MOL GROUP Annual Report

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Increased oil recovery (IOR)A comprehensive term to define increased petroleum recovery methods, which includes all methods or processes other thanproduction based on the energy of and in the reservoir (enhanced oil recovery (EOR), secondary and updated primary methods).Kyoto ProtocolThe Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), aninternational environmental treaty, which is intended to achieve “stabilization of greenhouse gas concentrations in theatmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.”Liquified Propane Gas (LPG)Hydrocarbon gas compound mainly consisting of propane and buthane, liquefied under high pressure, which is sold incylinders for household purposes. These days the motoric usage of LPG spreads. This fuel is the „autogas”.LDPELow density polyethyleneM bblThousand barrelMM bblMillion barrelM boeThousand barrel of crude oil equivalentMMSCFMillion cubic feet. The key imperial measure used in the natural gas industry. One cubic meter is equivalent to 35.314 cubic feet.MEHHungarian Energy Office.Mining royaltyIn accordance with international practice and the relevant provisions of the Mining Law, the Hungarian State requires to paya mining royalty after any and all crude oil and natural gas produced in Hungary (except production applying EOR methods).The rate of this royalty has been 12% since January 1, 1998, except the extra mining royalty payable after the natural gasproduced from fields developed prior to 1998.MOL filling station operated in franchiseFilling station operated under MOL-logo and with MOL product slate, but not owned by MOL.MonomersBasic compounds of polymers (plastics, rubbers), basic elements (links) of polymer chains in high-molecular-weight materials.Nowadays the most important monomers, the basic petrochemicals are short-chained olefins (ethylene, propylene,butadiene) along with their simple derivatives, and the simplest aromatic compound: benzene. Primary sources of all thesemonomers are the olefin plants.MSZKSZHungarian Hydrocarbon Stockpiling Association responsible for the strategic stockpiling of crude oil, crude oil product andnatural gas.Natural gas liquidsLiquefied hydrocarbons separated from natural gas, ranging from propanes to gasolines and also containing heaviercomponents.NCI (Nelson complexity index)The Nelson complexity index, developed by Wilbur Nelson in 1960, is a measure of the secondary conversion capacity of apetroleum refinery relative to the primary distillation capacity.Net dry natural gas productionTotal gas recovered, reduced by the quantity of produced or separated carbon dioxide and/or the condensates.Net electrical efficiencyThe net efficiency of an entity (a device, component, or system) in electronics and electrical engineering is defined as usefulpower output divided by the total electrical power consumed (a fractional expression) and adjusted with its own consumption.Net productionTotal crude oil and natural gas quantity from the hydrocarbon fields following the deduction of mining royalties.OlefinThis is collective noun for open-chained hydrocarbons including unsaturated double carbon-carbon bond(s). The simplestrepresentatives of these compounds, ethylene and propylene are basic petrochemicals. The most important asset in olefinproduction is the so-called steam cracker (olefin plant), which converts naphtha, chemical gasoil and other light hydrocarbonsto key products as ethylene and propylene by cracking and dehydrogenation.PolyethyleneThis is a kind of thermoplastics produced by polymerisation of ethylene. Today polyethylene has the largest share amongcommodity plastics. Parameters (such as pressure, temperature, applied additives and catalysts) of industrial processesaiming at production of PE show significant differences, consequently a wide range of products with different characteristicscan be produced. All of them can be classified into two groups according to their density: LDPE (low-density polyethylene)and HDPE (high-density polyethylene).There are significant differences at molecular level: LDPE shows inordinate structure,a mixture of heavily branched components resulting in softer, more flexible material, while HDPE is a denser, harder andstronger (with higher tensile strength) plastic due to its more structured hydrocarbon chains.PolyolefinsThis is collective noun for thermoplastics produced by polymerisation (polyaddition) of olefin monomers (e.g. ethylene andpropylene). The most important commodity plastics, polyethylene and polypropylene belong to this class.Polypropylene (PP)A thermoplastic produced by polymerisation of propylene. Has a significant - and increasing - share among commodityplastics. Parameters (such as pressure, temperature, applied additives and catalysts) of industrial processes aiming atPP production show significant differences, consequently a wide range of products with different characteristics can beproduced. Addition of ethylene into the polymerisation process as co-monomer leads to PP copolymers. PP can be used in awide variety of application sit has good resistance to heat and low water absorption.PPMPPM is a measure of the concentration of a substance in a liquid, used where low levels of concentration are significant. Theppm value is equivalent to the absolute fractional amount multiplied by one million. For example, 10 ppm equals 10 kilogramof a substance for a million kilogram (one kiloton) of a liquid.Production Sharing Agreement (PSA)Agreement for sharing the production of an oil field or a gas field between the State and the Investors, having the productionlicense for the field.Proved developed producing reserveThe reserve that can be extracted from existing wells with existing facilities, during the period of time available for production.Proved reserveEstimated quantity of crude oil, natural gas and liquefied gas products that can commercially be extracted from alreadyknown reservoirs with a high degree of certainty (over 90%) under the prevailing economic and operating conditions.Proved undeveloped reserveReserve that can be extracted from new wells located in areas where no drilling has been made yet or from existing wells inwhich relatively significant expenditure is required for development.Glossary246 MOL Group annual report 2010 247
Putting into productionAccomplishment of surface and underground facilities necessary for the production of hydrocarbon reserves.PyrolysisThermal cracking of hydrocarbons at high (usually above 650°C) temperature and low (few bars) pressure, which is the basicprocess in operation of olefin plants. Process is conducted in the presence of steam in order to minimize coke-formation.Pyro-naphthaMixture of valuable by-products with significant aromatic content, having boiling points within the range of naphtha, arisingbesides main products (ethylene and propylene) in the course of pyrolysis of petrochemical feedstocks (naphtha, chemical gasoiland other light hydrocarbons) in olefin plants. Can be converted to basic aromatics (benzene, toluene, xylenes, etc.) by furtherprocessing, while after appropriate hydrogenation it can also be used as high-quality, high-octane mogas blending component.Refinery marginDifference between product’s international quoted price and the actual crude oil price. Or: The unit profitability of a(theoretical or actual) refinery, which is determined by crude oil product, as well as unit refining costs.Refinery complexityRefinery complexity demonstrates, what white product yield can be achieved from 1 barrel of crude oil. The more complexthe refinery, the higher is the white product yield from the same quality crude oil ie. the less fuel oil it produces. One of thebest measure for complexity is Nelson index, which calculates complexity from the existence of different refinery plants andfrom the the ratio of their capacity to distillation capacity.Refining coverTotal refining capacity divided by total volumes of product soldResidue upgradingTo transform residues (heavy fuel oil) into more valuable white products.Russian export blend(API degree: 32.5, sulphur content: 1.25%) Mix of Russian crude oils whose quoted price is considered as a benchmark in theinternational crude oil markets.SAPPOSlovak Association of Petroleum Industry and TradeSteam cracker (olefin plant)Technology for production of key basic petrochemical products (olefins: ethylene, propylene, and aromatics: benzene, toluene,xylenes), on the basis of thermal decomposition (cracking) and dehydrogenation of petrochemical feedstocks (naphtha andchemical gasoil) produced by the refineries or lighter saturated hydrocarbons (ethane, propane, butane) in the presence of steam.Main products of the process (ethylene, propylene) are raw-materials of polyethylene and polypropylene production, while theby-products can widely be used in organic chemical industry, plastics and rubber production or as gasoline blending components.SCM (Supply Chain Management)Supply Chain Management coordinates the procurement of crude oil, other refinery feedstock and products, as well asrefining, logistics related to procurement or sales, and the wholesale of crude oil products. It targets to maximise MOL Groupprofit with optimising through the whole value chain.SPE based reserve valuationMethod used by the Society of Petroleum EngineersSpot contract/salesShort term sales, usually in a contract for one delivery.Strategic gas storageThe mobile natural gas reserve and the relevant peak withdrawal capacity aiming at implementing the Law XXVI. of 2006on strategic storage of natural gas. This reserve and capacity can be exclusively used for ensuring the security of natural gassupply in case of supply crisis , under the terms and conditions published in the relevant minister’s decree and such reserveshall be replenished.Thermal Power PlantA thermal power station is a power plant in which the prime mover is steam driven. Water is heated, turns into steam andspins a steam turbine which drives an electrical generator (regional average net electric efficiency of existing thermal powerplants is approximately 35%).Term contract/salesLong term contract, usually for one year or longer termToe (tonne of crude oil equivalent)Mass equivalent received from the heating value of gas following conversion to crude oil on the basis of heat unit. As a rule,1,200 Nm3 gas is equivalent to 1 toe.TransitGas transmission through pipeline, which crosses the border of one member of the European Economic Area and its startingor end-point is outside the European Economic Area.Transmission pipelineThis pipeline, including its accessories and fittings, is used for transmitting natural gas, and its starting or kick-off points arethe national border of the country, inlet points of gas production facilities, inlet and outlet points of underground gas storagefacilities, and the end or terminal points are the national