MOL Group Upstream has over 75 years of experience. MOL’s portfolio consists of oil and gas exploration and production assets in 13 countries with production activity in 8 countries. MOL Group remains committed to ensuring safe operations that protect people and the environment, as well as to the principles of sustainable development.
THE CENTRAL EASTERN EUROPEAN REGION
MOL Group has started a major production optimization program in its core CEE region. The program delivered already visible results in 2015. Hungarian production decline was the lowest in the past 10 years and Croatian onshore oil production increased by 20% year-on-year. All measures of the production optimization are break evening at or below 20 USD/bbl.
Production Optimization efforts in Hungary started mid 2015. As a result the total 2015 production decline shrunk to -1% from the -4% of 2014. Oil production in Hungary increased even by 5% year-on-year. The program systematically reviews the production potential from a subsurface perspective and targets also cost efficiency.
INA’s Production Optimization efforts increased production by 7% in 2015, with Croatian crude oil output increasing by 20%. The program is focusing on all mature fields, and as part of the 2015 efforts INA conducted a well stimulation campaign consisting of 21 wells. Moreover, an intensive well workover and well optimization campaign was executed throughout the year, involving over 90 wells. In addition, INA progressed the first phase of the Ivanić-Žutica EOR project, with well preparation for the second phase of the project now under way.
In terms of CEE exploration, MOL Group also increased its exploration acreage in Hungary to 4,530 km2 with the successful bidding for new licences offered in the Third Hungarian licensing round. MOL was awarded the 584 km2 Dány license in Eastern Hungary and the 391 km2 Battonya- Pusztaföldvár-Észak license in southeast Hungary.
In terms of exploration activities at INA, 4 domestic onshore exploration wells have been completed and INA has been awarded new onshore and offshore exploration licences. In onshore, INA was awarded with Block Drava-2 following participation in Croatia’s onshore bid round. In offshore, two exploration blocks were granted in the framework of the First Offshore Bid Round. Both onshore and offshore licences await the Croatian Government’s ratification. The investments also contributed to the reduction of the environmental footprint of our E&P operations. In the CEE region carbon-dioxide (CO2) emissions decreased by 25% while the amount of water withdrawn reduced by 52% compared to 2014.
THE NORTH SEA
In the UK, the production contribution of non-operated assets rose in 2015 with first oil in Cladhan and the first infill well delivered in the Scott field. MOL Group doubled its resource potential to 1.2bn while adding 750mn unrisked resources through its entrance into Norway.
In the UK, first oil from Cladhan field was achieved in December, 2015. In case of Scott, Telford and Rochelle the reliability issues in H1 2015 have been resolved by the operator. A well stock review was completed for Scott, and an infill drilling programme has commenced successfully in September with a first infill well that was delivered on Scott. MOL Group is also participating in two large development projects in the UK: Catcher and Scolty&Crathes. The Catcher project remains within budget, and the drilling of the first two wells have been completed with a positive flow back and injectivity test. To minimize the impact of the slippage of the FPSO construction on the project timeline, a mitigation plan has been put in place. The Scolty-Crathes field development plan was approved in October 2015, and work is progressing well on the facilities topsides scope of the project.
In 2015, MOL Group entered Norway with the clear intention to develop a new hub and centre of excellence for exploration. As a first step MOL Group acquired 100% ownership in Ithaca Petroleum Norge (“IPN”), from Ithaca Petroleum Ltd, pre-qualified as operator in Norway. The deal included acquiring the portfolio of 14 licences of which 3 are operated. In addition, MOL Group took over IPN’s strong exploration-focused team with in-depth experience of the Norwegian Continental Shelf (NCS). Following the acquisition, MOL Norge successfully expanded its exploration portfolio through acquiring interest in 7 licences, out of which 2 are operated. (3 non-operated acquired from Det norske oljeselskap ASA in October 2015 and 4 (out of which 2 operated) awarded during the 2015 APA round.)
Overall, MOL Norge has established three core areas within the North Sea focused on proven oil plays close to existing infrastructure where discoveries are capable of being efficiently monetized. The new Norwegian portfolio contributes with 750 MMboe to Group's estimated net unrisked prospective resources.
THE MIDDLE EAST, ASIA AND AFRICA
MOL continued its operation of 78 mboepd (100% block) production in the TAL block in Pakistan which has been complemented by successful exploration in neighbouring blocks. With two further exploration successes it has registered 10 discoveries in 3 different blocks since 1999 and successfully derisked more than 400 MMBOE 2P reserves (100% basis). In the Kurdistan Region, Shaikan production stabilised, whereas the Akri Bijeel block was handed back to the Government.
