Hungary’s MVM buys stake in Caspian gas field in all-time record deal

Hungary’s state-owned MVM Group has signed an agreement with Azerbaijan to acquire a 5% stake in the Shah Deniz natural gas field. The acquisition will propel Hungary’s gas security into a “new dimension,” Hungarian Foreign Minister Peter Szijjarto said at a joint press conference in Baku with Azerbaijani Foreign Minister Jeyhun Bayramov.

Szijjarto said the deal “provides us with protection against significant energy price fluctuations. As Azerbaijan becomes a new player in our energy supply, this development ensures a much more stable and secure energy supply,” he added.

The biggest investment in MVM’s history will be covered from the company’s own resources and will not burden the budget, Hungarian Energy Minister Csaba Lantos said. The agreement sets production volumes for stakeholders until 2050 and paves the way for production at new fields, too, Lantos added.

Deal helps Hungary’s energy diversification

Located in the Caspian Sea, Shah Deniz, operated by British Petroleum (BP), is one of the world’s largest deepwater natural gas fields with annual production of 29bn cubic metres. The 5% stake would translate into an annual supply of 1.5 bcm of natural gas for Hungary, which will receive 50mn cubic metres of Azeri gas this year, as per an earlier agreement.

Hungary mainly imports its natural gas from Russia, even since the latter country’s invasion of Ukraine in February 2022, which prompted other European countries to seek alternative energy sources. Hungary has been receiving 4.5 bcm of gas per year from Russia under a 15-year agreement signed in 2021.

MVM CEO Karoly Matrai said “While we invest in hydrocarbon exploration domestically and abroad, up to 90% of our energy needs are imported, with 40% sourced from Russia. We appreciate the gas supplies from Azerbaijan, Turkey, and Qatar.”

Hungarian oil and gas company MOL was the third-biggest stakeholder in the largest offshore oil field in Azerbaijan and the value of its investments in the country had reached USD 2bn. Last year, MOL’s production at the field was over 5mn barrels, 15% of the group-level total. Other stakeholders in the Shah Deniz field are BP (29.99%), Lukoil (19.99%), TPAO (19%) and NICO (10%).

MVM also buys stake in selling, marketing entity

Present in 23 countries with more than 120 member companies, and a 18,000 payroll, MVM Group is the second-largest company in Hungary and a top five firm in Central and Eastern Europe. It booked HUF5.1tn (EUR 13bn) revenue last year, down from HUF7.6tn in 2022, although profits surged to HUF 369bn from HUF73 bn in the same period.

MVM will also take a 4% stake in the Azerbaijan Gas Supply Company, responsible for marketing and selling Shah Deniz natural gas. The transaction is expected to close in Q3. Hungary, Azerbaijan, Georgia and Romania are also collaborating on the Southern Gas Corridor submarine cable project to bring energy from the Caucasus to Europe.