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3.
CONTENTS
Lectori salutem! 4
Introduction 5
Short hitory of petroleum 6
History of the Hungarian oil industry 8
Hungarian Petroleum Association 10
Hydrocarbon exploration 13
Petroleum production 15
Gas production and usage 16
Refining 17
Lubricants 18
Quality of the petroleum products 19
Quality control 21
Retail 22
Environment protection 24
Strategic reserves 25
Fuel taxation and price structure 26
Alternative fuels 27
Bio fuels 29
Education 31
Hungarian Oil Museum 32
Oil industry specific legislation 33
Important institutions 34
LECTORI SALUTEM!
Twenty years is long period of time. So much time has passed since the arrival of the
multinational oil companies in Hungary and since the largest petroleum companies es-
tablished the Hungarian Petroleum Association.
After twenty years, it is good to sit back and see how the oil industry is organised today
and what changes have occurred over the last few years.
Some dislike the industry for many reasons. This is true locally and globally. It is hard to
imagine that the worlds oil industry processes four billion tons of crude oil per year -
double the volume of water in Lake Balaton!
It is characteristic of the economic weight of the petroleum industry that 20% of state
revenues derive from oil and oil companies (mining royalties, company tax, excise tax
etc.).
The dynamism of the domestic oil industry meant that it was among the first to be lib-
eralised. Although this was not studied enough from the legal stand point, it initiated se-
rious ignition. The arriving oil giants brought some 2 billion dollars in operating capital
into the country in just a few years. To withstand such competition, domestic companies
with interests in the oil industry had to undergo vast transformation and to make huge investments. As a consequence, a few years after the change in polit-
ical system, proportionately, there were more up-to-date filling stations in Hungary than any other country and the arrival of the international oil companies
was an encouraging sign for medium and small foreign enterprises.
However, in the oil industry, to be competitive, there was, is and always will be the need for continuous growth. Thanks to these on-going developments, we
belonged to the lesser sector of industry which, even in 1994, when Hungary applied to join the EU, was in perfect harmony with the requirements of the Eu-
ropean Union, or, properly speaking, with those of its legal precursor. On Hungarys entry, the oil industry did not have to ask for any modifications of the law.
Not long after the change in political system, with the start of strategic stockpiling in 1993, security of supply grew significantly stronger and today there are
strategic stocks of natural gas in our country, a rarity in Europe. Also, as a result of our efforts, there is an independent, accredited institute which tests petro-
leum products and reports on fuel quality to the EU.
Considerable progress has been achieved in the protection of the environment and health. One example I would like to mention is that, whereas diesel sul-
phur content could be up to 5,000 ppm (0.5 %) at foundation of our Association, this was reduced to 10 ppm (0.001 %), in several phases, by 2003.
We did not forget the new generation of professionals, either. We have good relations with the universities to ensure we create new generations of petroleum
engineers. As a part of this effort, we established the Foundation for the New Generation of Chemical Engineers in the Hydrocarbon Industry some years ago.
Besides successes, of course, we have had and still have troubles. For example, we were not able to settle the question of used oil in a satisfying and environ-
mentally-conscious way.
All in all, however, I think that twenty successful years lie behind us.
These twenty years are presented in this publication. Our aim is to help to form an accurate picture of the Hungarian petroleum industry.
Dr. Jzsef Tth
President of the Hungarian Petroleum Association
Senior Vice President of the World Petroleum Council
4.
INTRODUCTION
Crude oil (or mineral oil) is a natural end-product of biomass accumulated in sedimentary rocks. (Petroleum literally means rock oilfrom the Latin petr(a) rock
+ oleum oil). It is generated by genetic transformation of sedimentary organic matters, mostly plankton and bacteria in the anaerobic (oxygen-free) environment
of the Earths crust. The main components of crude oil are liquid hydrocarbons but, depending on circumstances, they can contain gases and solid substances
in dissolved or dispersed phases. Thus, sulphur, nitrogen, oxygen (and other heteroatoms) containing compounds can also be present in different crude oils.
In addition, native crude oils usually contain water (in the form of emulsions) and suspended mineral particles.
Crude oil can be characterized by high enthalpy (combustion heat, calorific value). Its production technology is relatively simple, transportation and storage
facilities are easily operated and it is indispensable as an industrial raw material. Crude oil is one of most important natural resources for all national economies.
The geological formation of oil reservoirs - starting with the accumulation of biomass, followed by sedimentation, genetic transformation, decomposition, pri-
mary and secondary migration, and ending with gravitational segregation in hydrocarbon traps - takes several million years. Substantial oil fields may form
in those geological formations where tectonic activity is negligible and impermeable layers surround an oil trap. Extended sedimentary rocks and formations
frequently exist in bathyal zones of mountains and meet these requirements. Such oil-bearing formations can be found in both continental and offshore areas,
mostly on ocean rims where the depth of sea water is several thousand metres.
Explored and proven hydrocarbon resources can be effectively put to use when the accumulated amount of organic liquid and gas is sufficiently high and the
recoverable reserve determined by available technology is considerable The fact is that efficiency in oil production depends on many factors. Among others,
the reservoir rock must have high permeability and porosity, preferably extensively fractured in structure and the oil body must be in contact with peripheral
water saturation or aquifer. The composition of oil trapped in tectonic and structural geological domes is definitely a function of the type of biomass, sedimentary
(mother) rock, properties of migration path and the final oil-bearing formation. As a result, hydrocarbon reservoirs might be oil and gas fields and gas-capped
oil fields.
It is also worth mentioning that the character of crude oil is significantly influenced by temperature and pressure conditions acting throughout the whole
process. Thus, as far as its rheological properties are concerned, oil may be subdivided into three main groups: light, medium, and heavy. Another classifica-
tion is made according to chemical composition, determined by analyses. Accordingly, paraffinic, aromatic, naphthenic, and more complex naphtha-aromatic
and asphaltenic crude oils are produced from different reservoirs, all over the world.
Before refining, water and sediments are separated from crude oil and, thereafter, significant quantities of gas containing propane and butane are obtained
through degassing. Crude oil stabilisedin this way is separated by atmospheric distillation to the following distillates: the cut in the range of 60-200 C
o
is vir-
gin naphtha, the cut in the range of 180-280 C
o
is kerosene and the cut in the range of 260-360 C
o
is diesel fuel. The bottom product of atmospheric distilla-
tion is residual fuel oil.
Residual fuel oil is further processed by vacuum distillation to produce vacuum gas-oil and lubrication oil fractions (spindle, machinery and engine oils). To re-
move components which deteriorate easily the fractions are submitted to further physical and chemical processes. The bottom product of vacuum distillation
is mainly used for bitumen (asphalt) production.
The main products of crude processing are: automotive fuels (gasoline and diesel), jet engine fuels (kerosene), various lubricating oils (spindle, machinery
and motor oils) and bitumen.
Products deriving from crude processing are only partly used in transportation and lubrication. Other fractions produced by refining (e.g. virgin naphtha) are
feed stocks for the petrochemicals industry. Organic compounds produced from these processes are used for syntheses, mainly in the plastics and chemicals
industries.
5.
A SHORT HISTORY OF OIL
Although oil from natural oil seeps has been known for sev-
eral thousand years, its production in industrial quantities
only started in the middle of the 19th century and thereafter
appeared as it were a comet in the sky of energy supply.
It was on August 27
th
, 1859 when oil got arrived on the sur-
face at a well in Titusville, Pennsylvania, USA. Seen from
today, it was not too big a deal: they had to drill just a little
bit more than 20 metres and 3-4 cubic metres of oil was pro-
duced daily using hand-operated pumps. All the same, the
arrival of black goldstarted with this drilling. After this suc-
cessful event, oil fever broke out and started a fight for Ti-
tusville concessions. The surrounding land was quickly full of
drilling rigs, wooden booths, sleeping quarters with straw
mattress and workrooms. Not one of todays giants derives
from these humble beginnings. One and a half years after the
big hit, 160 tons were being produced here every day.
It was a complete coincidence, but crucially important from
the point of view of the future fate of oil, that in the first year
of drilling at Titusville, Etienne Lenoire patented the gas en-
gine which was then further developed by a young German,
a certain Nicolaus August Otto, in such a way that it could be
operated using flammable liquids. (It is an irony that whereas
the end-product of oil processing remained lamp oil for many
years, Otto patented his internal combustion engine to run
on ethanol.)
In oil production, Standard Oil (the precursor of todays
Exxon/Esso = SO) led by Rockefeller played a decisive role.
Not long afterwards, oil was found west of the Mississippi
and in the southern states of the USA (Texas and Oklahoma)
in quantities which far exceeded the fields of Pennsylvania.
In the Baku region, the Nobel brothers started production on
an industrial scale and in short order Shell of Great Britain,
Royal Dutch of the Netherlands and the Anglo-Persian Oil
Company (today known as BP) all appeared.
In the history of oil, a crucial change was wrought by Edisons
invention of the light bulb which gradually ousted lamp oil.
At the same time, due to the expansion of internal combus-
tion engines (motor-cars and airplanes) the demand for fuel grew ever greater. 1910 was the first year in which more gasoline was sold than lamp oil.
The First World War convincingly proved the superiority of liquid fuels (gasoline, diesel, heating oil) over coal. After the war, transport and industry needed more
and more oil and the worry arose that reserves would soon be exhausted (it was predicted that global oil reserves were only enough to satisfy the level of de-
mand at that time for 30 years!). Accordingly, feverish exploration activity started on global scale and many new fields were discovered. In spite of the fact that
oil was abundant in the marketplace, competition was fierce, both in the market and for concessions.
In September, 1928, Royal Dutch, Shell, Standard Oil as well as the Anglo-Persian Oil Company agreed to limit production and split up the markets. This was
the so-called Achnacarry or As-is Agreement and was entered into later by four American companies (SOCAL, Mobil, Gulf and Texaco). Enrico Mattei, the pres-
ident of the Italian ENI, later christened them the Seven Sisters.
Due to increasing demand, production grew continuously. In 1945, 362 million tons of oil was produced globally. This figure multiplied tenfold over the next
35 years and at the beginning of the 21
st
century world-wide production totalled about 4 billion tons a year.
