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Payments to Governments 2021

1

 

MOL GROUP

Report on payments to governments

for thE period ended 31 december 2021

 

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1.       Introduction

MOL Group operates under special attention from a considerable number of stakeholders, where transparency is the primary means by which to communicate the Group’s activities. In general, MOL Group seeks to proactively meet and exceed disclosure expectations from its stakeholders by consistently reporting both financial and non-financial data beyond what is legally required. MOL Group follows globally recognized reporting frameworks and standards to ensure that Group’s sustainability meets the highest standards of transparency:

-           The Group’s sustainability report has been prepared in accordance with the ‘comprehensive’ option of the Global Reporting Initiative

-           MOL Group applies the Sustainability Accounting Standards Board as a means to communicate financially material sustainability information

-           MOL Group became a signatory of the UN Global Compact in 2006

-           MOL Group has reported its financial and non-financial performance in one integrated report since 2009 with data and narrative subject to external assurance.

-           MOL Group is currently rated by a wide number ESG rating firms, including Sustainalytics (25.8 Medium ESG risk rating) and MSCI (AA rating); and upgraded its Climate Change and Water Security CDP scores to B (“management”) in 2021.

-           MOL Group became an EITI[1]  supporting company in 2013

 

The present report on payments to governments is one element in our journey towards better transparency, and it is published in compliance with Chapter 10 of DIRECTIVE 2013/34/EU (29 June 2013) and Chapter VI/A of Act C of 2000 on Accounting (“Hungarian Accounting Act”) on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings.  The Directive requires extractive sector companies listed on a stock exchange to publicly disclose payments made to the governments of those countries where they carry out extractive operations (involving the exploration, prospection, discovery, development and extraction of minerals, oil and natural gas deposits or other materials).

MOL Group presents all cash payments and in-kind payments made to governments that relates to MOL Group’s activities involving the exploration, prospection, discovery, development and extraction of minerals, oil and natural gas deposits or other materials. Payments made to governments that relate to refining activities, other downstream activities and as well as other retail activities are not disclosed in this Report.

 

 




[1] Extractive Industries Transparency Initiative

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Payments to Governments 2021

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2.       Reporting principles

MOL GROUP’s consolidated Report on payments to governments (the Report) is presented below pursuant to DIRECTIVE 2013/34/EU and Chapter VI/A of Act C of 2000 on Accounting (“Hungarian Accounting Act”). It includes Payments made by the MOL GROUP’s Extractive Companies as defined below, for the benefit of each government in the countries in which these companies carry out their activities. The Report also provides details on the total amount of such payments by type, specific project and government paid. In light of these requirements MOL Group has assessed its reporting obligations to be as follows:

·        Where MOL Group has made a payment to a government, such payment is reported in full, whether made in MOL Group’s sole capacity or in MOL Group’s capacity as the operator of a joint-arrangement in accordance with the regulations of International Financial Reporting Standards.

·        When a national oil company is the operator of a project to whom MOL Group makes a reportable payment which is distinguishable in the cash-calls, it is included in this Report.

·        Payments made by an incorporated joint arrangement where MOL Group is not the operator are not included within this Report.

·        For some payments it may not be possible to attribute a payment to a single project and therefore such payments may be reported at the country level. Corporate income taxes, which are typically not levied at a project level, are an example of this.

·        According to DIRECTIVE 2013/34/EU, any payment to governments not exceeding 30 million Hungarian forints within a fiscal year shall not be taken into account when preparing the report. MOL Group presents all payments to governments without concerning this materiality limit.

In-kind payments

Production entitlement and Royalties paid in kind owed to Governments pursuant to legal or contractual provisions (not booked in the Extractive Companies’ accounts pursuant to the accounting standards) are reported in proportion to the interest held in the Project. Payments in kind are estimated at fair value which corresponds to the contractual price of oil and gas, market price (if available) or an appropriate benchmark price. These prices may be calculated on an averaged basis over a given period.

3.       Definitions

Payment

A single payment or multiple interconnected payments, whether in cash or in kind, for extractives activities.

The payment types included in this Report

Production entitlement: host Government’s share of production in the reporting period derived from projects operated by MOL Group. This payment is generally paid in kind. The value of these payments is calculated based on the market price at the time of the in-kind payment.

