Hungary’s MOL Group is eyeing North Sea operatorship and has deep enough pockets to do it. Elaine Maslin spoke to exploration director Alex Dodds (pictured).
Hungary’s MOL Group is aiming to double its production within at least five years and then double it again after that, senior executives have said.
The business, which produces 100,000 boe (60% liquids/40% gas) today, could potentially double that in 2-4 years, said COO for exploration and production Carl Grenz, at a briefing in Aberdeen, 15 May, adding that this increase was just “the first stage.”
MOL has already committed to spending £1-1.5 billion on non-operated North Sea developments in the next 6-7 years, through stakes in assets it acquired from Wintershall, a subsidiary of Germany’s BASF Group, late last year, including stakes in the Catcher and Cladhan developments in the central North Sea.
However, the company is looking for more organic growth, by winning new exploration licenses in the North Sea, as well as faster growth through acquisitions, in the UK and Norwegian sectors, and other locations that would suit the business. MOL also aspires to become an operator offshore, executives said.
MOL’s move into the North Sea was made to diversify the group’s production into politically stable areas, which is heavily weighted towards central Europe, including Hungary, Pakistan, Russia, Kazakhstan, and Kurdistan, explained former TNK-BP executive Alex Dodds, now MOL’s exploration director. The deal with Wintershall was the largest investment MOL or any other Hungarian company has made in the UK, valued at £200 million.
Buying power
Since then, the firm has been clear that this is just the start of its growth. Part state-owned MOL has a strong balance sheet, with US$5 billion in cash, described as an “embarrassment of riches” by chief operating officer Carl Grenz, who was previously vice president international at Endeavour International. To become an operator in the basin, the firm said it would likely have to do this through the acquisition of another company.
Grenz wouldn’t be drawn on what assets or companies it might be looking at. A number of assets are for sale in the North Sea, including Marathon Oil’s UK North Sea business, and a number of Shell assets, including the Anasuria FPSO produced development.
“We are not afraid to go anywhere, if it makes the best commercial sense for our shareholders,” Grenz said, adding that, despite being a mature basin there were opportunities, including the central North Sea—a “sweet spot”—but that the company was looking across the entire basin. “We want to have a balanced portfolio, onshore and offshore, operated and non-operated. We are looking to double our production in the shortest possible time frame, and looking to then double that again in as short a time as possible. In my mind this [the short time frame] could be five years, probably in the range of 2-4 years. That is the first stage.”
Cladhan, due on stream next year, and Catcher, due on stream in 2017, would add 6000-7000 boe/d to MOL’s production. The firm, through the deal with Wintershall, also acquired a number of exploration assets and has submitted applications for licenses in the UK 28th licensing round. (Read more: 173 North Sea round applications)
Technology
Grenz said MOL would be looking to apply its knowledge in EOR, such as polymer flood and CO2 injection, used on its Hungarian Cretaceous fields, in the North Sea, as well as long reach horizontal drilling.
Dodds said key technologies for the UK basin would be those that enable safe and efficient removal of assets, during decommissioning, as well as EOR, and robotics.
“Decommissioning platforms installed 30-40 years ago is a challenge," he said. "The North Sea needs technologies and technological advancement for abandonment to minimize the impact on the environment. Tail-end reservoir management is another challenge, where the pressure is not high enough. Horizontal wells, fracturing, chemical treatments, polymer flood, surfactant, that type of technology exists and isn’t really the final solution. There will need to be some additional technical advances to squeeze the last hydrocarbons out.
“Robotics is also very important,” he continued, adding that advancements in medical technology, such as an ability for a physician to be able to carry out open heart surgery in Africa, from the US, using a robot, was technology the industry could draw on.
Wintershall deal
The deal with Wintershall saw MOL acquire 14 licenses in the North Sea, including non-operated equity stakes in the Broom field (29%), and the Catcher (20%), Cladhan (33.5%) and Scolty/Crathes (50%) developments. MOL also bought Wintershall’s equity share in existing infrastructure on the Sullom Voe Terminal and the Brent Pipeline System.
Catcher is a floating production vessel development operated by Premier Oil. (Read more: Premier close to Catcher sanction)
Cladhan is a subsea tieback to the Tern Alpha platform, operated by Taqa Bratani. Scolty and Crathes, operated by EnQuest, are planned to be a subsea tie-back to the Kittiwake platform.
Chris Bird, formerly of Venture Petroleum, Centrica Energy, and most recently Endeavour International, is UK managing director, based out of MOL’s Aberdeen office.
MOL is 24% state-owned and until its move into the North Sea had very few offshore assets. MOL has a stake in Croatia’s Ina, through which it has a stake 15,800 boe/d (2012 figure) produced offshore Croatia, and small interests in fields offshore Angola.
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