August 2015 Seventh Issue

MGPm o l g r o u p pA n o r A m A

INVESTOR RELATIONSPerformance of MOL share price improves

DOwNSTREAM BuSINESS SuPPORTThe bridge between different organisations

BuSINESS uPSTREAM MOL Hungary: dominant role in production

Sándor Fasimon“Our objective is clear:

to be efficient, profitable and to satisfy all stakeholders.”

August 2015 3

contents

News illustratedFresh Corner Renewed stations with a wide range of products and services

12news illustrated

August 2015 13

news illustrated

forecourt

inside

Renewed stations with a wide range of products and services perfectly aligned to our customers’ everyday shopping needs.

MOL Fresh Corner: THE PLACE

► Improved visibility for both customers and staff► Removed all merchandise► Large glass portal provides

view into shop

nice and clean forecourt

► Provides extended service with food and beverages► Serves as meeting place for

motorists and pedestrians alike

terrace

► Inviting, clean and warm interior

► Layout is arranged to optimise sales potential

► Toilet is brought inside

ambiance

► Fresh Corner signage suggests both food and grocery services► Brown frame indicates that coffee is in

focus in the new offering► Green stripe links the building with the

MOL brand (yellow at Slovnaft, blue at INA)

emphasised shop

► Carwash, screen wash and lubricants are kept together► Lubricants and forecourt

merchandise are arranged neatly in a cabinet

dedicated car care destination

► First impression is coffee – uncompromising quality

► Full range of coffee drinks, including flavoured syrups

► Self- and barista-service as required► First-class tea blends

hot beverages► Broad bakery selection freshly baked on site

► Sweet pastries► Baguettes and several types of bread

bakery► Made-to-order fresh sandwiches

► Hotdog offer► Pre-packed sandwiches prepared exclusively for MOL

food-to-go► Radically consolidated portfolio of products

► Focus on daily essentials► Emphasis on convenience for our customers

grocery

MGP07_12-13_infographics_03.indd All Pages 8/13/15 3:18 PM

InterviewHighest priorities: customers, business results and the market An interview with Sándor Fasimon

6

6 MOL GrOup Panorama

interview

August 2015 7

tOp prIOrItIES: CuStOMErS, BuSINESS rESuLtS AND tHE MArKEt

hat do you think has been the most important mile-stone in MOL Hungary’s life over the past three years?

First of all, as the MOL Group’s determi-nant flagship, we have established our identity, our image, our mission, and our vision; and have defined clear business values to live by. We have made changes not only to the “hardware” but also to the “software“ of the business; cre-ating a new Code of Leadership to outline our ideas of what makes a good manag-er. Our objective is clear: to be efficient and profitable and satisfy all stakehold-ers, including our employees, by creat-ing an environment where even the flag-ships compete with one another. Finally, we found the key to achieving successful operations under circumstances beyond our control, such as the recent halving of the oil price.

Does this mean that you are making prog-ress in line with your philosophy that good work needs three years?In the first year, we assessed what needs to be done. In the second, we created an environment in which to operate; the management was transformed into a real team through the MOL Hungary Programme. This is the third year, when we can boost our performance.

How is MOL Hungary positioned within MOL Group?This is where MOL Group started from; MOL Hungary is where we run two of our most important sites, Algyő and Százhalombatta, both of which turn 50 this year. We have a great team of experts; domestic Upstream production accounts for 40% of the Group’s production while the Downstream business contributes 80% of Group EBITDA. And by creating the MOL Hungary Service Centre last year, we actually made it a role model within the Group.

“tHE pOINt IS tO MOvE fOrwArD By DOING tHE BESt wE CAN - tHErE IS NO NEED tO

wAIt fOr OtHErS tO SHOw uS HOw tO GEt tHErE. wE CAN LEArN frOM EACH OtHEr.”

interview

As a responsible company, we boost the economy and also invest in the future by supporting the next generation of profes-sionals and recruiting young talent.Let me give you an example: we work hard to engage those who have com­pleted the Freshhh and Growww pro-grammes. Today, 3% of our employees are former Growww participants. We have also donated half a billion forints to six universities over three years, we run a faculty at the University of Veszprém and are opening another in Miskolc. In addition, we are constantly striving to reduce our ecological footprint even in our daily operations. I consider it a great achievement that we have decreased en-ergy use at our Százhalombatta site by the equivalent of the consumption of a town of 30,000 people. On a social level, the pop-ular MOL Bubi bike sharing programme is another important innovation.

In addition to the innovations and new approaches mentioned earlier, how would you describe MOL Hungary’s achieve-ments and priorities for the future?We were the first in the Group to lever-age the synergies between Upstream and Downstream. We are still looking for new opportunities in Upstream, and this resulted in the geothermal conces-sion we were awarded in Jászberény. In order to minimise production decrease in Hungary, we launched an unconven-tional pilot project in Derecske. In addi-tion, we have completely revised our re-tail concept to ensure customers can buy almost anything they need at our service stations.

What are the best practices that can be shared and used Group-wide?We have changed our philosophy by de-signing the MOL Hungary Programme to ensure that various Group­level pro-grammes, such as the New Downstream Programme, Next Downstream and CORE, can improve efficiency both in business and functional areas. While control used to be the defining part of their activities, func-tional areas now dedicate 80% of their time to supporting business operations. This al-lows us to assign the highest priority to our customers, business results and the market as a whole. The point is to move forward by doing the best we can ­ there is no need to wait for others to show us how to get there. We can learn from each other.

Could you tell me a few words about the key investment projects?This year, we opened the Friendship 1 crude oil pipeline, which is crucial to our se-curity of supply. Our butadiene plant is ex-pected to be opened this year, extending our value chain in the chemical industry and boosting profits. The next step is to open a synthetic rubber unit, and we are on course to set up a joint venture with our Japanese partners to realise this. We hope to see the final investment decision made soon. We also aim to win further conces-sions to allow us to increase sustainability in Exploration and Production.

You briefly mentioned sustainability. What does MOL Hungary do to be a responsible company?MOL Hungary is the largest enterprise in the country. We are the country’s engine.

3700

An interview with Sándor Fasimon, MOL Hungary COO

Sándor FaSimon –moL Hungary Coo

Sándor Fasimon was Head of the Gas Division in 2003­2006, before going on to manage MOL’s activities in Russia. He

was Vice President of the Supply & Trading Division from 1 July 2009, where he was responsible for crude oil supply of

MOL Group, including development of the energy portfolio and trading platform. Between June 2011 and October 2012,

he was Executive Vice President of the Exploration and Production Division, during which time he also became an EB

member. As of October 2012, he is Chief Operating Officer of MOL Flagship. Sándor is Special Envoy to the Chairman­CEO

regarding CIS and Middle­East relations.

