The Letter of Intent signed between the companies PLINACRO and FGSZ Natural Gas Transmission (MOL Group)

On Thursday, July 3, 2008 in Zagreb, in headquarters of Plinacro Ltd, PhD. János Zsuga, the Chief Executive Officer and István Keresztesi, the Director of System Operation of the Hungarian gas transmission system operator FGSZ Natural Gas Transmission (former MOL Natural Gas Transmission Plc.) and B. Sc. Eng. Branko Radošević, the President of the Board of PLINACRO, the Croatian gas transmission system operator signed the Letter of Intent on cooperation between the two companies in order to speed up the implementation of the project of connecting gas transmission systems of the Republic of Hungary and the Republic of Croatia by the construction of the interconnection gas pipeline between Hungarian Városfold and Slobodnica in Croatia.

Immediately afterwards, the President of the Board of PLINACRO, B. Sc. Eng. Branko Radošević and the Chief Executive Officer of FGSZ Natural Gas Transmission, PhD. János Zsuga, as associated parties on the one side, and the President of the Board of Hrvatska elektroprivreda, M. Sc. Eng. Ivan Mravak on the other side, signed the Letter of Intent on capacity reservation for gas transmission in the planned interconnection system.

By the efficient implementation of the Plan of Development, Construction and Modernisation of the Gas Transmission System of the Republic of Croatia until 2011, the Republic of Croatia has, through its gas transmission system operator PLINACRO Ltd, already achieved a significant strategic step forward when compared to other countries in the region.
Along with exceptionally successful results related to the implementation of the plan of gasification of the entire Croatia, Plinacro pays special attention to planning and implementation of new supply directions and international connections – interconnections, thereby securing conditions of reliable natural gas supple for the Croatian market on a long-term basis, and opening possibilities of natural gas transit for the neighbouring countries.
The Republic of Croatia is thereby going to become more important from a strategic aspect, and achieve additional profit of the natural gas transit.

The implementation of the interconnection Slobodnica–Donji Miholjac–Dravaszerdahely–Pecs–Városfold is one of the main priorities of Plinacro Company, since it provides a new supply direction as well as connection and integration into potential huge international projects, e.g. Nabucco and South Stream. Following the Memorandum of Understanding (MoU) signed on May 31, 2007, and thanks to the very successful joint cooperation, it was possible to achieve technical harmonisation of the project to define all necessary parameters in a very short time; due to the mentioned the Letter of Intent was signed on July 3, 2008 in Zagreb between Plinacro Ltd and the Hungarian gas transmission operator FGSZ Natural Gas Transmission (former MOL Natural Gas Transmission Plc.). The Letter of Intent signed today confirms joint interest of the partners and commits the two companies to implementation of the project of interconnecting the gas transmission systems of the Republic of Hungary and the Republic of Croatia, through the construction of the international interconnection pipeline between Városfold in Hungary and Slobodnica in Croatia. By the proposed solution, the interconnection Croatia–Hungary shall be constructed as a single gas pipeline with the possibility of physical gas flow in both directions. Along with providing a new supply direction, this gives Croatia the possibility of gas transit to Hungary.

At this occasion, the President of the Board of HEP, Mr. Sc. Ivan Mravak with the partners in the interconnection project – the President of the Board of Plinacro Branko Radošević and the Chief Executive Officer of FGSZ Natural Gas Transmission János Zsuga also signed the Letter of Intent on transmission capacity reservation.
Since HEP expressed intention to use transmission capacities on the planned interconnection between natural gas transmission systems of the Republic of Hungary and the Republic of Croatia, by the Letter signed today HEP expressed their preliminary intent to conduct the negotiations on the reservation and contracting the use of the relevant capacities of the interconnection pipeline necessary for natural gas transmission between the Republic of Hungary and Republic of Croatia.

All mentioned above clearly shows that the project of interconnection of the Croatian and Hungarian gas transmission system is a priority regional project and as such it has a full support of governments of both countries. Moreover, during the previous project activities, all bodies in charge of energy activities have given their positive opinion and general approval. This signing of Letter of Intent on cooperation between the companies PLINACRO and FGSZ Natural Gas Transmission (MOL Group) and the Letter of Intent on capacity reservation for the gas transmission between HRVATSKA ELEKTROPRIVREDA (HEP) on the one side, and PLINACRO and FGSZ Natural Gas Transmission (MOL Group) on the other, is going to enable intensified activities regarding the organisation and implementation of this crucial project.