As a counter-cartel to the Seven Sisters, Iran, Iraq, Kuwait, Saudi Arabia and Venezuela established the Organization of Petroleum Exporting Countries (OPEC)
in Baghdad in 1960. Algeria, Ecuador, The United Arab Emirates, Gabon, Indonesia, Libya, Nigeria, Angola and Qatar joined later. Significant producers like the
Soviet Union (and its successor states), Mexico and Norway never joined.
The price of crude oil was usually steady but in the seventies there were two price explosions, early in 1973 during the Arab-Israeli war and later in 1979 dur-
ing the Iranian revolution. In the case of the latter, taking inflation into account, the price hit todays US$100/bbl. After the second big price hike, a decreasing
6.
trend occurred which touched bottom in February, 1999
(the benchmark Brent grade was cheaper than US$10/bbl).
Thereafter prices started to rise again, petroleum products
following the price of oil, but after the turn of the century,
increased demand for fuels (diesel in China and India and
gasoline in the USA) took world market prices to never be-
fore seen heights, followed by increases in oil prices (the tail
wagging the dog!). The price of oil reached its zenith on June
4
th
, 2008 when a barrel cost 144.2 dollars. While a lot of ex-
perts were worried it would hit 250 dollars in the near fu-
ture, oil prices started to slump and reached the minimum
on December 24
th
, 2008 at US$33.6/bbl. For the time being
(as of summer 2011) the price of oil is about US$100/bbl
and may be regarded as stable.
As demand for petroleum products has grown, significant
changes have also happened in processing. The early simple
atmospheric distillation process was followed by more and
more complicated processes (vacuum distillation, cracking,
reforming etc.) and later on procedures that process residue
into more valuable products (delayed coking, hydro-crack-
ing) became more and more important. The current basic
problem that Europe has is that, at the time refineries were
constructed, the main aim was to produce as much gaso-
line as possible. In the meantime, however, strong demand
for diesel has occurred and if the European refineries want
to meet diesel demand, huge amounts of surplus gasoline
would be generated. The imbalance between refinery ca-
pability and the demands of the vehicle owner is counter-
balanced in Europe in such a way that every year some 20
million tons of diesel are imported from Russia and the Mid-
dle East and similar quantities of gasoline are exported to
America.
The obvious question in the readers mind is: how long shall we have oil? Nobody knows exactly. At the very beginning of the 21
st
century it was estimated that
production would peak between 2025 and 2030. However, in the meantime, huge fields have been found in Brazilian territorial waters, in Venezuela and in
the Arctic Ocean. In this connection, it is worthwhile quoting Lew Watts, a senior Shell manager who said, at the World Petroleum Congress in 2000: The stone
age did not end because we ran out of stones. The oil age will not end because we run out of oil.
7.
A SHORT HISTORY OF THE HUNGARIAN OIL
INDUSTRY
In the historic areas of Hungary, oil and gas were to be found in many places, mainly outside
the Hungary of today, however. Long before the start of serious drilling for oil at the beginning
of the 20
th
Century, mineral oil and natural gas were declared state monopolies under Act No.
6 of 1911.
Upstream
In 1920, the Hungarian Oil Syndicate Co, a Hungarian affiliate of the Anglo-Persian Oil Company
(todays BP) was established but its prospecting for oil was not successful. EUROGASCO, owned
by English and Americans, acquired concessions directly from the Hungarian State in Trans-
danubia in 1933. In 1937, close to Budafapuszta (Zala county), an oil field was discovered which
was suitable for production on a commercial scale. Based on the wells production results, the
Hungaro-American Oil Co Ltd. was established as a subsidiary of Standard Oil of New Jersey
(today known in the US as Exxon and Esso in Europe). It discovered an oil field close to Lovszi
in 1940 that was suitable for production thus ensuring oil supply to domestic refineries. The
company was nationalised when Hungary entered the war in 1941. After the Second World
War, the Americans got the company back but in 1948 it was nationalised again. In 1951, the
Nagylengyel oil field was opened up. Due to forced production, the peak of 1.2 million tons of
1953 had dropped to 300,000 tons by 1957 and 1.2 million tons output was only again achieved
in 1965. In the meantime, in 1957, the Oil Trust was established. Later, in 1960, the Hungar-
ian Oil & Gas Trust, today known as MOL, was founded. Production started at the Algy field
after 1965 and even today this field produces the most oil in Hungary. Domestic production
reached the maximum, a little over 2 million tons, in 1980 and thereafter started to decrease.
Downstream
In historic Hungary, in the then eastern part of the country, even in the middle of the19
th
cen-
tury, there were many oil plants (kettle and distillation) processing Galician crude oil. Modifi-
cation to customs legislation in 1882 that hit imports initiated refinery construction, among
others in Fiume (today Rijeka) in 1882, in Budapest in 1883 and 1891, in Biharszilgy in 1889
and in Pozsony in 1895 which had significant capacity (60-80,000 t/a). The Vacuum Oil Com-
pany plant, with a capacity of 80,000 t/a, started production in Almsfzt in 1907. Combined capacity met domestic demand in 1900 and later on exceeded
it (252,000 tons of petroleum products in 1913).
After the First World War, most refineries were in territories detached from Hungary and the supply of oil became difficult. A Shell plant started production in
Csepel in 1930, the Szreg Petroleum Factory in
1931 and, with the support of the Treasury, a plant
was built in Ptfrd in 1937. The construction of a
refinery with a capacity of 400,000 t/a was started
in Szny, but production only started after World
War II. Combined domestic refinery gasoline, petro-
leum and diesel production exceeded 500,000 tons
by 1943.
After World War II, the refineries were nationalised,
in 1948. Smaller ones were closed and so process-
ing capacity fell back. Production in the Zala Asphalt
Factory, on the basis of oil from above-mentioned
Nagylengyel, started in 1952.
The Danube Oil Company was established in 1960
and due to continuous investment and renovation
it plays, even today, a decisive role in supplying the
country with petroleum products. Refinery con-
struction started in 1962, production in 1965. Oil
supply was also assured by the Friendship pipelines
coming from the late Soviet Union as well as by
8.
transport from Hungarian
oil fields.
The Tisza Oil Company was
established in 1972 but
hardly had it started up
when the oil crisis broke
out stopping construction.
Eventually, it was com-
pleted but with a capacity
of 3 mt/a versus the
planned 8 mt/a. The pro-
cessing capacity of the
country was highest in
1980 (14.5 mt/a) and the
largest volume of oil was
processed in 1979 (11.4
million tons). Today, due to
the closure of numerous
early distillation units,
Hungarys processing ca-
pacity is about 8 million
tons. Processing is only
performed at MOLs
Danube Refinery.
9.
THE HUNGARIAN PETROLEUM
ASSOCIATION
We have now been going for twenty years and the period has been rich in events.
After January 1
st
, 1991, due to the too hasty liberalisation of the oil market, chaotic conditions were preva-
lent and to resolve this the 14 biggest oil companies operating in Hungary at that time (Agip. Allcom, Aral,
Avanti, BP, Esso, Mineralimpex, Mobil, MOL, OMV, Q8, Shell, Tamoil and Total) founded the Hungarian Petro-
leum Association on December 13
th
, 1991.
The basic tasks of the Association were, and still are, to promote the foundation and maintenance of a freely
competitive marketplace, to foster good relations with the authorities and to provide expert information to
members and third parties. The Association is open: anybody can become a member who meets criteria laid
down in the Statutes. At the initial statutory meeting, Dr. Jzsef Tth was elected President and, after sev-
eral re-elections, still holds this position.
The multinationalsappeared on the scene after 1991, bringing enormous working capital to Hungary, their
investments reaching two billion dollars in the first few years. Besides these economic giants, however, lim-
ited companies with registered capital of one million forint, deposit companies with no assets and some un-
official groups unknown to the Court of Registration, entered the marketplace. They would have caused no
trouble if, like the multinationals, they had fulfilled their duties towards the state and the other players in
the marketplace. Unfortunately, most of them appeared to think that they were disadvantagedcompanies
operating under rules different from the majors.
The main problem was the fact that, as of January 1
st
, 1991, parliament cut the production and home trade
monopoly of OKGT (legal predecessor of MOL) and the foreign trade monopoly of Mineralimpex (legal pred-
ecessor of MOLTRADE-Mineralimpex) without providing relevant legal requirements and conditions for con-
trol. (In this situation, people could even give the State Presidents office as their office address, imports could
be approved from Cabo Verde, a place with no refinery and it was even possible to get a licence to import a
complete train-load of fuel which would then disappear. Anyone caught would say that unfortunately they
were not in a position to pay.)
Such were the circumstances in the de-monopolised (liberalised) marketplace. For Association members,
this state of affairs could not go on and they were happy when, in 1993, the government submitted a bill on
excise tax about which the petroleum companies were invited to give an expert opinion. Unfortunately, in
the end, two very important Association proposals were not included in the act: firstly, each petroleum prod-
uct had to be subject to excise tax so the force of law would put commercial matters in order and secondly,
activities relating to petroleum products had to be supported by significant guarantees since no one would
just hand over a train-load of fuel to a deposit company with no assets.
The authorities standpoint was initially unambiguously hostile to the Association, saying that the majors
wanted to make the position of the minors impossible. But then the above proposals were suddenly ac-
cepted when it became clear that the state was losing billions of forint.
In 1992, the Association requested Arthur Andersen & Co to assess whether national legislation was in har-
mony with the precepts of the European Economic Community (predecessor of the European Union). Their re-
ports two most important recommendations were a) that Hungary should introduce the bonded warehouse
since without it wholesale activity could not be conducted and b) to ensure security of supply, strategic stock-
piles should be established.
Association members played a strong role the following year when the Association of Crude Oil & Oil Prod-
ucts Stockpiling (predecessor of the Hungarian Hydrocarbon Stockpiling Association) was established.
A whole new series of fraud started up soon after. In Hungary, many people used HTO, a domestic heating
oil. This product differed from automotive diesel in that it was coloured red. From the financial point of view,
however, a bigger difference was that a high excise tax was levied on diesel while HTO attracted no tax. The-
oretically it was illegal to fill a car with HTO at a filling station. On the initiative and with the financial help
of our Association, inspections at filling stations were started and a new form of criminal ingenuity was dis-
covered - bleaching. The Sudanese red colouring the HTO was being treated with sulphuric acid so the colour
disappeared. But there was a slight snag: sulphuric acid initiates resinification in diesel which ruins diesel en-
The
Founders
AgipHungria Rt.
Allcom
Kereskedelmi Rt.
