Croatian and Hungarian governments have agreed to build a 340-kilometre long natural gas pipeline between the Adriatic coast and Hungary and a liquefied petroleum gas terminal on the Adriatic coast. The aim is to secure a steady supply of natural gas and reduce dependency on Russian gas imports. According to the plan, the total capacity of the system would be 1.5 billion cubic metres.
MOL’s role in the investment is not yet clear. In our view the company should have been involved in the talks and also in the business, since it owns the high-pressure natural gas pipelines in Hungary. According to our information the company also tried to use the opportunity to lobby for further privatisation of INA. The news is likely to arouse investors’ curiosity about MOL’s role in the business, and might induce some speculative buying on the market. However, while we have no estimates on the investment or its return, we leave our earnings estimates intact and keep our Hold recommendation with a target price of 22,650.