural gas as its direct source of supply and consequently, it must rely on other countries to be able to use LNG. In 2021, the first LNG cargo arrived at the Krk terminal, enhancing the Hungarian natural gas supply portfolio. In recent years, geopolitical events have underscored the importance of energy sovereignty as a key goal for both our country and Europe. Hungary could maintain reduced utility costs for households even amidst the turbulent international developments that have challenged the European Union over the past few years. Along with diversification, countries can also use their domestic resources, which could be instrumental in achieving energy security.

Mike Peffer, Chief geologist at Aspect Energy, spoke about the Nyékpuszta field. Launched in 2021, the Corvinus project focuses on the exploration, field development and production of the proven hydrocarbon asset under the Sarkad-I mining license in Békés county. The hydrocarbons are in so-called unconventional reservoirs more than 3,500 metres below the surface.

A specific feature of unconventional reservoirs is that, in order to achieve production that can be considered commercially successful, additional specialised reservoir management operations are required in addition to conventional technologies. A common feature of these accumulations, besides their unconventional nature, is that they typically contain large hydrocarbon resource volumes, often at significant subsurface depths, in high-pressure, high-temperature geological environments that present challenges to the technology applied.

upstream
Balázs Benedek Sándor, MVM CEEnergy’s CFO. Photo source: CEEC, FotóMűvek Kft.

The presentation on the Corvinus field was followed by MVM CEEnergy’s Upstream vision. Balázs Benedek Sándor, the company’s CFO, discussed the upcoming plans at CEEnergy. The Corvinus project stands out as the cornerstone of the current small-scale project portfolio, with four producing wells and ongoing drilling for the fifth. The Nyékpuszta field is a so-called unconventional gas field, which is currently estimated to have a recoverable natural gas resource of around 6 billion cubic metres (bcm). Due to its unconventional nature, daily production can be improved primarily by increasing the number of producing wells. CEEnergy is constantly monitoring potential business opportunities in the upstream business, to boost production and strengthen the Hungarian energy security.

While traditional upstream is a fundamental pillar of the energy sector, Government Authorities of Hungary and Croatia, Representatives of Aspect Energy, MVM CEEnergy and MOL Group held a roundtable discussion to address the current issues in the region. Besides hydrocarbon exploration and production, they have also talked about geothermal energy and its possibilities in the region. Geothermal energy holds significant potential in Hungary and Croatia. While Hungary is renowned for its thermal baths with healing properties, there is growing interest in utilizing geothermal energy as an energy resource. There is also promising geothermal potential in Croatia, particularly in the continental regions. For both countries, the opportunities presented by geothermal energy can contribute to sustainable development and energy security while reducing reliance on fossil fuels.

Geothermal energy, despite being a sustainable and reliable source of power, faces significant profitability challenges. The high initial capital costs for exploration and drilling, coupled with the need for advanced technology to access deep geothermal reservoirs, make the upfront investment substantial. Additionally, geothermal plants are location-specific and limited to regions with accessible geothermal resources, which can restrict market expansion and scalability. Maintenance costs can also be high due to the harsh conditions within geothermal wells. In scenarios where geothermal energy yields no financial gain, the extraction of natural gas and oil can be a profitable business opportunity for upstream companies.

The next CEEC event will be held in autumn 2024, which we eagerly anticipate. Meanwhile, MVM CEEnergy is actively seeking new potential business cases in the Upstream sector.

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