BuSINESS CArD

MGP07_06-07_Fasimon_Interview.indd All Pages 8/13/15 3:18 PM

MOL Group Panorama – The Internal Magazine of MOL GroupPublished quarterly . Magazine Founder: MOL Group Corporate Communications . Executive Publisher: Dominic Köfner, Vice President - MOL Group Corporate Communications . Magazine Manager: Rita Csernai . Managing Editors: Ágnes Inzsöl, Virág Simon, Tünde Szarka (HG Media) . Contributors: MOL Group HQ Editorial Board, Flagship and Operating Company Representatives . Publisher: HG Media – 1016 Budapest, Lisznyai u. 38. . Design: HG Media, Tamás Tárczy . Photos: Fotógyár

In numbersMOL Flagship facts and figures

WeLCOmeZsolt Hernádi, Chairman & CEO and Sándor Fasimon, MOL Hungary COO

IntervIeW WIth sándOr FasImOnHighest priorities: customers, business results and the market

BusinEss - uPstrEaMHungarian foundation to upstream business

BusinEss - DOwnstrEaMTo be best in class

neWs ILLustratedFresh Corner

GrOuP nEwsDiscoveries, announcements, successes around the world of MOL Group

nEw sEtuPInterview with Péter Ratatics, Senior Vice President, Group Corporate Centre

FLaGsHiP nEwsAnnouncements from the Flagships

InsIderInterview with Tamás Kocsis, Head of Group Down-stream Business Support

E&P intErviEwInterview with Berislav Gašo, E&P Chief Operating Officer

E&PWellHead Idea Management Program

retaILThe Customer is King – interview with Zsolt Tőtös, Head of MOL Hungary Retail

hrDiversity matters at MOL Group

FinanCE, MsCClient and efficiency in focus

mOmentsScenes from Summer Party 2015

COrPOratE rEsPOnsiBiLity anD sPOnsOrsHiPDonations, awards, sport successes

InvestOr reLatIOnsPerformance of MOL share price improves

sCIenCeMOL rubber bitumen – road to the future

BarrEL PEr DayWhy everyone suddenly wants to save the world

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member of mol group

ISSuE 07 August 2015

DOMINIc KöFNER

VICE PRESIDEnT – MOL GROuP CORPORATE COMMunICATIOnS

Over the last two years, we have executed a massive innovation strategy in our internal and external communications. I am happy to say that the Group Corporate Communications strategy now mirrors that of our business units in many ways. We offer our global colleagues a firm foundation to build on according to their local requirements, while focusing on international best practices. Our overall communications goal is to maintain and increase trust in MOL Group and thus to ensure our license to operate. With the recent launch of the MOL Group Photo Library (www.molgroupphotolibrary.info), we successfully closed this first, two-year long innovation phase. During the second half of 2015, we will focus on Group-wide implementation of our new channels where they are not yet available, and upgrade certain channels and tools. Already in 2016, we will start another wave of innovation with the main focus on internal communications, i.e. interactive/social intranet and a Group-wide marketing communications approach. Please familiarise yourselves with the new channels and tools we have invented for you.

DEAR cOLLEAGuES,

this issue: MOL flagship

4 MOL GROuP Panorama

COMPaniEs unDEr tHE uMBrELLa OF MOL FLaGsHiP 42

August 2015 5

in numbers

uPSTREAM

the daily production of oil in Hungary would fill

24,500 MOL us production (mboepd):

DOwNSTREAM

tonnes of products are produced in Hungarian plants (on a yearly average)

363H

40Slo

7.5 mILLIOn HR

9,522employees at MOL Flagship

SuSTAINABILITY

3,700 78,000

since 2005, the new Europe Foundation

has assisted young talents... ...and helped

heal more than

used COOKInG OIL

320 tonnes collected in total

1 litre can pollute 1 million litres of water

Green Belt programme in Hungary:

1.5 km2reCOvered arEa:

with our sponsorship, we have contributed to the winning of over

50 Hungarian Olympic medals over the last 20 years.

41.6number of

service stations by country:

(42% of total MOL Group production)

MOL Flagship has been a stronghold of MOL Group ever since its foundation. This edition of MGP focuses on MOL Flagship, which has built a team of experts possessing knowledge recognised worldwide. This year, we celebrate the 50th anniversary of the Danube Refinery, as well as the Algyő production site, which has been providing us with oil for 50 years now. Without our highly appreciated colleagues,

MOL Flagship could not have achieved its success. But instead of living in the past, MOL Flagship is moving forward with projects and initiatives like the EnI acquisition in Romania, upstream’s CORE Program, the next Downstream Program, and MOL Bubi. In addition, the new Fresh Corner service station concept was recently launched in Budapest and also in Romania to strengthen our focus

on our customers. On the operations side, the MOL Hungary Service Centre was opened to concentrate on all transactional activities and enhance efficiency. This issue of MGP provides an overview of our key projects to help you understand how MOL Flagship contributes to the performance of MOL Group.

Explore the world of MOL Flagship!

DEAR MOL GROuP cOLLEAGuES AND MGP READERS,

Zsolt HernádiChairman & CEO

Sándor FasimonMOL Hungary COO

welcome

42Srb

200ro

children

6 MOL GROuP Panorama

interview

August 2015 7

TOP PRIORITIES: cuSTOMERS, BuSINESS RESuLTS AND THE MARKET

hat do you think has been the most important mile-stone in MOL Hungary’s life over the past three years?

First of all, as the MOL Group’s determi-nant flagship, we have established our identity, our image, our mission, and our vision; and have defined clear business values to live by. We have made changes not only to the “hardware” but also to the “software“ of the business; cre-ating a new Code of Leadership to outline our ideas of what makes a good manag-er. Our objective is clear: to be efficient and profitable and satisfy all stakehold-ers, including our employees, by creat-ing an environment where even the flag-ships compete with one another. Finally, we found the key to achieving successful operations under circumstances beyond our control, such as the recent halving of the oil price.

Does this mean that you are making prog-ress in line with your philosophy that good work needs three years?In the first year, we assessed what needs to be done. In the second, we created an environment in which to operate; the management was transformed into a real team through the MOL Hungary Programme. This is the third year, when we can boost our performance.

How is MOL Hungary positioned within MOL Group?This is where MOL Group started from; MOL Hungary is where we run two of our most important sites, Algyő and Százhalombatta, both of which turn 50 this year. We have a great team of experts; domestic upstream production accounts for 40% of the Group’s production while the Downstream business contributes 80% of Group EBITDA. And by creating the MOL Hungary Service Centre last year, we actually made it a role model within the Group.

“THE POINT IS TO MOVE FORwARD BY DOING THE BEST wE cAN - THERE IS NO NEED TO

wAIT FOR OTHERS TO SHOw uS HOw TO GET THERE. wE cAN LEARN FROM EAcH OTHER.”

interview

As a responsible company, we boost the economy and also invest in the future by supporting the next generation of profes-sionals and recruiting young talent.Let me give you an example: we work hard to engage those who have com-pleted the Freshhh and Growww pro-grammes. Today, 3% of our employees are former Growww participants. We have also donated half a billion forints to six universities over three years, we run a faculty at the university of Veszprém and are opening another in Miskolc. In addition, we are constantly striving to reduce our ecological footprint even in our daily operations. I consider it a great achievement that we have decreased en-ergy use at our Százhalombatta site by the equivalent of the consumption of a town of 30,000 people. On a social level, the pop-ular MOL Bubi bike sharing programme is another important innovation.

in addition to the innovations and new approaches mentioned earlier, how would you describe MOL Hungary’s achieve-ments and priorities for the future?We were the first in the Group to lever-age the synergies between upstream and Downstream. We are still looking for new opportunities in upstream, and this resulted in the geothermal conces-sion we were awarded in Jászberény. In order to minimise production decrease in Hungary, we launched an unconven-tional pilot project in Derecske. In addi-tion, we have completely revised our re-tail concept to ensure customers can buy almost anything they need at our service stations.

what are the best practices that can be shared and used Group-wide?We have changed our philosophy by de-signing the MOL Hungary Programme to ensure that various Group-level pro-grammes, such as the new Downstream Programme, next Downstream and CORE, can improve efficiency both in business and functional areas. While control used to be the defining part of their activities, func-tional areas now dedicate 80% of their time to supporting business operations. This al-lows us to assign the highest priority to our customers, business results and the market as a whole. The point is to move forward by doing the best we can - there is no need to wait for others to show us how to get there. We can learn from each other.