Avanti Rt.
Aral Hungria Kft.
BP Oil
Magyarorszg
Kereskedelmi Kft.
Esso Oil
Tltlloms Kft.
Kuvait-FOR Kft.
Mineralimpex
Klkereskedelmi
Vllalat
Mobil - FOR Kft.
MOL Rt.
OMV -FOR Kft.
Shell s Interag Kft.
Tamoil Hungaria
Kft.
Total Hungaria Kft.
10.
gine pumps which are adjusted to within one-hundredth of a millimetre. Parliament did nothing about
bleaching for years. Then, from the second half of 1995, excise tax on diesel was repaid if one really
used HTO for heating. In 1996 heating with HTO became so expensive that the product has practically
disappeared.)
In the meantime, we took part in the formulation and modification of numerous standards. Our first pro-
posal to greenfuels was accepted in 1996: leaded RON 92 gasoline was deleted from the list of saleable
fuels (complete lead-free fuel, for which we were one of the forerunners in Europe, was introduced in
1998 with the extraction of the leaded RON 98 grade). In 1996, diesel also became greenerwhen our
members proposed sulphur content be reduced from 0.2 to 0.05 m%.
Simplification of taxation took many years to develop. In 1995, the following state charges were imposed
on the import of a litre of unleaded gasoline:
consumption tax HUF 41.6/litre
product fee HUF 2.0/litre
statistics duty 3 %
customs surcharge 8 %
road fund HUF 9.5/litre
stockpiling contribution HUF 1.144/ton
customs duty 2 %
V.A.T. 25 %.
Tax was imposed in eight ways and was regulated by even more rules. Some of them were determined
in percentages whilst others were fixed amounts; in the latter cases, the basis for calculation was some-
times the mass and sometimes the volume. The situation was exacerbated by the fact that the differ-
ent taxes were not due at the same time.
Close to the turn of the millennium, in harmony with the EU, a new regulation was enacted which only
called for two taxes on fuel, excise tax and V.A.T. and which declared that the distribution of the money
flowing into state coffers was the task of parliament.
On the Associations 10
th
anniversary, we appeared on the internet with an independent homepage
(www.petroleum.hu) in Hungarian and English. Here, the so-called Explanatory Dictionary of the Pe-
troleum Industry, informative material for outsiders, was first published in 2002. This consists of tech-
nical, financial and commercial parts put up in such a way that if, in the text of a headword, there is
another headword, one can click on it to jump to the new headword.
Practically since our very foundation we have been fighting tank tourism and fuel smuggling in par-
ticular. Taxes are high in Hungary where V.A.T. is the highest in the whole of Europe so tanking up abroad
makes sense. Drivers tanking up abroad and returning to Hungary commit no crime. However many
tank up abroad, unload in Hungary and resell the fuel. Our Association may be partly thanked for prac-
tically eliminating this practice and the black market for fuel in general. As recently as 2011, we man-
aged to encourage many transiting truck fleets to tank up in Hungary through the introduction of
commercial dieselon which the minimum excise tax prescribed by the EU is levied whilst private car
drivers have to buy diesel at much higher prices.
Many filling station robberies occurred at the beginning of the century, one ending in a death. In the
beginning we managed to ensure that media articles giving potential criminals ideas became rarer and
rarer and furthermore we tried to reduce the number of robberies by giving out information on sta-
tions security apparatus in printed and electronic media. Our efforts were successful. We could not en-
sure, however, that station personnel (as is the case with taxi drivers) be legally qualified as persons
fulfilling public tasks which, in itself, would have increased punishment for robbery and would most
probably have been a strong deterrent.
In 2003 the days of grace for vapour recovery and double-walled station tanks expired. This legislation
was introduced on our initiative in 1995 even though, as a consequence, member companies were
forced to cease operations at filling stations with low throughput. Unfortunately, the authorities did
not start checking up on white stationsuntil after the expiration of the days of grace.
On May 1
st
, 2004 Hungary joined the European Union. As Hungary did not meet each EU regulation, it
had to ask for derogation in numerous areas. It might be not an exaggeration to state that due to the
role our Association had played in the petroleum industry and trade, no derogation was needed.
From the point of view of the petroleum industry, a very important EU directive was issued just prior to
Hungary joining: Directive 2003/30/EC prescribed that in all motor fuels sold the ratio of bio fuel (on an
Members as
of Fall 2011
EniHungria Zrt.
Envirochem Kft.
LUKOil
Magyarorszg Kft.
Mabanaft Hungary Kft.
Mobil Petrol 2000 Kft.
MOL Nyrt.
Moltrade-
Mineralimpex Zrt.
OMV Hungaria
svnyolaj Kft.
Opal Tartlypark Zrt.
Shell Hungary Zrt.
Termktrol Zrt.
Total Hungaria
Kereskedelmi Kft.
11.
energy basis) had to reach 2% by 2005 and 5.75% by 2010. In Hungary, the act on excise tax was modified so that for gasoline after July 1
st
, 2009 and diesel
after January 1
st
, 2008 tax incentives were given if each drop of fuel contained 4.4% bio fuel. This Austrianpractice was followed by the Germanone from
2009 which gave no tax incentive but obliged petroleum companies to ensure on a monthly average that diesel sold contained at least 3.5% and gasoline 4.4%.
Anyone missing this target would have to pay a serious penalty.
2008 was an exciting year from many points of view. The price of oil reached a never before seen price in the global marketplace (on July 4
th
Brent cost 144.2
USD/bbl) which was followed by a free fall (on December 24
th
it was just over 33.6 USD/bbl). To stop price increases, OPEC increased production to historic lev-
els. Later, to stop prices falling, it carried out the biggest production decrease in history but these actions did not produce the sought-after effect. As a conse-
quence, the price of fuel fell by 80 HUF/litre between the beginning of July and the end of December, in Hungary.
The fall in oil prices was obviously connected to the world economic crisis getting bigger and bigger. The result in Hungary was the introduction of the Robin
Hood Taxon July 1
st
, 2009, an 8% special tax on energy suppliers. We protested in vain that the bill was discriminatory, impacted competition and was a penalty
for effectiveness and performance and not the proper way to solve a social problem.
The economic crisis continued during 2009 and, as a consequence, the government significantly increased the tax on fuels twice that year (such big tax increases
in a six-month period had never happened before). These tax increases had a fatal effect on fuel sales; in the first half of 2010, compared to the same period
in 2009, filling station gasoline sales fell by 15% and those of diesel by 10%.
In October, 2010, after the Robin Hood Tax, energy suppliers learned of a new additional tax. Although it negatively affected member companies, knowing
the economic situation of the country, they had to accept it. We have just asked the Ministry of National Economy to change parts of the act which were only
disadvantageous for petroleum companies. The excise tax is taxed again. A tax is levied on each participant in the wholesale chain that is higher than the mar-
gin. The layered character of the tax imposes different burdens on the participants and if the income of a company deriving from energy supplies exceeds 5%,
extra tax must be paid on each activity.
Typically, in the Association, workgroups have been established (Revenue, Legal, Statistics, Lubricants, Fuel Cards, Tank Techniques, Health, Safety and Envi-
ronmental Protection, Standardisation, Quality Assurance, EU Integration, PR and Complementary Activities). They prepare topics for decision by the Presid-
ium or at General Meetings (depending on their importance). The Associations standpoint on any matter is based on the jointly-agreed opinion of all members.
Individual members and the officials may not publish separate opinions. The Association is not a price cartel and has never taken a standpoint on formulating
retail pricing. It considers itself a private members club. It has represented and continues to represent the Associations standpoints in the areas of finance (e.g.
taxes), technology, (e.g. fuel quality) the environment (e.g. the elimination of leaded gasoline) and security (e.g. protection against filling station robberies).
To achieve its main aim i.e. the formulation of appropriate market conditions, it has helped the authorities with both expert knowledge and money. In the elim-
ination of notorious fuel splashingand the whiteningof heating oil, the Association played an important role.
The activities of the Association are public. Every year, an Annual Reportand other publications are prepared (e.g. Environmental Commitment). Fuel sta-
tistics are supplied to the media every quarter and a regularly renewed website (www.petroleum.hu) appears in Hungarian and English. The Association is in
contact with foreign petroleum associations and national associations with similar activities. The President of the Association is a senior vice-president of the
World Petroleum Council.
12.
HYDROCARBON EXPLORATION
The birth of Hungarian oil and gas exploration can be found at Budafa in 1937. It was typical of the pace of domestic hydrocarbon mining that from the first
ten wells, 3,600 tons of oil and 17 million cubic metres of gas were produced by December 31, 1938 versus the 142,000 tons achieved in 1939, a daily production
of 14 tons. This volume met roughly 75% of national demand at that time. In the fifties, the hydrocarbon treasures of Nagylengyel (1951), Demjn (1955) and
Pusztafldvr (1959) were discovered. The most important oil and gas discoveries in the sixties were at Hajdszoboszl (1961), lls (1963) and Szank (1964)
followed by the Algy field in 1965.
Hungarian oil and gas production 19372010, with important field discoveries
Since the birth of Hungarian oil and gas mining 74 years have passed so one can say that, in terms of hydrocarbon exploration using seismic measurements,
Hungary belongs to the most thoroughly investigated territories). Up until today, 93.5 million tons of oil and 209 billion cubic metres of natural gas have been
produced.
13.
Exploration areas in Hungary
In spite of successful and productive test drillings in progress even now (in 2010, out of 10 drillings, 7 were successful, an extraordinarily high ratio) a signifi-
cant part of domestic hydrocarbon reserves are mature and the number of reserves that can be found and explored and the reachable volume of fields are get-
ting smaller and smaller. Unfortunately, in the hydrocarbon industry, globally and locally, unfavourable trends may be observed both from the technological
and economic points of view. One of these trends is the reduction in size of reserves found; the other is the increase in depth of the explorable reserves. These
lead to very significant growth in expenditure. After many surveys and to reduce risks relating to exploration, the biggest player, MOL, focuses on hydrocar-
bon research close to existing fields. Using geological and geophysical methods (e.g. sequence stratigraphic procedures) new fields have been found but
smaller than earlier ones which were considered untouched territories.
