Fotó: MOL

As MOL expands into Poland, we take a look at the Hungarian oil and gas giant

Hungarian oil and gas company MOL has announced that it is expanding its operations in Poland by acquiring a network of 410 petrol stations from Lotos Paliwa in January 2023, making it the fourth largest fuel retailer in Poland.

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Poland has the strongest economy in Central and Eastern Europe, accounting for 30% of the region’s GDP, which is expected to grow by 4.5% in 2023. The country’s transport sector is also the strongest in the region, ranking fourth in Europe after Germany, France and Spain.

In addition, the country’s geography is stimulating to say the least: it is a large country, right next to Germany, at the crossroads of Europe and a major transit centre for goods and people. This makes Poland an attractive market for MOL to use as a base for expansion into other European markets.

MOL’s expansion in Poland is therefore a significant step for the company. It is the company’s largest investment in a single market and a sign of MOL’s commitment to the region. The expansion is also a challenge for MOL as it will have to compete with established players in the Polish market.

How big player is MOL in the oil business?

Hungarian multinational oil and gas company MOL Group include the Croatian and Slovak formerly state-owned oil and gas companies, INA and Slovnafta, and stands as Hungary’s most profitable enterprise, with a market cap of $6.06 billion in August 2023, and a USD 4,702mn full-year EBITDA for 2022.

A decade ago, however, the company was significantly stronger than today. In 2013, it was ranked as the third most valuable company in Central and Eastern Europe and placed 402 on the Fortune Global 500 list of the world’s largest companies.

MOL is vertically integrated and active in exploration and production, refining, distribution and marketing, petrochemicals, power generation, trading and retail.

The biggest market in Central and Eastern Europe

The Polish petrol station market is the largest in Central and Eastern Europe.

The market is dominated by a few large players, according to the Polish Petroleum Industry and Trade Organisation, and at the end of 2022, when there were 7,898 petrol stations in Poland, this was the petrol station landscape:

In addition, the market is expected to grow in the coming years, driven by increasing demand for fuel and growth in the transport sector.

Polish-owned Orlen is the largest fuel retailer in Poland with a market share of 24%. The company has a network of over 1,900 petrol stations in the country and is also a major player in the oil refining and natural gas markets.

BP is the second largest fuel retailer in Poland with a market share of 7.3% and a network of more than 574 service stations in the country. BP is also a major player in the global oil and gas industry.

Shell is the third largest fuel retailer in Poland with a market share of 5.8% and a network of more than 454 service stations in the country. Shell is also a major player in the global oil and gas industry.

MOL is currently the fourth largest fuel retailer in Poland with a market share of 5.8% and a network of more than 400 service stations in the country.

However, independent petrol stations should not be overlooked, as they account for more than 29% of the market. These stations are often owned and operated by local companies and tend to offer lower prices and more personalised service than the large chains.

Mol’s presence in other countries

The MOL Group announced at the end of June that it had completed the purchase of OMV Slovenija, temporarily expanding its network to more than 170 service stations in Slovenia, and thus became the second player in the country in cooperation with INA.

The group currently has more 2,000 fuel stations in ten countries in Central and Eastern Europe, operating under six brand names: MOL, Slovnaft, INA, Tifon, Energopetrol and PapOil. These networks play a leading role in the Croatian, Hungarian, Slovakian and Bosnian retail markets and represent the premium segment in the Czech Republic, Romania and Slovenia.

The group is also present in the Serbian and Montenegrin retail markets.

Dark clouds over the deal

MOL’s entry into the Polish market has raised eyebrows in Poland, to say the least, as there is more to the deal than meets the eye.

According to an investigation by the Polish portal Onet, Polish PR firm R4S signed a secret agreement with MOL in 2020, under which R4S lobbied the Polish government to sell its shares in Polish oil company Lotos to MOL in exchange for €10,000 a month.

R4S is owned by Adam Hofman, a former spokesman for Poland’s ruling Law and Justice (PiS) party, who is close to Daniel Obajtek, CEO of PKN Orlen, Poland’s largest oil company.

MOL announced in 2021 that it would buy a 35% stake in Lotos. The deal was approved by the Polish government, despite opposition from some parliamentarians.