Could you tell me a few words about the key investment projects?This year, we opened the Friendship 1 crude oil pipeline, which is crucial to our se-curity of supply. Our butadiene plant is ex-pected to be opened this year, extending our value chain in the chemical industry and boosting profits. The next step is to open a synthetic rubber unit, and we are on course to set up a joint venture with our Japanese partners to realise this. We hope to see the final investment decision made soon. We also aim to win further conces-sions to allow us to increase sustainability in Exploration and Production.

you briefly mentioned sustainability. what does MOL Hungary do to be a responsible company?MOL Hungary is the largest enterprise in the country. We are the country’s engine.

3700

An interview with Sándor Fasimon, MOL Hungary COO

Sándor fASImon –mol HungAry Coo

Sándor Fasimon was Head of the Gas Division in 2003-2006, before going on to manage MOL’s activities in Russia. He

was Vice President of the Supply & Trading Division from 1 July 2009, where he was responsible for crude oil supply of

MOL Group, including development of the energy portfolio and trading platform. Between June 2011 and October 2012,

he was Executive Vice President of the Exploration and Production Division, during which time he also became an EB

member. As of October 2012, he is Chief Operating Officer of MOL Flagship. Sándor is Special Envoy to the Chairman-CEO

regarding CIS and Middle-East relations.

BuSINESS cARD

MOL HuNGARY ExPLORATION & PRODucTION IN NuMBERS (2014)

MEDIuM-TERM (2015-2017) uPSTREAM STRATEGY IN NuMBERS

8 MOL GROuP Panorama

interview

August 2015 9

HuNGARIAN FOuNDATION TO uPSTREAM BuSINESS

business

HE sECrEt tO PrOGrEss: COLLEaGuEs, tECHnOL - OGy anD innOvatiOn Global markets will have an

impact on the future of the business, but its foundation was built in Hungary – by turning to the most precious assets the company has: our employees and their knowledge. Despite the trend that total exploration in Hungary has been shrinking by over 90% in recent years, MOL Exploration & Production (E&P)

employees can continuously work at the same discovery rate as beforehand, thanks to the team’s professional exper-tise and competencies. In addition to outstanding human re-sources, E&P can also rely on new tech-nology. Thanks to secondary and tertia-ry methods that have been applied for decades to slow down falling produc-tion, the production lifetime can be suc-cessfully extended. Innovative solutions have been identified to enhance produc-

tion in depleting fields: the company’s employees were among the first to ap-ply carbon dioxide injection – pioneering implementation and application of this method under unusual circumstances in Hungary. As the innovator of this meth-od, the Hungarian oil sector has been a regular topic at international confer- ences. Today this method is widely applied all over the world.

COrE PrOGraM aiMs tO iMPrOvE EFFiCiEnCy The goal of the programme comes from its name: capture opportunities for reliable efficiency.This enables us to achieve planned targets despite unforeseeable changes that may normally emerge in the petroleum sector. The programme was launched in unfavourable market conditions, such as significantly declining crude oil and natural gas prices. Our Hungarian E&P experts will review three main areas: geological field portfolio, exploration and field development projects (CAPEX), as well as OPEX. Following detailed analysis, projects and operations that cannot secure return on investment in the

limit production decline to a rate of 5% per year. Development in exploration technologies has become increasingly important. MOL experts are engaged in developing well stimulation solutions that can significantly enhance crude oil and natural gas recovery from various fields. Some of these methods have already been applied in daily practice in selected fields and wells, and our short and medium term figures may also improve as a result. We are also looking forward to successes from research efforts aiming to reduce water influx in wells and more effective exploitation of lime-marble structures. These methods – proven in Hungary – will also be applied at reservoirs in other countries, as experts working in these fields are facing similar difficulties, whether they involve excessive sulphur content or water influx.

PrODuCtiOn OutLOOk Regarding volume, domestic production can be maintained for a period of nearly 20 years. The depletion rate in production can be consolidated at 5% per year through continuous modernisation of secondary and tertiary recovery methods, reservoir interventions and other EOR /IOR processes. Current production lifted from Hungarian fields is 70% natural gas and 30% crude oil. Formerly drilled and completed wells will be re-completed and modified in order to enhance production. As a result of continuous field revisions, development projects will be launched for fields that have not yet been developed due to their size or economic considerations. Energy rationalisation projects are also aiming to improve efficiency and increase field profitability, so we will be able to

BuSINESS cARDTamás Szakál began his career at MOL; he started working

at the company in 1996. Since then, he has always been active in the exploration and production areas: between

2000 and 2005 as a reservoir expert, and from 2007 as Head of Operative Reservoir Surveillance. In 2009,

he was appointed Head of Reservoir Surveillance & Reserve Management. From January 2011, he has been

assigned to the role of Managing Director of Geoinform Kft. Since 1 October 2012, he is Vice President of MOL

Hungary Exploration and Production.

Over the decades passed, it was often assumed that Hungary’s hydrocarbon production might come to an end. it would be a logical assumption that MOL Group would find options to compensate for disappearing capacity in Hungary from other regions, but MOL Hungary’s production is still a dominant part of the Group’s portfolio. Preserving this capability forms the basis of MOL Hungary 2015-2017.

current economic environment will be temporarily suspended. Technical solutions that embrace the process from the reservoir to the pipeline feeding the refinery may need modifications to the technology, idle capacities may be mothballed, minor well workover operations may be postponed if they do not pose any danger, and out-of-use wells and real estate may be divested as part of the CORE programme.

► MOL Hungary upstream provided more than 40% of MOL Group’s production and contributed to over 40% to uS EBITDA in 2014

► OnE-FiFtH of gas consumed in domestic households is produced in Hungary

uPSTREAM SPEcIALTIES

TAmáS SzAkál – VICe preSIdenT of mol HungAry explorATIon And produCTIon

“I strongly believe that mol Hungary e&p will be able to preserve its core role and further contribute to the success of group e&p in 2015.”