The status of production in known domestic fields is characterised by exploitation values - for oil 0.79, for natural gas 0.61. Expected oil and gas production
from these hydrocarbon sources in an average planning horizon of 15 years reduces to one eighth in the case of oil and little more than one quarter in the case
of gas. In domestic hydrocarbon layers with an average age of close to 40 years, reserves continuously decrease with naturally decreasing production which
results in current production of 800,000 tons of oil and 2.6 billion cubic metres of natural gas per year, very far from the peaks of the eighties. It is character-
istic in our hydrocarbon fields that the yield factor is 42% on average for oil and 70% for gas - outstandingly high figures on a global basis.
exploration area
14.
CRUDE OIL PRODUCTION
Most domestic hydrocarbon production (HC) comes from 2-3 large areas and surrounding fields. (South-East Hungary: Algy, Kiskunhalas; Western Hungary:
Svoly, Nagylengyel; Central Hungary: Talms, Gomba). In past decades and in the future discovering fields with such big reserves as in the case of Demjn
(1955) or in Algy (1965) is unlikely.
Major Production fields of MOL
In recent years, MOL has formed a successful co-operation with its strategic partner, INA (the Croatian oil company). This involves the Drau basin and a joint
cross-border exploration well Zalata-1, as well as a joint 3D seismic survey in the Oresac-Potony area. MOL has also co-operated with another important part-
ner, Hungarian Horizon Energy Ltd. in the Komdi-Vszt block. There is also exploration and production co-operation in progress with numerous partner com-
panies (cross-border co-operation, field rehabilitation, joint field development etc).
The aim of Hungarian exploration and production remains continuous value creation, the maintenance of present production levels and stemming the reduc-
tion of reserves. The broad application of 3D seismic survey methods and improved evaluation methods offer further possibilities to the experts as we have seen
in the Derecske and Drava basins.
As a result cost-saving programmes and other major investments in the 1990s which aimed at efficiency improvements, environmental protection, sustain-
able development as well as projects ensuring continuous operations, unit costs did not increase despite decreasing production volumes. On-going control by
maintenance teams played a key role in the process.
In general, oil companies start tertiary production methods late in the day (EOR - Enhanced Oil Recovery; IOR - Improved Oil Recovery EGR - Enhanced Gas Re-
covery), attributing little importance to them. Taking the global average, the recovery yield factor is 8 percent, the final factor about 22 percent while the Hun-
garian average is 35 per cent.
In light of favourable global oil prices, besides conventional hydrocarbon exploration, non-conventional exploration activities have excited more attention in
Hungary. Non-conventional exploration is pursued in three regions which contain five basins with significant hydrocarbon potential.
The existence of non-conventional hydrocarbon reservoirs has been known for 30 years. For example, in the active hydrocarbon system in the Mak basin ex-
ploratory drillings were launched by OKGT (legal precursor of MOL) to prove it. Due to the previous lower level of technology, expert knowledge, the high de-
gree of geological/technical risk and enormous cost, exploration and production activities in this area were not taken seriously until recently. However starting
up such projects requires partner involvement.
Bajnsenye-riszentpter-D
Talms-D
Nagykta
Gomba
Nagykr
Szank-NY
Szank-K
Szank-DK
Tzlr
Kiskunhalas-K-
ttms-K
Szank-Ny
Cslyosplos-K
Kmpc-D
Kiskunhalas-D
Kiskunhalas-K
Jnoshalma-j
Borota
Kiskunmajsa-D
Ruzsa-
Dny
Demjn
Szeghalom
Mezsas-Ny
Martf
Dvavnya
Mhkerk
Fldes-K
Hosszplyi
Kismarja-Ny Fegyvernek
Kisjszlls-Ny
Endrd-
Endrd
Nagylengyel
Svoly
Svoly-D-K
Ttkomls-D
Battonya
Battonya-K
Mezhegyes
Mezhegyes-Ny
Csandapca
Algy
lls
Szeged-Mravros
Budafa
Mezcsokonya-Ny
Barcs-Ny
Grgeteg-Babcsa
Ortahza
lb CO2
Pusztafldvr
Kaszaper-Nagybnhegyes
Dl-Bks
15.
GAS PRODUCTION AND CONSUMPTION
In the recent decades natural gas supply had a dominant role in the primary energy supply of Hungary. 40% of the total energy needs is based on natural gas
and more than 80% of the households energy needs is primarily supplied by the natural gas market which represents an outstanding share in Europe level com-
parison. In the last two decades the natural gas consumption increased by 25%, in 2010 the annual consumption was ~12 bcm. In order to ensure the coun-
trys energy supply, due to the decreasing production of the domestic natural gas fields, the already high share of natural gas import increased by XX % in the
last two decades. Currently 81% of the total natural gas consumption is originated from export mainly Russian sources.
The Hungarian natural gas supply is ensured by well established transmission network and the underground gas storage capacities provide secured supply in
fluctuating seasonal demand. The underground gas storage enables the market players to inject and withdraw 4.9 bcm commercial and 1.2 bcm strategic nat-
ural gas reserve annually. The commercial capacities as the integrated parts of the Hungarian natural gas system provide the opportunity to ensure even six
time higher demand in the winter than an average consumption in the summer, while the strategic capacities are the main mitigating factors against the
risks of the one-sided and dominant import source.
From January 1, 2004 the conditions are ensured to have a competitive natural gas market. With the development of the market the residential consumers have
been entitled to step out from the public supply and to use the services provided by the competing players. From July 1, 2009, with the termination of public
supply with exclusion of some special group of consumers it
has become mandatory for most of the non-residential consumers
to entry into the competitive market aiming at developing a more
efficient natural gas market. However the role of the regulated
services remained dominant in the field of small consumers and
residential.
The Hungarian natural gas market could face despite the tight-
ening internal opportunities a promising future development as
a result of the establishment of a regional market driven by the al-
ready built interconnections to Romania and Croatia and the
planned connection to the Slovak natural gas market. These in-
terconnectors are not just supporting the regional gas trading but
significantly increasing the regional supply security. Nabucco and
South Stream international transit pipeline projects crossing Hun-
gary are expected to contribute to a more efficient regional co-
operation, and to the growing availability to the Western
European markets.
16.
REFINING
In Hungary, only one company, MOL, produces petro-
leum products. This takes place at the following four lo-
cations: Szzhalombatta, Tiszajvros, Zalaegerszeg and
Almsfzt. Due to rationalisation of processing, refin-
ing operations were closed down at the Tisza and Zala
refineries in 2001, thus oil has only been processed at
Szzhalombatta since then. The Almsfzt lubricant
blending unit was established in 2002 by MOL Lubri-
cants, owned 100% by MOL.
The Danube Refinery has a refining capacity of 8.1 mt/a
and processes both domestic and imported crude oil.
The refinery produces a broad range of products includ-
ing automotive gasoline, diesel, heating oils, bitumens,
base oils, various chemical raw materials and fuel oils
which are marketed in Hungary and across the Central
and East European region. Transportation of products
occurs by pipeline, rail, road and barge. Based on finan-
cial and numerous technological factors, the Danube Re-
finery is a forerunner among European refineries.
From the beginning of the nineties MOL continuously carried out improvements to meet quality crtiteria prescribed by the European Union. The company
made necessary investments prior to Hungarys joining the EU even if such product quality was not then compulsory in Hungary. As a result, Hungarian pe-
troleum products have met EU quality requirements since 1997.
The first large-scale improvement at the refinery after 1990 was the residue processing project aimed at enhancing oil processing efficiency. This huge invest-
ment was based on increasingly stringent environmental requirements as well as demand for more economical product yields. The strategy started in 1998
was the further processing of heavy fuel oils of high sulphur and heavy metal content which strongly contaminated the environment. The most important part
of the investment, the delayed coking plant, went on stream in 2001. In the delayed coking from distillation residue process, formerly burned heavy fuel oil is
converted into automotive fuels and other valuable products as well as petroleum coke.
After the turn of the millennium, the main field for improvement was the reduction of the environmental burden of automotive fuels to meet EU 2005 and
2009 requirements. As part of improvements carried out at the Danube Refinery, a diesel desulphurising plant with a capacity of 2.2 mt/a, a hydrogen factory
of 40,000 m
3
/h and a gasoline desulphurising plant were built. Thank to these units the sulphur content of fuels was reduced to below 10 ppm as early as 2005.
The priority for improvements after 2005 is the production of automotive gasoline and diesels that contain bio-components.
17.
LUBRICANTS
Besides filling stations the other shop window of the petroleum industry is the sale of lu-
bricants.
In Hungary, automotive and industrial lubricants, metalworking fluids, lubricating grease
and related additives are produced in Almsfzit and an additional quantity of lubricants
and additives are imported.
Practically all the oil companies sell their own products and certain firms in Hungary only
sell lubricants and no fuel.
Since 1994, our member companies have issued their own statistics on lubricants sold by
wholesalers, according to the breakdown shown in the table on the following page (in
1997, a more detailed statistical model was introduced).
The data show a downward trend. One of the reasons for this is that certain car manufac-
turers (e.g. Opel and Toyota) purchase oil from abroad and supply it to their authorised re-
pair shops. While such products may have been manufactured by one of the oil companies
present in Hungary, these volumes do not appear in the Associations statistics since Hun-
garian affiliates take no part in such deals.
In the case of vehicles, there is clearly an increase during periods of oil change (oil change
is required after 30,000 kilometres by Otto engines, 50,000 kilometres by Diesel engines -
but only after 100,000 kilometres by the new Mercedes trucks).
The more advanced industrial equipment also requires less frequent oil changes. It is prob-
able that the companies not affiliated with the Association (most of which sell oil at very
low prices) have increased their sales in recent years.
Lubricants in themselves are not hazardous materials but used oils generated from them are. The environmental protection product fee, introduced in 1998,
can be recouped after re-collection and re-utilisation (including energy
utilisation) of used oils generated. It is worth mentioning that, in connec-
tion with the product fee (which is discussed in the section titled Envi-
ronmental protection) it is really too high but its payment is avoidable. The
regulation is based on the situation prior to 2004 when the fee was based
on the quantity declared at customs clearance. There has been no customs
clearance since Hungary joined the EU (and no lubricants ar-
rive from non-EU countries). The environmental protection
product fee is unique to Hungary and is not applied in any other
country. If one buys a lubricant sold in Hungary at the Vienna or
Bratislava affiliate of the same petroleum company and then
transports it to Hungary, no product fee is paid since no one
checks up on the end user.