Taxes: taxes and levies paid on income, production or profits, excluding taxes levied on consumption such as value added tax, personal income taxes, sales taxes and property and environmental taxes.

Royalties: payments for the rights to extract oil and gas resources, typically at set percentage of revenue less any deductions that may be taken

Dividends: dividends, other than dividends paid to a government as an ordinary shareholder unless they are paid in lieu of a production entitlement or royalty.

Bonuses: bonuses paid for and in consideration of signature, discovery, production, awards, grants and transfers of extraction rights; bonuses related to achievement or failure to achieve certain production levels or targets, and the discovery of additional mineral reserves or deposits.

License and other fees: license fees, rental fees, entry fees and other considerations for licenses and/or concessions that are paid for access to the area where the extractive activities will be conducted. Administrative government fees that are not specifically related to the extractive sector, or to access to extractive resources, are excluded. Also excluded are payments made in return for services provided by a government.

Infrastructure improvements: payments for local infrastructure development, including the improvement of infrastructure, except where the infrastructure is exclusively used for operational purposes. Payments which are of a social investment in nature, for example building of a school or hospital, are excluded.

 

Government

Any national, regional or local authority of a country or territory, or any department, agency or undertaking (i.e. corporation) controlled by that authority.

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Payments to Governments 2021

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Project

Operational activities governed by a single contract, license, lease, concession or similar legal agreement that form the basis for payment liabilities with a Government. If multiple such agreements are substantially interconnected (meaning that the agreements are governed by a single overarching agreement, that the agreements have more or less identical terms, and that the agreements are geographically and operationally interconnected), they are considered as a single Project.

 

Reporting currency

All amounts presented in the Report are stated in million Hungarian forint. Payments made to Governments in foreign currencies (currencies other than the Hungarian forint) were translated into the equivalent forint amount using an average of the relevant exchange rates during the reporting period.

4.       Summary report

In the summary report all amounts are stated in million HUF.

 

Summary by countries

 

 

all amounts are stated in million HUF

 

 

 

 

 

 

 

Payments by countries

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Angola

0

435

0

0

0

0

0

435

Azerbaijan

0

16,461

0

0

17,411

0

0

33,872

Croatia

0

0

18,031

0

128

1,185

0

19,344

Egypt

635

0

0

0

0

0

0

635

Hungary

0

2,475

30,777

0

61

257

0

33,570

Norway

0

0

0

0

0

52

0

52

Pakistan

0

5,000

2,806

0

0

61

0

7,867

Russia

0

5,574

8,939

0

0

0

0

14,513

TOTAL

635

29,945

60,553

0

17,600

1,555

0

110,288

 

 

 



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Payments to Governments 2021

4

Angola

 

Payments by goverments

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Angolan Tax Authority

0

435

0

0

0

0

0

435

TOTAL

0

435

0

0

0

0

0

435

 

 

 

 

 

 

 

 

 

Payments by projects

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Block 3/05

0

435

0

0

0

0

0

435

TOTAL

0

435

0

0

0

0

0

435

 

Azerbaijan

 

Payments by goverments

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Azerbaijan Tax Authority

0

16,461

0

0

0

0

0

16,461

State Oil Company Azerbaijan Republic

0

0

0

0

17,411

0

0

17,411

TOTAL

0

16,461

0

0

17,411

0

0

33,872

 

 

 

 

 

 

 

 

 

Payments by projects

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

ACG

0

16,461

0

0

17,411

0

0

33,872

TOTAL

0

16,461

0

0

17,411

0

0

33,872

 



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Payments to Governments 2021

5

Croatia

 

Payments by goverments

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

National Tax Authority

0

0

15,299

0

0

0

0

15,299

Mining and Geology Authority

0

0

2,732

0

0

0

0

2,732

Local muncipalities

0

0

0

0

0

1,185

0

1,185

Hydrocarbon Agency

0

0

0

0

128

0

0

128

TOTAL

0

0

18,031

0

128

1,185

0

19,344

 

 

 

 

 

 

 

 

 

Payments by projects

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Croatia on shore

0

0

15,299

0

0

1,139

0

16,438

Croatia off shore

0

0

2,732

0

0

46

0

2,778

DRAVA-02

0

0

0

0

38

0

0

38

DRAVA-03

0

0

0

0

30

0

0

30

SZH-01

0

0

0

0

30

0

0

30

DINARIDI-14

0

0

0

0

30

0

0

30

TOTAL

0

0

18,031

0

128

1,185

0

19,344

   