► Exploration of at least 5 bLOCKs in Hungary► Drilling of 21 ExPLOratOry wELLs in existing exploration blocks – with a Further 15 In the

COnCessIOn areas to be applied for in future bid rounds ► 3 seIsmIC acquisitions

► 26 FiELD DEvELOPMEnt PrOjECts in progress and launching of 10 nEw FiELD DEvELOPMEnt PrOjECts

► Implementation of 2 sMaLL-CaPaCity ELECtriC POwEr plants ► LEss tHan 5% DECLinE in domestic production

► Exploration and concession areas: 6 BLOCks, 3,655 kM2

► Mining plots: 239 PLOts, 3,916 kM2

► number of producing wells: 942 WeLLs

10 MOL GROuP Panorama

business

August 2015 11

TO BE BEST IN cLASS

business

MOL Hungary Downstream has set am-bitious goals for the coming three years: double-digit profitability, increased retail non-fuel margin revenue by 60%, plant operational availability of 97% and yields on white products of 83%. In doing so, we aim to become the best in the region and secure our place in the top quartile of DS companies in Europe.

maxImum utILIsatIOn OF assetsMOL Hungary DS will play a key role in contributing to the Group Downstream profit target of uSD 1.2 billion by 2017. We will be involved in the next DS Program, and are set to improve DS effi-ciency by contributing at least uSD 120 million in EBITDA growth. In order to im-prove efficiency across the entire DS val-ue chain, the Production organisation has launched a three-year programme called uPTIME to boost plant availabil-ity, thereby improving both production and wholesale sales volumes, while si-multaneously reducing maintenance costs and unscheduled shutdowns. DS Production is also working to maximise white product yield and petrochemicals manufacturing output, which also de-mands continuous, reliable operation of its plants. Last but not least, we will also continue to ensure maximum safety in the workplace.

Our highly developed, multipolar logis-tics network enables us to meet custom-er needs even in unanticipated situations through the continuous improvement of lo-gistics processes, systems and services. The retail network is also expanding its prod-ucts and services to ensure it is continu-ously aligned with the everyday needs of consumers, while maintaining competitive prices. As part of this new retail strategy in-tended to make MOL the preferred choice for consumers by 2017, ten Fresh Corners have already been opened in MOL service stations to offer not only fuel, but also fine coffee, fresh sandwiches and baked goods made on site. We are not only seeking to build the largest network, but also to create a powerful brand that offers the best fuels, non-fuel products and services. suCCessFuL InteGratIOn and extensIOn OF the vaLue ChaInIntegration of the petrochemicals divi-sion into Downstream has started and will be completed in Q4. We expect the pet-rochemicals entity to make an even great-er contribution to DS profitability. The con-struction of a butadiene extraction plant is a major project currently in progress to re-inforce our internal target markets and ex-pand our value chain. Preparatory work has begun on a synthetic rubber (S-SBR) plant using butadiene as a feedstock.

two-thirds of usD 1.2 billion Downstream profit growth from 2015 to 2017 to be generated by MOL Hungary.

“We intend to make mol the preferred choice for

customers by 2017.”

QuaLiFiCatiOns, DEvELOPMEnt, COMMitMEntMOL Hungary DS has excellent assets, forming a good basis for achieving our strategic goals. However, effectively leveraging these assets depends on the expertise and creativity of our employees. MOL always promotes openness to innovation within its workforce as outstanding quality and improved customer satisfaction can only be achieved through continuous process optimisation. To this end, MOL has launched a number of programmes to develop staff know-how and leadership skills:► Sales Academy for wholesale sales representatives► Retail Academy for service station partners ► PetroSkills Competence Development System for colleagues at refineries and logistics► Leader Succession Program develop the next generation of our managers► The DS business has taken on a pioneering role in ensuring continuous improvement through the introduction of the LEAn

methodology, which was first implemented at the Danube Refinery. The seventh 14-week wave is currently underway

► 770 m usd Clean CCS EBITDA► DOuBLE-DiGit ROACE

► usd 120 m nxDSP ebItda improvement► Minimum 97% OPEratiOnaL availability

► Minimum 80% wHOLEsaLE MarkEt share► +60% rEtaiL non-fuel margin

► 20 m tOnnes of product moved► 1,350 kM product pipeline► 850 Km crude oil pipeline► 86+19 tanKer trucks (fuel and propane)► 1,800 raiLrOaD tank cars► 4.5 m tOnnes of products delivered

for the purpose of sale ► 200+ tyPEs of product

DS STRATEGY IN FIGuRES:

BuSINESS cARDZsolt Pethő started his career at MOL plc. in 1998 and

has held various executive positions since. Before his appointment as Sales Director of Refining and Marketing

in 2006, he worked as LPG (propane-butane) Commodity Director, Fuel Products Director and Sales Director of

the South region. As of 1 June 2011, he is Senior Vice President of the MOL Group Petrochemical Division, as

well as CEO of TVK Plc. He has also been MOL Hungary Downstream Senior Vice President since 2012.

Zsolt pethő – Mol hungary doWnSTreAm mAnAgIng dIreCTor

news illustrated

August 2015 13

news illustrated

FOREcOuRT

INSIDE

Renewed stations with a wide range of products and services perfectly aligned to our customers’ everyday shopping needs.

mol fresh Corner: THe plACe

► Improved visibility for both customers and staff► Removed all merchandise► Large glass portal provides

view into shop

NIcE AND cLEAN FOREcOuRT

► Provides extended service with food and beverages► Serves as meeting place for

motorists and pedestrians alike

TERRAcE

► Inviting, clean and warm interior

► Layout is arranged to optimise sales potential

► Toilet is brought inside

AMBIANcE

► Fresh Corner signage suggests both food and grocery services► Brown frame indicates that coffee is in

focus in the new offering► Green stripe links the building with the

MOL brand (yellow at Slovnaft, blue at InA)

EMPHASISED SHOP

► Carwash, screen wash and lubricants are kept together► Lubricants and forecourt

merchandise are arranged neatly in a cabinet

DEDIcATED cAR cARE DESTINATION

► First impression is coffee – uncompromising quality

► Full range of coffee drinks, including flavoured syrups

► Self- and barista-service as required► First-class tea blends

HOT BEVERAGES► Broad bakery selection freshly baked on site

► Sweet pastries► Baguettes and several types of bread

BAKERY► Made-to-order fresh sandwiches

► Hotdog offer► Pre-packed sandwiches prepared exclusively for MOL

FOOD-TO-GO► Radically consolidated portfolio of products

► Focus on daily essentials► Emphasis on convenience for our customers

GROcERY

THE TOP FRESHHH TEAM The “Just Ask Siri” team from the Czech Republic won MOL Group’s Freshhh live final event in Budapest on 28 May. Second place went to “Oil’s Creed”

from Budapest, and third place was earned by the “Decor” team from the university of Ljubljana. The top three teams out of 2,200 entries from 70

countries received the opportunity to join MOL Group and were also given prize money totalling EuR 25,000. “We congratulate the winner teams of

the Freshhh competition 2015. It is incredible to see how young students work with such difficult real-life cases. The outstanding results from the

participants and number of applications are once more showing us that we are heading in the right direction to attract top talents in the industry”, said

Zdravka Demeter Bubalo, HR Vice President of MOL Group.

LEADERSHIP SuMMIT IN BRIEF

MOL Group held its annual Leadership Summit in Siófok, Hungary, on 9 June 2015, welcoming

300 top leaders from across the Group. The presentations were built on the central theme

of #STORIESWEWRITE as chairman-CEO Zsolt Hernádi highlighted the importance of challenging

the status quo, demonstrating excellence and supporting innovation. During the one-day

intensive programme the top management demonstrated the achievements of 2014. GCEO

József Molnár reflected on MOL Group’s results and shared his views about the performance of

the business units and his expectations. This year, participants of LEAD programme also attended the

event and shared their vision on how they see MOL Group in 20 years.