One can clearly see that the decreasing trend over the years
took a sharp turn upwards in 2004. Since national demand did
not decrease, it can be accurately stated that 18,000 tons of lu-
bricants arrived in the country avoiding product fee payment
resulting in a loss of at least one and a half billion forint to the
treasury.
Year Payment
(mHUF)
Product Fee
(HUF/kg)
Domestic
Sales
(tons)
Members
Sales
(tons)
Combined
Market
Share (%)
1998. 4.832,0 60,8 79.474 77.321 97,3
1999. 5.368,1 69,9 76.795 69.335 90,3
2000. 5.597,9 74,5 75.141 65.215 86,7
2001. 5.752,7 79,0 72.823 60.588 83,2
2002. 6.156,0 83,0 74.168 55.879 75,3
2003. 7.048,5 88,0 80.097 50.890 63,5
2004. 5.690,6 92,4 61.580 52.238 84,8
2005. 6.041,2 97,0 62.278 51.859 82,8
2006. 6.338,8 97,0 65.348 50.025 76,6
2007. 5.948,5 97,0 61.325 51.624 84,2
2008. 5.898,3 97,0 60.804 49.632 81,6
2009. 5.454,1 97,0 56.226 37.407 66,5
18.
QUALITY
Since the quality of the various products produced
by the petroleum industry is rather complex, it is im-
possible to define it using a single criterion. More-
over, in general, specific product quality is often
defined by differing pre-set internationally-recog-
nised standards. (If this were not so, diesel in one
country could mean something different in another
country. This could lead to problems, for example,
when filling up vehicles).
Quality is defined by standards, in most cases, by in-
ternational standards. This is illustrated in the at-
tached gasoline standards table. The first petroleum
industry standard was developed in the United
States at the beginning of the last century and fixed
a value for a point on the distillation curve of gaso-
line today this would not be at all appropriate.
A standard may define maximum value (e.g. sulphur
content), minimum value (e.g. octane number) or
interval (e.g. density). As the table shows, the
method itself, used to analyse various parameters,
must be defined by standards too. The standards ap-
plied in the Hungarian petroleum industry have
been reconciled with European standards for more than 20
years (Standard number prefixes EN = European Norm and
MSZ [Magyar Szabvny = Hungarian Standard] refer to this
unity).
International as well as Hungarian standards are used for the
majority of petroleum products, from propane-butane mixture
to bitumen. The existence of a standard does not mean that all
types of a certain product defined in the standard must be pro-
duced. For example, Hungarian standards allow production of
RON 91 gasoline but it is not produced in Hungary because of
lack of demand for it.
The application of a standard is not mandatory. According to
Act XXVIII, 1995, on national standardisation, its application is
voluntary; for example, it can be used to specify required qual-
ity in a contract. In theory, the application of a standard would
be mandatory if a regulation insisted upon it, but this does not
happen in present practice. There is a decree, however, on the
quality of tradable automotive fuels (30/2011 {VI. 28.} NFM).
This refers to the most important, mainly environmental, re-
quirements but does not state that only gasolines and diesels
that meet standards MSz EN 228 and MSz EN 590 must be sold
at filling stations. (See the table on gasoline tradable in Hun-
gary).
Quality requirements refer to fuels retailed, to fuels which leave
the bonded warehouse or are transported either to the filling
station or the end-user. The decree does not concern product
quality in cases where companies (e.g. the railways) import fuel
for their own purposes. To avoid growth in emissions, there is
another regulation, the act on excise tax, which levies penalty
taxes in such a way that it is not worth anyone using offspec
quality fuels. (Taxation and quality inspection is discussed
later.)
19.
No. of GKM accreditation: 103/2006
MEI T1 /2008 Budars, 2008.
Assessment
Customers name:
Product identity: Unleaded superplus gasoline Esz-98/E5
Test results: Based on MEI /2008 Analyses report
Characteristics Test result Specification Specification
No. of the tested sample at least doesnt
exceed
Research octane No. (MSZ EN ISO 5164) 98,0 -
Vc|c| cc|are No. (MSZ EN ISO 5163) 88,0 -
Lead content(MSZ EN 237) mg/l - 5
Relative density at 15 C (MSZ EN ISO 12185) kg/m
3
720 775
Sulphur content (MSZ EN ISO 20846) mg/kg - 10,0
Oxidation stabilty (MSZ EN ISO 7536) min. 360 -
Ez|s|er| gu ccr|er| (sc|ver| Was|ed} (MSZ EN ISO 6246) mg/100ml - 5
Copper s||| corrosion test (MSZ EN ISO 2160) deg. 1st class 1st class
Appearance (experimental) clear, transparent , transparent
Hydrocarbon group composition (ASTM D 1319)
olefines
aromatics
%(V/V)
-
-
18,0
35,0
Benzene (MSZ EN 12177) %(V/V) - 1,00
Ox,gen content(MSZ EN 1601) %(m/m) - 2,7
Ox,genates (MSZ EN 1601) %(V/V)
methanol - 3,0
ethanol - 5,0
iso-prop,l-alcohol - 10,0
ter|-but,l alcohol - 7,0
iso-but,l alcohol - 10,0
ethers (C
5
+) total - 15,0
MTBE - -
ETBE - -
TAME - -
other oxigenates - 10,0
Bio-component content (expressed in ethanol) %(V/V) - -
Vapour pressure (MSZ EN 13016-1) kPa 45,0 60,0
Distillation curve (MSZ EN ISO 3405)
% evac|a|ed a| 70C
% evac|a|ed a| 100C
% evac|a|ed a| 150C
Final 8c|||rg c|r|
Distillation residue
%(V/V)
%(V/V)
%(V/V)
C
%(V/V)
20,0
46,0
75,0
-
-
48,0
71,0
-
210
2
Evaporation index (MSZ EN 228) - -
Phosphor content (XRF) missing missing
Based on the analysis of the sample
the tested product
meets/does not meet
the requirements of the standard specification as per Esz-98, MSZ EN 228:2004 for Unleaded superplus automotive
gasoline
Sthl Gabriella
analyst
20.
GKM Accreditation No.: 103/2006
MEI T1 /2011 Budars, 2011.
ASSESMENT
Customers name:
Product identity: Diesel gasoil
Test results: Based on the Analyses report MEI /2011
Characteristics Test results Specification Specification
No. of the tested sample at least does not
exceed
Cetane No. (MSZ EN ISO 5165) 51,0 -
Cetane index (MSZ EN ISO 4264) 46,0 -
Relative density at 15 C-on (MSZ EN ISO
12185)
kg/m
3
820 845
Polyaromatic hydrocarbons
(MSZ EN 12916)
%(m/m) - 8
Sul|ur content (MSZ EN ISO 20846) mg/kg - 10,0
Flash point (MSZ EN ISO 2719)
o
C 55 felett -
Ca|ccr residue (MSZ EN ISO 10370)
(from 10% distillation residuel)
%(m/m) - 0,30
Ash content (MSZ EN ISO 6245) %(m/m) - 0,01
Water content (MSZ EN ISO 12937) mg/kg - 200
Total ccr|a|ra||cr (MSZ EN 12662) mg/kg - 24
Copper strip corrosion test (MSZ EN ISO 2160)
(3 hrs at 50
o
C)
grade Class 1 Class 1
Oxidation stability (MSZ EN ISO 12205)
(MSZ EN 15751)
g/m
3
hrs
-
20
25
-
Lubricity, cc||ec|ed Wea| sca| d|ae|e|
(wsd) at 60
o
C (MSZ EN ISO 12156-1)
m - 460
Viscosity at 40
o
C (MSZ EN ISO 3104) mm
2
/s 2,00 4,50
Distillation (MSZ EN ISO 3405)
% |eccve|ed a| 250
o
C
% |eccve|ed a| 350
o
C
10 %(V/V) distillates at
50 %(V/V) distillates at
90 %(V/V) distillates at
95 %(V/V) distillates at
%(V/V)
%(V/V)
o
C
o
C
o
C
o
C
-
85
-
-
-
-
< 65
-
-
-
-
360
Cold Filter Plugging Point (CFPP)
(MSZ EN 116)
o
C - +5
Fatty acid methyl esther (FAME) content
(MSZ EN 14078)
%(V/V) - 7
Based on the analysis of the sample
the tested product
meets/does not meet
the requirements of the standard specification as per MSZ EN 590:2009+A1:2010
for Diesel gasoil, sulphur-free.

Sthl Gabriella
Analyst
QUALITY CONTROL
Although there are several testing companies in Hungary, MEI Petroleum Products Quality Inspection is the most significant, independent and fully accred-
ited player in the field of testing and certifying petroleum products. MEI is a nationally and internationally known and acknowledged institution.
MEI was accredited by the National Board for Accreditation. The company issues well-established analyses in its field of operation. It acts fairly, free of in-
fluence, efficiently and consistently considers relevant expert and scientific criteria. MEIs aim is to create, maintain and continuously develop an efficient, qual-
ity-focused organisation that serves the overt and unspoken demands of the market players.
The general task of MEI is the physical, chemical and instrumental analytical analysis of petroleum and related products such as oil, natural gas, liquefied
gases, automotive gasolines, aviation gasolines, special gasolines, aromatic hydrocarbons, kerosene, jet fuel, diesels, heating oils, fuel oils, insulation oils, lu-
bricants, paraffins, bitumens, petrol coke as well as bio fuels and their raw materials (bio ethanol, E85 ethanol, bio diesel) as well as the sampling of natural
gas, liquefied hydrocarbon gases including LPG, liquid petroleum products, automotive and aviation fuels, liquid insulating materials and bituminous binders.
The high quality of MEI services is proven by the fact that most certification of marketed oil products as well as monitoring of filling station networks is done
on request of the traders or owners. MEI also inspects the countrys strategic fuel and heating oil stocks and prepares reports on fuel quality for the European
Union. It also provides expert witnesses on request
of the Authorities.
21.
22.
THE RETAIL TRADE
The shop window of the petroleum industry is the filling sta-
tion where end-customers meet its leading products and, in the
majority of cases, many other products and services, as well.
The older among us can remember the gasoline well prior to
the change of the political system. Along roads at determined
places there were open-air dispensing sites that sold fuels and
lubricants with a small booth for the operator to take cover. This
gasoline station was the distant precursor of todays filling sta-
tion where fuels, lubricants and hundreds of other goods are sold,
under a canopy covering the whole area and where one can typ-
ically find ancillary services such as car wash, tyre service and
restaurant.