In Pakistan, MOL Group has a proven track record, with strong partners, and over 15 years of operated and non-operated activities. MOL has interests in 5 blocks in Pakistan and is the Operator of the TAL block 30 km from the border of Afghanistan, currently with 78 mboepd production on 100% basis. MOL Group continued to increase resources through significant exploration efforts and via acquiring additional licences. MOL Group spudded three exploration and one development wells in 2015. The completed Mardankhel-1 exploration well was the 7th discovery in the TAL Block since 1999. Further exploratory drilling is ongoing on TAL’s Tolanj and Makori fields. In the Karak block, Kalabagh-1 well resulted in MOL’s 2nd discovery in the block. Overall MOL made 10 discoveries (7 operated) from 2000 onwards with over 400 MMboe discovered (100% basis). In addition, MOL Group acquired a 30% non-operated stake in the DG Khan Block which marked the entry in the Middle Indus region. Despite good business results tragic safety incident happened in our Pakistani operations in 2015. Four contractor employees lost their lives in a gas vapour explosion while loading a road tanker. This alarms us to further strengthen our safety management in our operations.
In the Kurdistan Region of Iraq, non-operated Shaikan block has undergone debottlenecking and facility upgrades and has doubled the gross probable reserves confirmed by an independent third party review (Competent Person’s Report). The field is currently producing from 9 wells through two production facilities (PF-1 and PF-2) with a production capacity of 40 mboepd. The Operator continues to exercise a prudent field development approach related to the regularity and the amount of payments for all production (including the arrears). On the Akri-Bijeel block, a comprehensive in-house assessment was carried out, and confirmed by an independent analysis (Competent Person’s Report) of the block’s geological potential. The analysis confirmed that the expected recoverable volumes did not pass the Economic Limit Test (ELT), and consequently no reserves were assigned to the block. In agreement with partners, Gulf Keystone Petroleum and the Kurdistan Regional Government’s Ministry of Natural Resources, MOL Group relinquished the block, and signed the Relinquishment and Termination Agreement on 31st December 2015. MOL Group prepared plan for restoration of sites and mud pits as per local requirements and international best practices.
In Oman, MOL Group progressed with the maturation of two exploration wells in Block 66, located in the mid-western part of the country, close to the Saudi border. The first exploration well was spudded in November 2015, however, the penetrated reservoirs were water bearing. The second well is expected to be spudded in Q2 2016.
In Cameroon’s Ngosso block, oil bearing layers were encountered throughout drilling of one deep HP/HT exploration well. However, as accumulations were below the economic threshold, the well was plugged and abandoned. After reviewing the remaining potential of the block, MOL decided to relinquish the asset.
THE CIS REGION
MOL increased the Baitugan field production via a high density drilling campaign. In the Fedorovsky block in Kazakhstan, a 25-year Production Licence Contract for the Rozhkovsky field was approved by the Ministry of Energy. Preparations are ongoing for the first phase of the project. Appraisal program of Bashkirian discovery was started.
In the operated Baitugan block in Russia, focus has been on increasing production via a high density drilling campaign. The 2015 development drilling programme was carried out with 5 rigs, and 60 production and injection wells were drilled and completed, resulting in 23% production increase year-on-year (9.4 mboepd in 2015). Baitugan is a shallow, compact field with developed infrastructure, which supports low energy and operational costs. This has made Baitugan resilient to the current low oil price environment, and contributed to reaching a cash flow-positive position in 2015.
In the Kazakh Fedorovsky block, Reserve Calculation and Trial Production Plan for the Block were approved by the Kazakh state. Furthermore, a 25 year Production Licence Contract for the Rozhkovsky field was approved by the Ministry of Energy. Preparations are ongoing for the first phase of the project which is intended to help the Partners evaluate the behaviour of the reservoirs. In addition, appraisal of the Bashkirian discovery is ongoing.
Exploration licences acquired/awarded in 2015
Two concession areas were awarded to MOL, in the framework of the Third Hungarian Licensing round. Contract signing is currently in progress.
In Croatia, INA bid for licences offered in the First Onshore Bid Round and was subsequently awarded with Block Drava-2. In addition, two offshore exploration blocks were granted in the First Offshore Bid Round. Both onshore and offshore licences await Croatian Government’s ratification.
In Pakistan, MOL Group signed a farm-in agreement for the DG Khan block, whereby MOL acquired a 30% non-operating interest from the Pakistan Oil Field Limited. The Government of Pakistan approved MOL’s farm-in in December 2015.
MOL acquired 17 licenses on the Norwegian Continental Shelf, 3 of which are operated by MOL Norge. In addition, as part of the 2015 APA round, MOL Norge was awarded interest in 4 other licences, 2 of which are operated.