14 MOL GROuP Panorama

group news

HSE cHAIRMAN AwARDS ANNOuNcED

MOL Group’s HSE Chairman Award recognizes the best HSE achievements in the organization every year since 2001. The

following winners of MOL Group’s HSE Chairman Award were announced at the Leadership Summit held on 9 June 2015: InA

Exploration and Production (Culture/Awareness); DS Production MOL (Process Safety Management/Occupational Safety); and DS

Innovation MOL (Eco-efficiency).

On 9 july 2015, MOL Group announced the successful completion of a deal to acquire 100% ownership of ithaca Petroleum norge

(iPn) from ithaca Petroleum Ltd. the deal doubles the size of MOL Group’s exploration portfolio. this move reflects the company’s

active approach to portfolio development. it balances and grows MOL Group’s global upstream portfolio and includes 14 licenses

in the norwegian Continental shelf, three of which are currently operated by iPn.

ITHAKA cLOSING cEREMONY

neW md/CeO at mOL KaLeGranJosef Stoppacher has been appointed MOL Kalegran Managing Director and CEO. Josef has more than 13 years’ experience throughout the oil and gas industry value chain. Since joining MOL Group in 2011, he has worked in Investments (InA and MOL Group) as Group Investment Manager, and as VP of Group E&P Engineering.

strEaMLininG BusinEss PrOCEssEsThe new Group Business Process Architect (BPA) organisation began operating in its new structure on 1 June 2015. The unit is led by Chief Group Business Process Architect Gábor Heiszmann, who reports to Group CFO József Simola. BPA was set up to drive optimisation and standardisation of business processes, and to ensure adoption of both internal and external best practices.

nEw DisCOvEry in PakistanOn 19 May, MOL Group announced a new commercial discovery from the MOL-operated Mardan Khel-1 exploration well in the TAL Block. MOL has also signed a farm-in agreement for the DG Khan block in Pakistan and is acquiring a 30% non-operating interest from Pakistan Oil Fields Limited (“POL”) in the block.

reFInInG assOCIatIOn rOLe GrOWsBéla Kelemen, SVP of Group Supply Chain Management, has been appointed Vice President of the Board of Directors of the European Refiners Petroleum Association in Brussels. This marks a historic step for MOL as the association’s board members are generally drawn from the world’s largest petroleum companies.

OptiMOL COntinuEsOptiMOL, the idea generation programme introduced by the Process Excellence Office (part of the Corporate Governance and Operational Improvement Team) has successfully completed its first, one-month campaign, attracting 199 submissions. A list of ideas to be implemented will be drawn up by the end of August, while the winner of the first prize of an iPhone 6 will be announced in September. Thank you all for your participation, and remember to send any further development ideas to the OptiMOL Idea Box by typing ‘optimol’ into your browser.

News in brief

August 2015 15

group news

Péter Ratatics graduated from Corvinus university of Budapest, Faculty of Finance, specializing in capital

markets. He started his career as a Gas Trading and Business Development expert at MOL Plc. Between

2009 and 2011, Peter held different responsibilities before moving up to the position of VP, Group

Corporate Centre. He was appointed a member of the InA Management Board in June 2011 and Vice-

Chairman of the Supervisory Board of FGSZ (natural Gas Transmission) in 2012.

BuSINESS cARD

16 MOL GROuP Panorama

interview

August 2015 17

”wE NEED MORE cREATIVITY AND OwNERSHIP”

new setup

he organisational restructuring on 1 june resulted in the expansion of the areas under your supervision. what areas

did you manage already, and what are the new ones?I am responsible for the Group’s organ-isational and governance structure and managing human resources. In March, I also took over Corporate Services – pro-curement, investment and coordination of facility management and maintenance. As of 1 June, I also coordinate the Corporate Communications department, and implementation of the operation-al improvement tasks set out in the Fast Forward project which started in the summer of 2014. Of these, perhaps the most noteworthy change is Global So-

lutions, which maps and optimises the quality of the company’s existing exper-tise and service provision – even if spread across multiple locations. Our aim is to review with a step-by-step approach all supporting functional areas in terms of scalability and special expertise require-ments, and group them as separate logical areas. A key objective for the coming pe-riod is to provide high quality services re-quested by the businesses in a transpar-ent, cost-efficient, fast and flexible way, in a structure where service receivers and pro-viders share a common service mind-set.

what’s your secret for quickly developing a good understanding of multiple fields?I am very curious, which helps me under-stand processes and their technical back-

ground. Of course, this requires time, so I need managers reporting to me who are able and bold enough to make decisions in-dependently. At the same time, they need to be open to periodically having the ev-eryday routines questioned. For this, they need teams that support them, are open to change, and ready to use their brains to challenge the status quo continuously. My most important role is to coordinate our activities, share information and keep the things moving ahead. I pass directions from senior business management to func-tional areas, which must then build these into processes that meet constantly chang-ing external and internal requirements. To do this, I must also learn to be open to con-structive suggestions, and understand the logic behind them.

a real partner to the businesses by devel-oping true technical and market knowl-edge and experience. At Investment, the task is to re-establish the technical ca-pabilities – engineering, investment and construction skills and capacity – that were downsized more than a decade ago, enabling us to handle even the largest projects using internal resources.

you’ve been at MOL for years, and a manager since 2009. are you strict with your team, or do you give them space?I think MOL needs more independent and creative colleagues who dare to face with and want to solve problems rather than create them. I have been given the author-ity I need to work effectively, and I give the same to the organisations and employees reporting to me. As for my management style, I consider myself to be an inclusive manager; I prefer to involve my colleagues in my decisions. I form an opinion quickly, but welcome questions that help to determine whether the path I’ve conceived is viable. I am open to rational counter-arguments, but I also expect to receive proposals for a solution.

How do you balance your huge workload and large number of meetings? How do you organise your days?I grew up in a digital world. Smartphones and tablets provide almost instant access to information, so, I’m constantly avail-able and responsive. But I also need inter-nal balance to cope: a calm family life on one hand and the time to reduce stress on the other, which is why I try to exercise as much as possible.

made my first task to develop internal communications and provide employees with relevant information more often.

aside from making organisations more efficient, what main strategic directions do you foresee for the long term, and what plans are there for the coming year? which projects will get priority?I still consider my work with InA to be among my most important tasks. Zoltán Áldott and I have been working on the Management Board for five years to de-velop the Croatian operation. In addition to continuous efficiency improvements within the organisations, productivity of Croatian fields is also rising. This year, however, we need to make some critical decisions on the refinery operation. We are also planning major restructuring in-

side the Corporate Services organisation. With Procurement and Investment, we’re moving forward with the Global Solutions concept. As well as elevating valuable and complex procurement activities to be handled with a common approach for the whole group and introducing an efficient tendering process, we intend to become

in terms of the Communication team, what have you “inherited” from your predecessor, Ferencz i. szabolcs?Szabolcs’s tremendous expertise and feel for communications is difficult to replace, although we are still in daily contact. At the same time, I think it benefits any area periodically to get a new manager with a diffe rent approach and way of thinking. I want to understand and clarify pro-cesses and accepted practices. Also, I’ve

Interview with Péter Ratatics, Senior Vice President of MOL Group’s Corporate Centre

“I AM OPEN TO RATIONAL cOuNTER-ARGuMENTS, BuT I ALSO ExPEcT TO REcEIVE PROPOSALS FOR A SOLuTION.”