This new type of retail area appeared in Hungary after 1990, when
incoming major oil companies started to build such stations, the
most up-to-date in their operating countries. In this way the al-
most unbelievable situation was created in the mid-nineties
whereby, in proportion, more up-to-date stations existed in Hun-
gary than in any other country.
To the outsider observer it was not immediately clear whether
these stations constituted a serious investment in environment
protection. In fact, all tanks and pipelines were double-walled to
prevent possible leaks, each gasoline dispenser was fitted for
vapour recovery so no volatile hydrocarbons could escape into the
air and thus there is no smell of gasoline.
The exact number of filling stations in the country can only be es-
timated; of the 1,500-1,600 stations, Association members run
just over 1,000 units. Taking national fuel sales statistics into con-
sideration, these stations account for some 80-85 per cent of total
0
500
1000
1500
2000
0
500
1000
1500
2000
1990.
1992.
1994.
1996.
1998.
2000.
2002.
2004.
2006.
2008.
2010.
Automotive gasoline sales in Hungary in the past twenty years
(million litres)
gasoline sales with the remaining 550-600 whitestations accounting for the other 15-20 per cent. Gasoline was taken as basis for this breakdown since it is
only sold at filling stations whereas half of all diesel sales are direct to large users such as transport companies.
The retail trade has concentrated over time. In 1996, Kuwait Petroleum sold its stations to OMV, as did BP in 1998. In 2002, Tamoil stations went to Agip with
Shell buying the Total stations and OMV the Aral stations in 2003. In 2006, ConocoPhillips (JET) and Lukoil merged while Agip bought ExxonMobils Esso sta-
tions. In 2009, Shell rented the former Tesco stations for 15 years. Of course, in the meantime, new networks mainly of the discount type appeared such as En-
virochem, Mobil Petrol, and OIL! and so on.
Only fuel qualities prescribed by relevant fuel decree legislation may be sold at stations. In practice every station sells RON 95 gasoline and diesel with some
companies offering to premium quality sub-brands.
No significant changes can be expected in the number of Association member stations in the future. The average station sells almost 3 million litres of fuel an-
nually, much more than the European average.
The construction cost of a modern filling station is about 2 million euros, not including the land required.
The price of fuels can vary significantly even among stations belonging to the same company. For example a station on the motorway with high throughput
is more expensive than one in a poor neighbourhood with low throughput.
Since consumers pay high average cash transactions at stations, there have been many robberies. Today, petroleum companies operate security measures such
as camera systems, safes only operable by the security service to hold cash exceeding 200 euros, alarm signals connected to the police etc. These have sharply
reduced this type of crime for which long prison sentences may be imposed on the criminal).
23.
24.
ENVIRONMENTAL PROTECTION
Many people have the erroneous idea that one of the main causes of environmental pollution is the petroleum and transport industries. However, one can say,
in all good faith, that no other branch has spent more on protecting the environment than the petroleum industry. In total, many billions of forint have been
spent on investments of this type although ironically enough the driver cannot perceive the results. In this century, no leaded gasoline has been sold, fuels have
became lead-free, their aromatic content has sharply decreased, gasoline arrives from refinery to filling station in such a way that no volatile hydrocarbons leak
into the air and station tanks and pipelines are double-walled to avoid fuels leaking into the soil. The many tasks carried out in refineries and oil fields for en-
vironmental reasons exceed the frame-work of this review.
The automobile industry has also taken serious steps in this direction. Cars manufactured more than 10 years ago are equipped with catalysts to purify exhaust
gases, transforming: unburned hydrocarbons into water and carbon dioxide; carbon monoxide, generated as a consequence of incomplete combustion, into
carbon dioxide; nitrogen oxide, generated due to high burning temperatures, into nitrogen and oxygen. However this is not usual in the case of cars running
on diesel.
If such up-to-date fuels and vehicles are produced how can it be that more people die in Budapest from air pollution than from accidents? This is all due to a
strange regulation.
Since 2003, only sulphur-free diesel, on which most modern vehicles run, may be sold. However, such a regulation does not exist in Hungary. The purification
of diesel engine exhaust gases is more complicated than that of Otto engines because soot must also be removed. This is not cheap but it is doable. The other
problem is the extremely high average age of some vehicles, about 20 years in the case of busses running around Budapest and this is exacerbated by the fact
that vehicles of this type have far higher annual mileage than private cars. So it often happens that an old diesel-driven vehicle running on modern gas-oil emits
heavy fumes. By the middle of 2011, there is no regulation to eliminate this problem.
The figures below show how difficult and long the process of basically transforming the character of a fuel really is. The example given is the elimination of
leaded gasoline. Properly speaking, lead-tetra-ethyl is a relatively cheap octane improver but at the same time a precursor of a harmful by-product in the
combustion of fuel. It ruins the catalyst and, similarly to sulphur, it blocks the catalytically active spots. Without lead additive the octane number of a gasoline
cannot be brought easily to over 91. Consequently another, environmentally-friendly octane booster has been found. It is metyl-tertiary-butilester [MTBE] which,
due to its oxygen content, enhances the cleanness of the burning.
Another well-known petroleum industry problem is in connection with lubricants and the used oils generated from them. This question has not been com-
pletely solved in any country of the world thus the Hungarian solution is unique. At its introduction, the aim was to solve two problems at the same time: the
re-collection and re-utilisation of used oils and the prevention of the smuggling of diesel under the name of lubricants. To achieve the latter (which could have
been done by enforcing controls) an environmental protection product feewas levied on lubricants, equal to the excise tax on diesel, so it became senseless
to pretend it was a lubricant. This sum is much higher than necessary for the re-collection and re-utilisation of used oils.
A product fee has been levied on lubricants since 1998. To date the sums below were paid in on putting the product into circulation and rebated after re-util-
isation (the quotient of the two values is the rate of re-utilisation).
Reality presents a worse picture than the table shows, as you can see in the section on Lubricants, because payment of the product fee has been avoidable since
2004. Actual re-utilisation may not reach more than 20%. In those Eu-
ropean countries where the destination of used oil is more established
than in this country, the figure goes up to 50-60%.
Unfortunately Association efforts to modify the regulation have not
been successful so far.
Paid
(mHUF)
Reclaimed
(mHUF)
Reused
(%)
1998. 4.832,0 288,7 5,9
1999. 5.368,1 1.073,1 19,9
2000. 5.597,9 1.098,1 19,6
2001. 5.752,7 1.335,0 23,2
2002. 6.156,0 1.159,7 18,8
2003. 7.048,5 1.109,2 15,7
2004. 5.690,6 1.453,5 25,5
2005. 6.041,2 1.566,3 25,9
2006. 6.338,8 1.526,7 24,1
2007. 5.948,5 1.471,2 24,7
2008. 5.898,3 1.490,2 25,3
2009. 5.454,1 1.324,8 23,9
STRATEGIC RESERVES
In the autumn of 1993, the Hungarian Parliament approved Act No. XLIX concerning the mandatory stockpiling of imported oil and oil products. Pursuant to
this law, the Association of Crude Oil & Oil Product Stockpiling (KKKSz, later HUSA) was established with the obligatory membership of oil-importing compa-
nies of the time.
The law provided that the Association accumulate strategic stocks equalling 90 days net imports, by the end of 1998, according to a specific annual schedule.
The law itself and the stockpiling system developed on its basis (with a similar structure to the German EBV) met internationally-accepted requirements. This
made it possible for Hungary to be the first COMECON country to become a member of OECD (in 1996) and of the International Energy Agency (in 1997).
Association activities are controlled by the market players, the membership and the Government, through voting rights exercised at the General Meeting and
at Board of Directors meetings.
The requirements of the several times amended Stockpiling Act have been brought fully in line with the principles of the national energy strategy and with
the expectations of the IEA and the European Commission. Specification of the actual levels of stock was based on the net imports of the prior year up until
2004. Since 2005, this system was modified, in parallel with Hungarys EU membership to calculate stock levels based on the prior years figure for domes-
tic consumption. Fulfilling the annual stockpiling obligation is dated from 1st July every year. Stocks today comprise motor gasoline, diesel oil, heating oil for
power generation and crude oil. Most of the nearly 1.2 million metric tons of liquid hydrocarbons are stored in modern above-ground tanks built in the sec-
ond half of the 1990s, under long-term storage contracts. The most important partners in the storage business are the OPAL Storage Company owned by
KKKSz, TTZrt. co-owned by MOL Plc. and MOL Plc. itself.
The purchasing of the stocks is financed by bank loans, as required by law. The terms of bank contracts are normally one and two years. The interest on loans
and the storage costs are covered by the contribution fees paid by member companies. Principal payments have to be made only in case of the release and sale
of stocks, should that become necessary. Current loans to finance liquid hydrocarbon stocks totals 220 million Euros, while the actual market value of the stocks
serving as collateral is 920 million euros, more than four times higher.
In case of an emergency, stocks may be released by the minister exercising the supervising authority. In such cases, member companies have the right of pre-
emption in proportion to their annual contribution fees.
The first seventeen years activity of the Association fulfilled the expectations that had motivated its founding and is appreciated by Hungarian oil market par-
ticipants as well as national and international institutions.
As a result of the previous activity of KKKSz, the Hungarian Parliament entrusted the Association with the creation of the countrys strategic stocks of natural
gas under Act XXVI of 2006. To fulfil this legal obligation, the Association today stores 915 million m
3
of natural gas in the underground storage facility of
MMBF, co-owned by HUSA.
25.
TAXATION AND PRICE STRUCTURE
In Hungary, from the sums flowing into the state exchequer, some 20% derives from the petroleum industry comprising corporate tax, profit tax, employees
personal income tax, excise tax, VAT, extra taxes, mining royalties and innovation royalties and so on.
The excise tax paid on fuels plays an important role in a countrys revenues. The rate of excise tax is not defined by the European Union which merely stipulates
that it cannot be less than 0.302 euros on a litre of diesel and 0.359 on a litre of gasoline. Where the euro is not the official currency, this must be calculated in
the national currency using the exchange rate of the last working day of October of the previous year. For the time being the excise tax on a litre diesel is 97
forint and that on a litre gasoline is 120 forint which means Hungary is placed at the mid-point of European countries. To promote the wider use of bio-fuels,
the EU made it possible to apply the tax to a lesser extent, even down to zero, for bio-fuels blended with fossil fuels but overcompensationis forbidden.