Onet’s report claims that the sale of Lotos to MOL was part of a quid pro quo agreement between R4S and the Polish government. In return for lobbying the government to sell Lotos to MOL, MOL would pay R4S €1 million.

The report also claimed that Hofman used his close relationship with Obajtek to influence the government’s decision to sell Lotos to MOL.

The article raised serious questions about the relationship between R4S, MOL and the Polish Government, however, the Polish Government has denied any wrongdoing.

According to the report, Viktor Orbán knew about the deal between R4S and MOL because he met Adam Hofmann, the owner of R4S, in Budapest in 2020. This meeting was allegedly organised by journalist Igor Janke, a partner in R4S, who had previously written a book about Viktor Orbán, describing him as a tough but effective leader.

What was the sales agreement about?

MOL bought Lotos Paliwa, which operates 80 per cent of the petrol stations owned by the Lotos oil company, for 610 million dollars.

According to the Hungarian news site Index, the negotiations were as follows:

  1. Mol entered Poland with the purchase of 417 petrol stations for 610 million dollars, consisting of cash and financial leasing obligations.
  2. In the next step, the network will provide nationwide coverage and allow the company to take the third position in the Polish fuel retailing market. With this agreement, Mol will have more petrol stations in Poland than in Hungary.
  3. Mol sells 185 Hungarian and Slovakian petrol stations to PKN Orlen for 259 million dollars, of which 144 are in Hungary and 41 in Slovakia.

With this transaction, Mol has exceeded its strategic goal for 2025 and expanded its network to approximately 2,400 sites in ten countries.

Does MOL belong to Orbán?

The current ownership structure of MOL is as follows:

  • Foreign institutional investors: 30.81%
  • MOL-New Europe Foundation: 10.49%
  • Maecenas Universitatis Corvini Foundation: 10%
  • Mathias Corvinus Collegium Foundation: 10%
  • MOL Nyrt. KMRP (MOL employees who are also shareholders in the company) 7.91%,
  • Banks (OTP: 4.89%, ING: 4.18%, UniCredit: 4%), Hungarian institutional investors (9.11%) and private individuals (5.2%), and Mol (2.51%).

Reading the list, one gets the feeling that he has not become much wiser, and that he still does not know who the oil company’s biggest shareholders are.

In order to understand this, it is necessary to know the events of the last few years of contemporary Hungarian history. Until 2018, the Hungarian state was the largest owner of MOL, holding 25.24% of the company. In 2020, the state transferred this share to three foundations: the MOL-Új Európa Foundation received 5%, the Maecenas Universitatis Corvini Foundation and the Mathias Corvinus Collegium Foundation received 10%.

While the Hungarian state might have stepped down from the ownership of MOL shares, the people close to the government are definitely still close to the shares:

  • the Hungarian state is a co-founder of the MOL-Új Európa Foundation (whose board of trustees is chaired by the opera singer Erika Miklósa);
  • the chairman of the board of trustees of the Maecenas Universitatis Corvini Foundation is Zsolt Hernádi, president and CEO of MOL;
  • and the chairman of the board of trustees of the Mathias Corvinus Collegium Foundation is Balázs Orbán, the prime minister’s political director.

If anyone wonders what these organisations are:

MOL-Új Európa Foundation is a public interest asset management foundation performing public tasks. It has taken over MOL’s social responsibility activities and performs tasks of public interest in the fields of sports, culture, healthcare, economic development and environmental protection.

Maecenas Universitatis Corvini Foundation and Mathias Corvinus Collegium Foundation: from July 2019 universities in Hungary are operated by foundations. The first-mentioned organisation governs the Corvinus University of Budapest, while the second-mentioned organisation is Hungary’s largest private educational institution, with close ties to the government.

What are MOL’s plans for Poland?

Mol plans to open 600 petrol stations in Poland over the next five years, said the group’s executive director for consumer services, Péter Ratatics. Péter Ratatics at the opening of Mol’s first petrol station in Poland.

At the press conference, he also said that the group’s goal is to make MOL the second-largest petrol station operator chain after Orlen.

In order to achieve this, they are prepared to take smaller or larger steps; to get closer to the goal by acquiring independent wells and taking over smaller networks.

For MOL to overtake BP, which is now in second place in the network ranking, it needs to acquire 161 more filling stations.