MOL Group announced the financial and operational objectives for the next five years, shortly after the publication of the Strategy “MOL Group 2030 – Enter Tomorrow”.
“The integrated business model, sustainable, of MOL Group will continue to generate robust and stable profits over the next 10-15 years. The core activities of the company will generate a substantial cash flow, which can fully cover the financing needs of the projects included in the Strategy MOL Group 2030, as well as potential transactions of small-scale, in the mergers and acquisitions field,” states the press release.
MOL Group has allocated about 2 billion dollars as a strategic investment budget during 2017-2021 to implement the new long-term strategy. This amount will be added to the capital expenditures relating to existing projects, estimated at 1-1.1 billion dollars.
In refining MOL will continue to focus on improving efficiency and implementing the initiatives of the Next Downstream Program (2015-2017), which is set to deliver USD 500mn EBITDA improvement. As part of its long term strategy MOL targets a gradual increase of the share of valuable non-motor fuel products to above 50% by 2030 from below 30% currently. MOL intends to increase the feedstock for its petrochemical plants, whilst also taking advantage of the growing demand for such profitable products as jet fuel, lubricants and base oils. MOL will also expand its market share in LPG.
MOL plans to invest around 80-130 million dollars into its refineries in Hungary and Slovakia to increase the flexibility of propylene and lubricants production.
Petrochemicals – an industrial transformation
MOL has earmarked up to USD 1.9bn until 2021 to develop its petrochemicals business. The yield improvement of propylene and investment into attractive propylene derivatives will be the main direction for the next five years. In order to allow further diversification in the propylene value chain MOL Group will invest more than USD 500 million into its steam crackers in Hungary and Slovakia.
Transforming retail
MOL intends to further develop its market-leading regional service station network in the CEE and will continue to look for M&A opportunities in the supply radius of its refineries, outside the three core countries (Hungary, Slovakia, and Croatia). Building on its retail network and 10 million customer base, MOL will introduce new services and products. MOL will also modernize its service stations and will further improve and roll out its Fresh Corner concept to 700 stations by 2018.
Value creation in a low oil price environment
MOL intends to spend over 2 billion dollars organic capex for existing projects, in the period 2017-2021, with scrutiny on all spending. Approximately 35% will be allocated for exploration with focus on CEE, Pakistan and Norway, whilst 45% for development projects in CEE, UK, Pakistan, Kazakhstan and the Baitugan field in Russia. MOL strongly believes in the benefit of the integrated business model, which assumes Upstream oil and gas production shall sustain at least around its current production levels. However, this requires both organic and potentially inorganic investments in reserves replacement to stem the forthcoming decline beyond 2019.