Another tax levied on fuels is value-added tax. At 25%, VAT is extremely high in Hungary. Only Denmark and Sweden apply such a high rate of VAT. In neigh-
bouring countries it is much less. Both in Hungary and in the whole EU more than the half the retail price of fuels is tax.
In practice, the stockpiling contributionis paid as a tax as well as the environmental product feefor lubricants (97 HUF/kg) from which re-collection and re-
utilisation is covered.
In Hungary, fuels are freely priced which means that the seller fixes the price with one stipulation the seller pays the excise tax, V.A.T. and stockpiling con-
tribution. However, the market has more than one player and so competition defines prices. The basis of the price is not the production cost but the value for
which it could be bought in the nearest large commercial centre (in our case Genoa) expressed in dollars per ton. A theoretical cost of delivery for one ton of
fuel transported by rail to the Hungarian border is added. Since both retail trade prices and taxation are in forint, this value is re-calculated in forint per litre
at the prevailing dollar exchange rate. This is the competitive price at which one could deliver the goods to the Hungarian border. The Hungarian producer
can sell his product at a similar price irrespective of production costs. Of course if priced much cheaper, bankruptcy would occur, if much higher, no sales would
occur. The competitive priceincludes production costs and wholesale and retail margins. Excise tax and the stockpiling contribution are superimposed on the
competitive price and 25% VAT is levied on this net price. Thus excise tax is taxed again.
In short the retail price of fuels is defined by three factors:
world market priceof a given fuel
forint to dollar exchange rate
taxes
The price structures of gasoline and diesel at a price of 350 forint/litre are shown in the chart below.
Hungary is one of the few countries in the EU where commercial diesel exists. This means that transport companies can buy diesel on which the minimum
excise tax, as defined by the EU, is levied. Actually they pay the same price as everybody else but they can re-claim from the state the difference between the
excise tax levied on diesel and the minimum EU excise tax for diesel.
26.
ALTERNATIVE FUELS
Some worry about exhausting global oil reserves or at least fear production will peak in the foreseeable future. Against all that, the reality is that geologists
discover ever greater oil reserves every year. What is true, however, is that production conditions are getting ever more difficult. Some see environmental prob-
lems in automotive fuels and others would like to change from imported oil to a domestic energy source. As a result of the above factors, alternative fuels
have appeared. Ironically, looking at the whole subject from a different perspective, Nicolaus Otto submitted his patent for an engine to run on ethanol, Rudolf
Diesel submitted his patent for an engine to run on peanut oil so, in other words, todays gasoline and diesel are actually the alternative fuels to ethanol and
peanut oil!.
Alternative fuels are considered betterthan todays gasoline or diesel but the real solution would be a material which, compared to present fuels, was, at the
same time:
- cheaper
- more friendly to the environment
- safer
- of greater energy content
- at unlimiteddisposal
- acceptable to car manufacturers.
Although such a material has not yet been found, there are experiments being conducted with many alternative fuels that can be grouped as follows:
Natural gas
From all points of view it stands nearest to present fuels. Theoretically it can be applied in two ways: in compressed form requiring pressure-tight tanks or in
liquefied form needing efficient heat-insulated tanks. The problem in both cases is the required energy necessary and lost for compression or liquefaction.
Expansion can be expected in regions where a significant natural gas network exists such as Hungary. In Hondas Ohio plant, serial production of CIVIC mod-
els designed to run only on natural gas has started. Both Otto and Diesel engines can be converted to run on natural gas.
Autogas (LPG)
This is a mixture of propane and butane on which Otto engines can run after minor modifications. Tens of thousands of these cars can be found in Hungary.
Expansion is supported by the fact that a significantly more favourable excise tax than gasoline is levied on autogas. From the supply point of view, the main
problem is that supplies of this type of fuel are much more limited than the oil or gas from which it is generated. For the time being, no car is being manufac-
tured with engines specifically designed to run on autogas.
Hydrogen
Some believe this to be the fuel of the future. Its en-
ergy content is high and theoretically it plays a part in
circulation. Through the decomposition of water, hy-
drogen and oxygen are generated which generate
water at combustion and the energy of such com-
bustion drives the engine. But there is no perpetuum
mobile. Hydrogen can be produced through the elec-
trolysis of water but that is very expensive. It is
cheaper to produce it from natural gas through re-
forming water vapour but even this costs three times
more than gasoline. As with natural gas, it can be
used in liquefied or compressed form. But the prob-
lems are tougher in both cases. Hydrogen can be liq-
uefied at -253
o
C, methane at -161
o
C, requiring tanks
that have much better heat insulation. What is more,
as a consequence of liquefaction, 35% of the original
energy content is lost. Compressed hydrogen needs
special tanks because hydrogen transforms carbon in
steel into methane and carbon-free steel becomes
brittle. A special area for the use of hydrogen is the
fuel cell (see details below). For the time being just a
few hydrogen filling stations exist in the world.
27.
28.
Synthetic fuels
Demonstrably workable but not a cheap procedure. Their basis is the hundred year-old Fischer-Tropsch synthesis, originally developed from German coal. Syn-
thetic gas was produced by gasification of coal from which liquid fuel was produced. In the second half of the 20
th
century, due to the oil embargo, South
African fuel supplies were secured in this way. Its promising up-to-date version is GTL (gas to liquid) technology. Its main novelty is that the starting material
is natural gas. The target product of todays GTL plants is diesel that contains much less pollutant than that produced from oil. There is no such plant in Hun-
gary.
Combination liquid fuel and electricity (hybrid car)
The electric motor was invented earlier than the internal combustion engine. The
main reason why cars operating purely on electricity have not expanded is be-
cause the battery, as the energy source, is large, heavy, takes a lot of time to re-
charge and thus the range of cars using them is small. The combination of battery
and engine was firstly developed by Toyota Prius, the hybrid vehicle. Here, de-
pending on the situation, either the battery or the engine is operated and, in cer-
tain cases, both of them. It seems the plug-in hybrid has a bright future
particularly in America. It solves the problem of the slow re-charge. When at home,
the driver connects the home current via an adapter to the battery and every
morning travels up to 60 kilometres to work in an electric car. While at work, the
battery is re-charged ready for the homeward journey. For journeys of more than
60 kilometres, when the battery runs down, the engine automatically starts up.
Battery-related problems were also solved by the futuristic fuel cell vehicle; its
essence is the reverse of the electrolysis of water. Hydrogen reacting with oxygen
in the cell generates electricity and the motor runs on it. Although it is produced
in small seriesby Honda its quick expansion is only hindered by the high cost of
electricity and problems relating to hydrogen mentioned earlier.
Bio-fuels
obviously belong to alternative fuels. Due to their extreme importance they
are dealt with separately, below.
BIO-FUELS
Out of all the alternative fuels, bio-fuels are of outstanding importance because their application is practically compulsory in the EU. At first, Directive 2003/30/EC
(on the promotion of the use of bio-fuels or other renewable fuels for transport) proposed to member states (with the prospect of making it compulsory)
that the share of renewable energy in transportation fuels on an energy basis be 2% in 2005 and 5.75% in 2010. Each member state tried to achieve this using
bio-ethanol and bio-diesel, either by blending them with fossil gasoline and diesel or in their pure forms (B 100for example, is pure bio-diesel) or in almost
pure form (E85for example, is ethanol containing 15-30V% gasoline). Although the official reason for promoting bio-fuels was for the protection of the en-
vironment, in the background stood the agriculture lobby and still stands there. In fact, the Directive was approved at a time when a certain Loyola de Palacio
was EU Energy Commissioner having earlier been Minister of Agriculture in Spain. At first, the greensenthusiastically supported the idea but later their stand-
point dramatically changed and they began to emphasise that this trend would lead to the clearance of tropical jungles and to mono-cultural agriculture else-
where. Some politicians objected to rich countries producing fuel from raw food materials whilst masses of people starved in poor countries.
Directives 2009/28/C (renewable energies) and 2009/30/EC (fuel quality) can practically
be considered as amending Directive 2003/30/EC. They declare that transport fuels in mem-
ber states must contain renewable energy sources (bio-fuels and, just theoretically, hy-
drogen or green electricity). They object to the clearance of forests as well as the use of
land valuable from the biological point of view. They support those bio-fuels that signifi-
cantly decrease green house gas emissions and accept the mandatorily prescribed renew-
able part, especially if the production of raw materials and bio-fuels occurs in a sustainable
way which must then be certified.
The Hungarian law in force prescribes (until 2013) 3.1e% for gasoline and 4.4e% for diesel
(both of them correspond to 4.8V%). These figures must be fulfilled on a monthly basis. A
serious penalty fine must be paid if bio-components are missing. If bio-fuels are gener-
ated from waste or cellulose not of food quality such volumes may be twice taken into con-
sideration.
One cannot tell now how successful these two directives will be. At the same time, how-
ever, one can perceive a few problems relating to bio-fuels:
- their energy content (mainly in the case of ethanol) is low
- their production cost is high
- they are available in a much more limited volumes than fossil fuels
- the destination of by-products has not been settled.
To focus on the domestic situation of bio-fuels:
Ethanol
Hungarys agricultural conditions are rather suited to production of crops such as wheat or corn which can be raw materials for ethanol. The country could even
produce one million tons of ethanol. Today these raw materials are exported.
The most advantageous property of ethanol is its high octane number (cca. 130). Its energy content (lower heating value) however is only 70% that of gaso-
line. An even bigger problem is that its energy balance is negative - its production needs more energy than it releases at combustion. Furthermore, it attracts
moisture from the air which can cause storage problems.
Today practically the only gasoline sold contains at least 4.8V% (3.1e%) bio-ethanol, although the car should be filled up on monthly basis.
Another possibility for ethanol is E85 which is a mixture of gasoline and ethanol, where the minimum ethanol content is 70V% and the maximum 85V%. As
zero tax is levied on ethanol, it is considerably cheaper than gasoline and that is why more and more drivers use it. There are more stations selling E85 in Hun-
gary than in Germany, France or Italy. One has to remember, however, that in the longer run only vehicles with engines especially designed for it can safely
run on this fuel. For the future, the key issue is whether one can produce ethanol from cellulose. So-called second generation ethanol will involve the con-
version of cellulose (a polysaccharide) to sugar (saccharide) and then to ethanol. For the time being no such plant on an industrial scale exists in the world.