 

Egypt

 

Payments by goverments

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Egyptian Goverment (EGPC)

635

0

0

0

0

0

0

635

TOTAL

635

0

0

0

0

0

0

635

 

 

 

 

 

 

 

 

 

Payments by projects

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

EGYPT operation -  EAST YIDMA

635

0

0

0

0

0

0

635

TOTAL

635

0

0

0

0

0

0

635

 

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Payments to Governments 2021

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 Hungary

 

Payments by goverments

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Mining and Geology Authority

0

0

30,777

0

59

0

0

30,836

Local Goverments

0

0

0

0

0

8

0

8

Hungarian State Railways

0

0

0

0

0

14

0

14

Government Office

0

0

0

0

2

178

0

180

Disaster Management Directorate

0

0

0

0

0

32

0

32

National Tax Authority

0

2,475

0

0

0

0

0

2,475

National Pension Insurance Directorate

0

0

0

0

0

8

0

8

Ministry of Innovation and Technology

0

0

0

0

0

11

0

11

National Accreditation Authority

0

0

0

0

0

2

0

2

National Institute of Environmental Health

0

0

0

0

0

1

0

1

Hungarian Energy and Utilities Regulatory Agency

0

0

0

0

0

1

0

1

other

0

0

0

0

0

2

0

2

TOTAL

0

2,475

30,777

0

61

257

0

33,570

 

 

 

 

 

 

 

 

 

Payments by projects

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Hungarian Concession

0

24

1,787

0

61

0

0

1,872

Hungarian Exploration

0

0

0

0

0

116

0

116

Hungarian Production

0

2,451

28,990

0

0

141

0

31,582

TOTAL

0

2,475

30,777

0

61

257

0

33,570

 

 

 

 



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Payments to Governments 2021

7

Norway

 

Payments by goverments

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Norwegian Petroleum Directorate

0

0

0

0

0

35

0

35

Norwegian Environmental Directorate

0

0

0

0

0

7

0

7

Petroleum Safety Authority Norway

0

0

0

0

0

6

0

6

Ministry of Climate and Environment

0

0

0

0

0

4

0

4

TOTAL

0

0

0

0

0

52

0

52

 

 

 

 

 

 

 

 

 

Payments by projects

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Whole operation

0

0

0

0

0

52

0

52

TOTAL

0

0

0

0

0

52

0

52

 

Pakistan

 

Payments by goverments

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Directorate General of Petroleum Concession

0

0

2,806

0

0

61

0

2,867

Federal Board of Revenue

0

5,000

0

0

0

0

0

5,000

TOTAL

0

5,000

2,806

0

0

61

0

7,867

 

 

 

 

 

 

 

 

 

Payments by projects

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Tal

0

9

2,449

0

0

54

0

2,512

Karak

0

0

357

0

0

0

0

357

Margala

0

0

0

0

0

7

0

7

Margala North

0

2

0

0

0

0

0

2

Whole Operation

0

4,989

0

0

0

0

0

4,989

TOTAL

0

5,000

2,806

0

0

61

0

7,867

 

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Payments to Governments 2021

8

Russia

 

Payments by goverments

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Federal Tax Authority

0

5,574

0

0

0

0

0

5,574

Central energy customs

0

0

8,939

0

0

0

0

8,939

TOTAL

0

5,574

8,939

0

0

0

0

14,513

 

 

 

 

 

 

 

 

 

Payments by projects

Production entitlements

Taxes

Royalties

Dividends

Signature, Discovery and Production Bonuses

Licence and other fees

Infrastructure improvements

TOTAL

Baitugan

0

5,574

8,939

0

0

0

0

14,513

TOTAL

0

5,574

8,939

0

0

0

0

14,513

 

 

.

Notes

MOL Group also carries out extractive activities in Kurdistan Region of Iraq, Romania, Kazakhstan and the United Kingdom however no payments to the governments made in 2021 within the scope of this Report.

 

5.       Contact information

MOL Group

Legal and mailing address:

1117 Budapest, Hungary Október huszonharmadika u. 18.

Phone: + 36 1 209 0000

Corporate website:

www.mol.hu

https://molgroup.info/hu/