OrGanizatiOns unDEr GrOuP COrPOratE CEntrE:► Group Human resources► Group Corporate services► Group Corporate Governance and

Operation improvement► Group Corporate Communications► top Management services

péTer rATATICS –SenIor VICe preSIdenT, group CorporATe CenTre

August 2015 19 18 MOL GROuP Panorama

flagship news

50 YEARS AT ALGYőThe discovery of the Algyő oil and natural gas

field was one of the most important events in 1965. Since then, the village has become the

symbol and pillar of Hungary’s energy security. To celebrate the 50th anniversary of the discovery,

a jubilee event was held on 26 June 2015, where MOL Hungary thanked employees for their

much appreciated hard-work, as well as for their achievements in hydrocarbon production and

research at Algyő through the decades.

TIFON – wHOLESALEThe TIFOn Wholesale department has successfully

completed procurement of a fleet of T Series Renault Trucks based on MOL Group’s purchase contract with the French manufacturer. The new trucks will further improve logistics and technical

support in the supply of our own service stations, generating additional savings for TIFOn. The

purchase also allows TIFOn to continuously work on applying the highest standards of quality and

environmental protection.

SuccESSFuL REBRANDING FINALISED

Romanian motorists can now enjoy the premium MOL brand experience in an enlarged network: the rebranding process of the

42 service stations acquired from EnI this year was completed by the end of June 2015. An integrated team from MOL Romania and MOL Retail Comert (the acquired service stations) worked

together to ensure all technical specifications were met. MOL fuel cards for companies and the MultiBonus loyalty platform for

motorists were also extended to the new stations.

InA GEnERAL SHAREHOLDERS′ MEETInG InA recently held its regular General Shareholders’ Meeting to discuss key financial decisions regarding 2014 profit allocation. Shareholders were also presented with the 2014 financial report. InA MB President, Mr. Zoltán Áldott, added “In recent years, we have turned InA into a financially stable company. We have created value for our shareholders as evidenced by today’s decision on dividend payments totalling HRK 150 million. In 2014, InA realised robust investments worth HRK 1.7 billion, reinvesting two thirds of its EBITDA.”

LDPE4 unIT: SAFE WORKStaff at Slovnaft reached more than 1.5 million man-hours worked without injury or sick leave in the construction of the new LDPE4 production unit for polyethylene production, proving that safety really does come first. The project manager of the Investment Projects Management Department, Miroslav Randuška, thanked all external and internal staff and managers who made it possible to achieve this goal. He expects this trend to continue until the construction work is completed.

SIMuLATIOn OF A CRISIS SITuATIOn MOL, Petrolszolg and FER Firemen Service recently simulated a railway accident in Százhalombatta. Experts introduced a rapidly deployable mobile system to remove gas from a liquefied petroleum gas truck as part of the simulation. The equipment stationed in Százhalombatta is unique in Europe. The key advantage the technology offers is that it is faster at removing gas than other equipment, and can be transported directly to the location of the accident.

uSEFuL REPORTInG OF nEAR-MISSESEight Production workers have received an award for their major contributions to the successful introduction of a near-miss reporting system from the Vice President for Slovnaft Downstream, Gabriel Szabó, and SD&HSE department director Martin Demčák. The new system allows for quicker response and improved prevention of accidents through the timely elimination of risks. Consequently, Slovnaft reached a leading position throughout the entire MOL Group by providing a safe working environment.

News in brief

August 2015 19

flagship news

PANTA “TEAMS” IN

INTERNATIONAL SPOTLIGHT

Over the past two months, Panta Racing Fuel has received significant recognition

as both a supplier and sponsor. In the FIM World Superbike class, Leandro

“Tati” Mercado of the Barni Racing Team finished 8th at the Autodromo Internazionale in Imola. Young Italian

rally driver Alessandro Bosca won the 2015 Rally of Salento and Enea

Bastianini, official driver for the Gresini Racing Team, achieved 2nd in the Moto3

Class at the Grand Prix of Catalunya.Panta has won the Tender for

supplying fuel for the 2016, 2017 and 2018 seasons of the FIA World Rally

Championship.

PET POINT INSTALLED

InA’s Vukova Gorica petrol station on the A1 motorway in Croatia was selected for a pilot

project to install a Pet Point – a dedicated space where dog owners can take care of their pets on their travels. TV host Barbara Kolar approved of the new service when she

and her dog Lola were among the Pet Point’s first guests: “Allowing pets to take a break at a Pet Point makes for a more comfortable

trip for owners too.”

20 MOL GROuP Panorama August 2015 21

insider

ENSuRE cOHERENcE, cONTINuITY AND FOSTER NEw cHALLENGES IN DOwNSTREAM

interview

hat are the roles of Group Downstream Business support at MOL Group and how

would you characterise your team?My team consists of seven talented professionals working closely with colleagues both at group and local levels, under the direct supervision of the Downstream EVP, Ferenc Horváth. Our main role is to coordinate the execution of Downstream initiatives in support of our business management

and business lines. For example, we coordinate the group-level efficiency improvement programmes (e.g. next Downstream Program, Eiffel) and internal communication activities in Group Downstream such as the “We are Downstream” communication campaign. We are committed to improving cooperation between organisations as well as between Group Downstream and Group Functional units. Our philosophy is to ensure coherence and continuity in

Interview with Tamás Kocsis, Head of Group Downstream Business Support

the daily operation of Downstream as well as in strategy development and execution. We permanently investigate and foster new challenges to support cultural change in the business.

what are the long-term projects you are working on? Could you highlight some key projects that have recently finished or reached a milestone? One of the key challenges for our team has definitely been the coordination of the new Downstream Program be-tween 2012 and 2014. Beyond the fi-nancial accomplishment of a uSD 500 million increase in EBITDA, a mind-set change was initiated through this programme. Employees in all areas of

The management entrusted us with be-ing the supporters and promoters of this cultural change. We are truly committed to embark on this mission, both by co-ordinating our own projects and by sup-porting all the business lines in their ini-tiatives. We have a long journey ahead of us. Our goal is to be the bridge between different organisations, for which cooper-ation at all levels will be crucial.

How do you see your team? what strengths would you highlight? We are a very good example of diver-sity. Of our eight people, four differ-ent nationalities (Hungarian, Croatian, Italian and Romanian) are represent-ed. This dynamic team of young people brings various perspectives and valu-able input to every task – their diverse backgrounds varying from economics to chemical engineering have also prov-en to be beneficial. Everyone in the team strives to deliver the best possi-ble materials and feels free to commu-nicate openly and keep each other con-tinuously informed.

major priorities to outline and commu-nicate the strategy and values that lie at its foundation throughout the entire Downstream organisation. Therefore, you may have already encountered ex-amples of the values campaign we cre-ated together with Group Corporate

Communications, such as the video on our values, workshops, reminder tokens for employees and other materials.

what is the most significant challenge you are currently facing?MOL Group has undergone many chang-es, therefore solidifying a common cul-ture has become a priority. One of the first steps was to identify the common values of Downstream. We have to build an organisational culture upon them, for as Peter Drucker correctly stated, “Cul-ture eats strategy for breakfast”.

