Hungary: Open for Business (again)
Signaling a willingness to get its mining industry back up and running, Hungary's Ministry of National Development recently held an event entitled 'Investors Forum on Concession' in Budapest.
The Forum, which featured numerous representatives of the Hungarian government and oil and gas sector players presently operating in Hungary, began with the announcement that the National Development Ministry intends soon to launch a public call for tenders for the exploration, development and production of hydrocarbons (and geothermal energy) under a concession contract.
"The government of Hungary is fully aware of the economic importance of the success of concession tenders, as they can attract foreign investment, support the country's economic performance, and play a crucial role in increasing energy supplies and in the diversification of our energy resources," said Ms. Réka Szemerkényi, Chief Adviser, Office of the Prime Minister of Hungary.
She said that production of conventional and unconventional resources was an opportunity that could not be ignored, something that could become the basis of the country using competitive and affordable energy. Ms. Szemerkényi said this did not mean that the Government was not aware of the difficulties over the past few years: namely, for the last three years oil and gas exploration have been halted by an October 2010 declaration the Hungarian Mining Bureau (MBFH).
"On behalf of the Prime Minister's office, what we have done so far is to try and keep an open dialogue and procedures to exchange views and ideas of mutual concern and governmental priorities. We have been trying, as friendly outsiders to this process with the Ministry of National Development, to discuss openly and transparently the issues that are raised by you," she said to the dozens of participants in attendance. "And we will continue to play that role in the near future as well, as much as we can."
Then, Mr. Pál Kovács, Minister of State for Climate and Energy Affairs, Ministry of National Development, took the podium to explain that this was a time for Hungary to reevaluate the role of mining, that it was a useful tool for improving security of energy supply.
Hungary had signed into law in 2011, he recalled, a long-term Energy Strategy up to 2050, one of whose goals was security of supply, defending the country's national interests and conforming with EU objectives, which included energy savings, renewables and nuclear.
Enumerating that Strategy's objectives, Mr. Kovács said the last of these was the utilization of domestic coal and hydrocarbon reserves. His presentation pointed out that 62% of Hungarian energy demand was fulfilled by imported fossil fuels; regarding natural gas 82% of gas consumption was imported.
Referring to the Hungary's Mineral Asset Recovery and Reserve Management Action Plan, which he said was under preparation, he said, "Hungary is not a poor country in energy reserves. Use of our hydrocarbon reserves and geothermal potential may significantly improve Hungary's security of supply in the long term and substantially reduce its import dependence."
For this reason, he said the Government was eager to facilitate its hydrocarbons sector, especially considering market failures having resulted from the EU's 20/20/20 strategy, like the unsustainable low price of CO2.
"We can see that some countries are increasing their CO2 emissions while relying on renewable energies," observed Mr. Kovács. "The 2020 targets will not be achievable if Europe continues as it is doing now.
"From these signs, the Hungarian government felt it was obvious that we need to go for internal sources of energy, to improve security of supply by improving conditions in this field."
He outlined the preparatory steps being taken for the public call for tenders, stating that the legislative amendments necessary for the launching of the concession tenders had been completed, that the coordination of the tender conditions had commenced and so invitations to tender would be published in the second half of 2013.