border of the country, outlet points of gas transfer stations (citygates), inlet and outlet points of underground gas storage facilities.Ural BlendRussian, export quality crude oil. Heavy and sour (with high sulphur content) crude oil, therefore the price of Ural Blend islower than that of light Brent crude oil, which has low sulphur content.Financial TermsADRAmerican Depository Receipt, depository certificates issued by a foreign depository on the issuers shares, which aredeposited with a Hungarian custodian.CAPEXCapital ExpendituresCash Flow at Risk (CF@R)Methodology to measure the risks of the MOL Group. It takes into account the exposures to external factors (product price,rate of interest) of the different businesses within the MOL Group portfolio, as well as the volatilities and correlation betweenthose factors.EBITDA (Earnings before interest, tax, depreciation and amortisation)Operating profit plus depreciation and amortisationEBITDA marginRatio of EBITDA divided by net sales revenuesEPSEarnings per Share is based on the profit attributable to ordinary shareholders using the weighted average number of sharesoutstanding during the year after deduction of the average number of treasury shares held over the period.Financial CovenantIt is the rate calculated from specific terms of P&L, Balance Sheet and Cash-Flow. (Eg.: Net Debt per EBITDA, EBITDA perTotal Interest Expense) Financial Covenants are primarily applied in loan facility agreements to limit lenders’ credit risk.Glossary248 MOL Group annual report 2010 249
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MOL GROuP ANNuAL REPORT 2010MOL GRO
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Key financial and operating dataKey
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Overview of the environmentWorld ec
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Exploration and ProductionHIGHLIGHT
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OTHER RESuLTSSustainable developmen
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upstreaPortfolio EleentsRuSSIASPE 2
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ize MOL and INA sales channels in C
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PetrochemicalsPetrochemicalsPetroch
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Downstream portfolioelementsDomesti
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The most important events of 2010Th
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Gas and PowerGas and PowerThe Gas a
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Financial and Operational Performan
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1.) We have audited the accompanyin
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Moderating growth in world economy,
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Higher personal expenses due to ful
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Unit OPEX slightly increasedStronge
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…and in SPE P1 reserves2010 was t
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In Slovakia sales volumes recovered
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has been granted an IPPC and a Buil
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Refining & MarketingCAPEX down by 5
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INDEPENDENT AuDITOR’S REPORTMOL H
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Consolidated balance sheet31 Decemb
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Consolidated cash flow statement31
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Joint venturesA joint venture is a
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vi) HedgingFor the purpose of hedge
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off. Upon determination of economic
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At each balance sheet date, the Com
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IAS 1 Presentation of Financial Sta
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Exploration costsTransfers from exp
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6 Subsidiaries and jointly controll
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The purchase price allocation for t
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10 Investments in associated compan
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15 Other current assets16 Cash and
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Changes in the number of ordinary,
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The following table summarises the
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28 Financial (income) / expense30 I
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Page 83 and 84: Historical SummaryHistorical Summar
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Page 89 and 90: InterviewwithGyörgy MosonyiThe str
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Page 115 and 116: 7.10.11.8.9.7. Mr. József Molnár
Page 117 and 118: 6. Mr. József Simola (44)Corporate
Page 119 and 120: 7.Mr. József Kohán (59)Member of
Page 121 and 122: Ownership Structure31.12.2009 31.12
Page 123: GlossaryAverage production costTota
Page 127 and 128: Content tableTopic of interestCover
Page 129: Statementresponsibilityofundersigne
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MOL GROUP Annual Report

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