Bio-diesel
Bio-diesel raw materials include vegetable oils or animal fats (tri-glycerides) which are transformed with methanol to fatty-acid-methyl-ester (bio-diesel) and
glycerol. The properties of fatty-acid-methyl-esters are close to those of fossil diesel (with the exception of the so-called cold properties) and even their en-
ergy contents are almost the same. For the time being, one large plant with a capacity of 150,000 t/a produces bio-diesel from rape seed oil in Hungary. From
29.
30.
the storage view point, the main problem of fatty-acid-methyl-esters is poor stability.
As with gasoline, each drop of diesel sold today contains at least 4.8V% of bio-diesel. Unlike other countries, no pure bio-diesel (B100) is sold in Hungary.
This is because, versus ethanol, there is no tax incentive to buy bio-diesel and without it, its price is much higher than the price of fossil-based diesel. No ve-
hicle has yet been designed to run on bio-diesel. If one intends to convert a car from fossil diesel to bio-diesel, minor modifications are required such as a
change of seals in the fuel pipe.
It is expected that production of second generation bio-diesel will start up in our country, although there exist only a few such plants on an industrial scale in
the world. The essence of the process is that vegetable oil or animal fat is hydrogenated and, in this way, long straight-chain hydrocarbons (excellent diesel
components) propane and water are generated. Its other advantage to trans-esterification is that wastes (e.g. used cooking oil - UCO) can easily be used as raw
material. It has no stability problems and can be blended with fossil diesel ad libitum.
EDUCATION
The petroleum industry needs many highly-educated experts (economists, lawyers,
engineers etc) but there are only two establishments teaching petroleum industry
expertise. Upstream experts study at Miskolc and those in Downstream at Veszprm.
We will shortly deal with these two universities, below. In line with the Bologna
process, education is achieved in two stages at both universities.
The precursor of the University of Miskolc was the Institute of Mining & Metallurgy
(the Bergschule) founded in 1735 by Charles III in Selmecbnya, where mining
was taught at high level for the first time in the world. When Selmecbnya was de-
tached from Hungary the institute had to move; education was continued firstly at
Sopron and then, from 1949, at the Miskolc Technical University for Heavy Industry
(todays University of Miskolc). The Oil Production Department was established in
1951. The most prestigious organisation in the oil industry, the Society of Petroleum
Engineers, finalised and adopted, at that time, the petroleum engineer training pro-
gramme, which became the basis of the Hungarian curriculum as well. In the mid-
1960s, the training faculty was diversified to include petroleum and gas engineering
departments. University education is still based on this concept. Since the mid-1980s,
English language education started for foreign students. Since the 1970s, the basic
programme is complemented by an option for postgraduate study in various spe-
cialist areas and, in the last ten years, a Ph.D. programme has also been available.
University research workshops for this special field are the Crude Oil & Gas Institute of the University of Miskolc and the Research Institute of Applied Chem-
istry. The two institutes, which work in close cooperation, have resolved a number of issues for the domestic oil and gas industry over the last few decades in
the areas of deep drilling, reservoir mechanics, oil and gas production, long-distance transport and gas supply. The results are documented in hundreds of re-
search papers, a number of patents, books in Hungarian and other languages, textbooks and numerous publications. Professional recognition of these re-
search institutes is demonstrated by their participation in international
educational and research cooperation projects, which are continuously in
development.
The training of future oil refining professionals started in 1951 at the
Chemical University of Veszprm (todays University of Pannonia) at its
Department of Petroleum & Carbon Technology. At the outset, carbon pro-
cessing was the more important area but then, after 1960, the educa-
tional and research curriculum was revamped and the emphasis shifted
to oil refining. Since the mid-1980s, the educational profile was again
modified. While conserving its traditional values, which mainly revolved
around notions concerning the hydrocarbon industry, the faculty ampli-
fied its curriculum to include process planning, thesis programmes and
the preparation of design projects. As a result of research and develop-
ment projects conducted jointly with industrial companies, new lubri-
cants and petrochemical additives were developed and petrochemical
catalytic processes further developed.
The professors and researchers in the department, the Cooperation Re-
search Centre of the Institute of Chemical Engineers, together with stu-
dents and junior researchers, conducted many experiments that were later
developed by the industry. The department was also involved in more sig-
nificant state-subsidised research projects for the domestic hydrocarbon
industry. For their research results they have received much national and
international recognition and have delivered outstanding performance
in the development of qualified junior research workers.
Their system of education played a leading role in the development and
introduction of a completely new way of teaching chemical engineering
and the two-stage education method was accredited by the British Insti-
tution of Chemical Engineers.
As of September, 2009, based on an earlier department, MOL Plc created
the MOL Department of Oil & Carbon Technology and with it the MOL Oil
& Petrochemicals Special Master Course, where education in English will
shortly be started.
31.
32.
THE HUNGARIAN PETROLEUM INDUSTRY
MUSEUM (MOIM)
Like other branches of industry, the Hungarian petroleum industry has established a technology museum to commemorate its history through the preserva-
tion of the best representative written materials, artefacts and photographs. It was founded in September 1969 (at that time as the Petroleum Industry Trans-
danubian Museum) in Zalaegerszeg, Western Hungary.
The aim of the museum was the collection, scientific systematisation and exhibition of petroleum industry memorabilia - industrial, technical, technological
- and from the way of lifepoint of view. Its exhibition premises cover 7.5 acres.
The sections of the Museum are:
the collection of technical artefacts
the archive (documents on industrial and technical history)
the historical collection
photos, films and videoteque
the collection of fine and industrial arts
the library
the documentation department
the collection of minerals and rocks.
We are proud to say that MOIM is an outstanding member of the network of technical museums in Hungary
SPECIFIC RULES OF THE PETROLEUM
INDUSTRY
Act XLIX. of 1993 on the Security Stockpiles of Imported Petroleum and Petroleum Products
Act XLVIII. of 1993 on Mining
Act LIII of 1995 on General rules of the Environmental protection
Act XLIII. of 2000 on waste management
Act CXXVII. of 2003 on Excise taxes and Special Regulations on the marketing of excise goods
Act CXL of 2004 on the General rules of Administrative Proceedings and Services
Act CXXIII of 2007 on Expropriation
Government Decree No. 203/1998 (XII.19.) on implementation of Act No. XLVIII. of 1993 on Mining
Government Decree No. 54/2008 (III.20) on determination of specific value of mineral raw materials and geothermic energy, and on method of value
determination
Government Decree No. 320/2010 (XII.27.) on the Hungarian Commercial Licensing Office and on regional measurement- and technical security authorities
Decree No.25/1994 (X.14) of Ministry of Industry and Trade on the conditions of nomination of mine responsible technical manager and deputy technical
manager
Decree No. 18/1995 (VI.6.) of Ministry of Industry and Trade on the professional and exam conditions of industrial and commercial professional qualifications
Decree No. 9/1995 (VIII.31) of Ministry of Environment Protection on the limitation of hydrocarbon emission generating at gasoline storage, charge,
transportation and trans-charge.
Decree No. 71/1995 (XII.26) of Ministry of Industry and Trade on domestic marketing of fuels and certain crude oil products
Decree No. 4/2001of Ministry of Environment Protection on the detailed regulations of waste oil handling
Government Decree No. 98/2001 (VI.15.) on the conditions of pursuing activity with dangerous waste
Decree No. 20/2004 of Ministry of Economy and Trade on international data supply on crude oil and oil products.
Decree No. 79/2005 (X.11.) of Ministry of Economy and Trade on hydrocarbon transmission pipeline security requirements and on publication of Hydrocarbon
Transmission Pipeline Security Regulations
Decree No. 96/2005 (XI.4.) of Ministry of Economy and Trade on Construction Authority Procedures related to specific buildings falling into scope of activity of
mine inspection
Decree No. 14/2008 (IV.3.) on handling of mining waste
Decree No. 20/2008. (VIII.22.) of Ministry of Transport, Communication and Energy on quality requirements of fuels
Joint regulation No. 4/2009 (I.30.) of National Ministry of Development and Economy and Ministry of Social Affairs and Labour on detailed regulations on
indication of products prices, unit prices, and fee of services
Decree No. 2/2010 (I.14.) of Ministry of Transport, Communication and Energy on Safety Rules of crude oil and natural gas exploration
Decree No. 10/2010 (II.26.) of Ministry of Transport, Communication and Energy on the Mine Safety Rules of topographical contents and scale of mine maps
Decree No. 5/2010 (VIII.18.) of National Ministry of Resource Development on the detailed rules of financial compensation of archaeological finding places,
and discoveries
33.
Ministry of National Economy
1051 Budapest, Jzsef ndor tr 2-4.
www.ngm.gov.hu
Ministry of National Development
1055 Budapest, Honvd utca 13-15
www.nfm.gov.hu
Ministry of Rural Development
1055 Budapest, Kossuth Lajos tr 11.
www.vm.gov.hu
National Tax and Customs Office
1054 Budapest, Szchenyi utca 2.
www.nav.gov.hu
Office of Economic Competition
1054 Budapest, Alkotmny utca 5
www.gvh.hu
Hungarian Mining Office
1051 Budapest, Arany Jnos utca 25.
www.mbh.hu
Hungarian Office for Commercial Authorization
1124 Budapest, Nmetvlgyi t 37-39.
www.mkeh.gov.hu
Hungarian Energy Office
1081 Budapest, II. Jnos Pl ppa tr 7.
www.eh.gov.hu
MEI Fuel Quality Inspection Ltd.
2040 Budars, Gyr utca 2.
www.amei.hu
Hungarian Hydrocarbon Stockpiling Association
1037 Budapest, Montevideo utca 16/b.
www.husa.hu
University of Miskolc
3515 Miskolc, Egyetemvros
www.uni-miskolc.hu
Pannon University
8200 Veszprm, Egyetem utca 10.
www.vein.hu
Hungarian Oil Industry Museum
8900 Zalaegerszeg, Wlasics Gyula utca 12.
www.olajmuzeum.hu
Hungarian Petroleum Association
1027 Budapest, Csalogny utca 23.
www.petroleum.hu
IMPORTANT INSTITUTIONS
34.
Published by the Hungarian Petroleum Association, Budapest, Dr. Gyrgy Wilde Secretary General
Design & DTP Engram Kft., Budapest, Printed by: Prospektus Nyomda Kft., Veszprm
November, 2011
35.