Downstream have begun to acknowl-edge how important it is to perform our daily activities more efficient-ly. Stakeholders have also realised that setting demanding targets and tracking performance leads to tangi-ble results. We are very determined to strengthen this attitude through the ongoing next Downstream Program, which aims to bring an additional uSD 500 million EBITDA increase by the end of 2017. The programme is part of Group strategy for the next three years. It has also been one of our

“our goal is to be the bridge between different organisations.”

ágoTA reCSnIk-boSCH

emeSe kókAI

IVeTT CIglI

STefAno lIgI

TeodorA mArIA gAbor

KatarIna DuŠeVIĆ

gábor STefán

GROuP DOwNSTREAM BuSINESS SuPPORT AcTIVITIES

Long term Activities

Project bAsed Activities &

coordinAtion

business Process

imProvement

business suPPort next ds ProgrAm

communicAtionseiffeL ProgrAm

energy Audit risk mAnAgement

cAPex Post-evALuAtion

sLA ProjectProcess AnALysis

TAmáS koCSIS –HeAd of group doWnSTreAm

buSIneSS SupporT

22 MOL GROuP Panorama August 2015 23

E&P interview E&P interview

THE KEY: AccOuNTABILITY

ou were appointed Group E&P COO as of 1 May 2015. what were your first ex-periences and how do you

feel about your new role?My first experiences are very positive and I am excited about this role. Our E&P organisation is full of great people who are working hard to deliver on expectations, although there is huge pressure on E&P right now. With clear priorities, strong teamwork and im-provements to our operations, we can handle this pressure. My team and I are personally committed to the success of E&P.

Interview with Berislav Gašo, E&P Chief Operating Officer

since the introduction of the E&P 200kBDOE programme, what processes do you think have gone particularly well that could serve as best practice for other business units or flagships?There is a strong sense of E&P values as a result of this programme. As introduced during the Leadership Summit, our core values are accountability, integrity, collabo-ration and excellence. From the past year’s achievements, I would also like to high-light our new well delivery process and the stage-gate process.

what are the areas of day-to-day operations where there is room for

improvement? what challenges are you currently facing?I like to think about challenges as oppor-tunities. In that sense, I see several op-portunities for us, for instance in commu-nications between HQ and international OpCos, probably also between E&P and Functions. We have already made prog-ress by organising workshops across the entire uS operations, where we met with our colleagues and discussed ideas of the team. We also strive to improve in our daily operations, for instance in our proj-ect management capabilities on the CAPEX side and in our drilling perfor-mance in some countries.

During the Leadership summit, you talk-ed about accountability and why it is so im-portant for E&P. what do you think your team and team members as individuals can do to increase accountability?For me, accountability is the obligation or willingness to accept responsibility or to ac-count for one’s actions. This creates an envi-ronment of trust, support and dedication to excellence. We have to be able to count on each other for support and reliability.

To do so, we have to have a clear list of pri-orities, clarity around roles and responsibili-ties, and accountabilities. If we have this, we will be successful.

1. saFEty First. We believe that our long-term success depends on our ability to continually improve the way we work while protecting our people, company assets, the environment and our reputation. Everybody in E&P must therefore ensure that our employees understand their individual and collective responsibility for HSE performance. We have launched several initiatives to improve HSE culture further, including the STOP Card system. With my leadership team, I am role-modelling this behaviour.

2. After safety, the most important priority over the coming months will be to focus on maxImIsInG the vaLue OF Our exIstInG assets.

3. Cee reGIOn. Hungary and Croatia will remain the backbone of our production in the coming years. In the short-term, our aim is to mitigate the production decline and to maximise cash flows as much as possible. In the mid-term, our priority is to unlock the value of undeveloped 2P reserves. Wherever possible, we will prioritise meaningful field developments and focus on delivering exploration success in the core region.In terms of managing production decline, our E&P leaders in Hungary and Croatia are doing a good job and we will provide maximum support on the group-level to their CORE and 4P programme. In Hungary, our aim is to keep the production decrease below 5% per annum and increasing our efficiency further. Tamás Szakál and his team defined a good programme to review the existing field portfolio. In Croatia, we aim to achieve similar

results with the 4P and EOR projects. Zelimir Sikonja and his team also started a wellover and fracking campaign, which is showing very encouraging first results.Complementing CORE and 4P efforts, we are starting two new group-wide initiatives: Production Loss Reporting (PLR) and Production Optimisation (PO). These initiatives will be led by Steve Kemp and Jaksa Dadic and staffed by a multi-disciplinary team from Headquarters, MOL Flagship and InA. PLR is a systematic approach to identify and classify shortfalls in production, and investigate root causes in order to identify common themes for the creation of work programme or explore investment options to improve performance. With PO, our ultimate objective is to improve our production rates, recovery factors and efficiency. The Group subsurface team is already working on identifying the first 60 well candidates for production optimisation and will start in Q4 with the first actions.

4. InternatIOnaL assets. In light of the significantly lower oil prices that we have today, we are working on detailed action plans and roadmaps for all our international assets. This is our biggest short-term priority.

5. ExPLOratiOn. After the acquisition of MOL norge, we now have unrisked resources worth 1.2 billion mmboe in our portfolio. We are actively working on grading these opportunities and looking to add new exploration acreage to our portfolio. We are looking to de-risk 200-300 resources every year.

kEy BusinEss PriOritiEs FOr the COmInG mOnths

“After safety, the most important priority over the coming months will be to focus on maximising the value of our existing assets.”

Dr. Berislav Gašo is MOL Group’s E&P Chief Operating Officer since May 2015.

Before this role, he was MOL Group’s SVP of Controlling, Accounting and Tax and

an Executive Board Member of InA in charge for restructuring. Before that, he

spent 5 years with McKinsey & Company as a leader (Junior Partner) in the Firm’s

European Petroleum and Operations Practices. Mr. Gašo gathered extensive

industry experience in Western/South Eastern Europe, Russia, Central Asia and

Middle East.

BuSINESS cARD

berISlAV gAšo e&p CHIef operATIng offICer

24 MOL GROuP Panorama

e&P retail

he Japanese invented the process of collecting employee ideas known as kaizen several decades

ago. It is a simple and compelling way to improve employee engagement and business performance. Downstream launched such a programme called Eiffel in 2010 and MOL Hungary was the first in upstream to introduce it. now, MOL Group Exploration & Production is also proud to launch and adopt the WellHead Idea Management Program to welcome any ideas coming from E&P employees that may lead to positive changes in operation, facilitate business activity and/or increase safety of the working environment. The key to success will be local implementation with strong HQ support. HQ will provide the communications tools, infrastructure and a Group Award to ensure employees’ voices are heard.Local units will run the scheme in a quarterly rhythm, ensuring compliance and rewarding employees locally. The main criteria for evaluation of ideas will be whether they contain new content/innovative elements, are feasible and offer financial benefit.

THE wELLHEAD IDEA MANAGEMENT PROGRAM

the planned start date of idea collection is early autumn, so you will hear more about the programme soon. all ideas are welcome as every employee and every idea counts and is appreciated at MOL Group E&P.

STrengTHen loyalty and

cost-consciousness2enCourAge knowledge sharing 1

ImproVe business performance3

CreATea culture where

innovation is an important part of daily business

4

InCreASeemployee engagement5

August 2015 25

THE cuSTOMER IS KING

projects that are helping us effectively im-plement our long-term strategy and af-fect our entire network of 363 service sta-tions. The first addresses the training, remuneration and motivation of partners of the service stations. The second is a re-thinking of our relationships with operat-ing partners to give everyone involved a stake in our growth. The third is a portfo-lio and pricing strategy for products and services. We have also started to concep-tualise the renovation of our fuel station. A detailed plan will be ready in Septem-ber, and we will be building these objec-tives into our 2016 business plan.

On 1 May 2015, you were appointed to lead the MOL Hungary retail organisation. what have you learned in the two months since?It is great to experience how many unex-ploited possibilities we have that clearly offer potential for development. I’m opti-mistic, because we have a lot of very tal-

ented, committed and capable colleagues who also have a positive outlook. Our goal is to increase the transparency of both our organisation and processes, an area we still fall short in. We need to be inno-vative, we need to approach retail from a new perspective. We need a modern cul-ture built around the keywords of “cus-tomer focus”. Also, we must look at our processes in terms of both business and host mentality. To do this, we are planning an intensive training programme over the coming year that will involve all 3,600 peo-ple in retail, including myself as well. We will also set clear, measurable targets and continuously assess them, taking all feed-back into account.

the launch of the new retail strategy and opening of Fresh Corners is the start of the repositioning of the brand. Based on the initial response, where do you think the project’s success will lie? what additional tasks have emerged?It is very important for us to always offer both fuel and non-fuel products and ser-vices of a high quality, and at competi-tive prices. The non-fuel category splits into two major groups: “gastro” items – food and beverages – and other grocer-ies, such as dairy products and cold cuts, which were not previously available at service stations.

what further measures and changes can be expected when implementing the new strategy?We’ve already launched several

Interview with Zsolt Tőtös, new head of the MOL Hungary Retail organisation

“SHOPPING HABITS cHANGE VERY quIcKLY. RETAIL MuST LEAD THESE cHANGES, NOT

RESPOND TO THEM.”

you have a wide range of experience in the retail sector internationally as well. what business practices and innovations have you seen elsewhere in the world that you’d like to see adopted in Hungarian retail?We must focus on customers with every fibre of our beings. Shopping habits change very quickly. Retail must lead these changes, not respond to them. This is a long and never-ending process, so we must stay innovative and fresh. At the same time, the retail vision needs the support of MOL’s senior management and we must have full trust in each other to succeed.

Zsolt tőtös – HeAd of mol HungAry reTAIl

Zsolt Tőtös joined MOL as Head of MOL Hungary Retail on 1 May 2015. He previously

spent 23 years in senior sales and marketing positions at multinational FMCG companies,

including unilever Hungary Ltd. Before joining MOL, he was CEO of Carnibona Ltd.

in Bratislava. Between 2010 and 2012, he was General Manager of StarBev Hungary

in Budapest. He was appointed General Manager (Imperial Tobacco) in Taipei and

returned to Hungary in 2008.

BuSINESS cARD

26 MOL GROuP Panorama

hr hr

August 2015 27

DIVERSITY MATTERS AT MOL GROuP

Diversity is a very broad topic. in simple terms, what does diversity mean to you?zDravka D. B: Diversity is the way peo-ple differ and benefit from being unique as both individuals and teams. At MOL Group, diversity is defined as visible differences in age, gender, ethnicity, language and skills, as well as underlying differences in thinking style, religion, nationality and education.

we often see the concept of inclusion associated with diversity. what does inclusion mean?

Workplace diversity has become a major focus area for employers. Zdravka Demeter Bubalo, Human Resources Vice President at MOL Group, and Donna Darzentas, Group SD&HSE Senior Vice President discuss diversity, different cultures within the organisation and ongoing projects to attract and retain talents.

zDravka D. B: Inclusion means creating a working culture where diversity is valued and everyone can develop their skills in line with our shared values and business objectives. Our aim is to promote a cul-ture at MOL Group where people feel in-volved, respected and connected.

How is MOL promoting diversity and in-clusion at group level?DOnna D.: Sustainability and CSR ana-lysts already consider diversity to be a significant success factor. The best per-

forming companies do not just have pol-icies and programmes in place in this area, but also set targets and quantify results. We are committed to creating an environment throughout MOL Group that allows our global workforce of di-verse backgrounds and perspectives to contribute to our success.

zDravka.D.B.: MOL Group’s Diversity strategy addresses 3 key elements: inter-nationalisation, the retention of young talents and knowledge transfer between generations.

1) One of our most remarkable achieve-ments in internationalisation and di-versification is our first group of female employees at MOL Pakistan. The seven female trainee engineers participated in the Growww Program.

EQuaLity FOr aLL EMPLOyEEs:as Donna D. said: at MOL Group, we are committed to equal opportunities for all employees and job applicants irrespective of age, gender, disability, ethnic or national origin, race, religion or belief, marital or civil partnership status, and sexual orientation. One of our most important achievements came when employee organisations and the Company signed MOL Plc’s 3rd Equal Opportunity Plan for the next 2 years (2015-2017). the plan covers all MOL Plc. employees and pays special attention to the rights of employees on maternity leave, single parents, parents with two or more young children, people with disabilities and reduced capacity to work, employees over 50 and those from a national or ethnic minority. the goal is to improve the working and employment conditions of these employee groups and to focus on their specific needs. in addition, the “Layette benefit” contribution initiative was launched not only to maintain contact with employees on maternity leave, but also to provide flexible working conditions. an electronic information booklet is being prepared for them and their managers to provide information on the key tools and measures introduced by the company.

The following new initiatives are to be

launched under the Diversity & Inclusion

framework this year and in 2016:

1. FEMME program: integrated programme, for attracting,

retaining, networking and career advancement of

female geoscientists and engineers at MOL Group

2. Diversity & Inclusion Champion’s community

3. Employee resource groups: voluntary employee-led

groups that serve as a resource for members and

organisations by fostering a diverse, inclusive workplace

aligned with our mission, values, goals, business

practices and objectives.

freSHHH is a competition that has engaged young talents since 2007. In 2015, 6,630 stuDEnts entered from 70 COuntrIes.

is the new E&P talent acquisition programme, which attracted 972 teams from 14 COuntrIes in the first year of the competition.

MOL Group’s widely recognised recruitment platform has brought in 1,570 yOunG taLEnts since 2007, with a retention ratio of 83%.

MOL GROuP PROGRAMS TO IDENTIFY TOP TALENTS

IN SEcONDARY ScHOOLS AND uNIVERSITIES:

2) the MOL Group Diversity employee value proposition was created last year to support the attraction and retention of young talents (Generation Y). Also last year, we kicked off an important project to establish a technical career ladder for the E&P workforce.

3) to promote knowledge transfer across generations, the women Leadership network was launched in late 2014 to support communication, collaboration and networking among female leaders. The program aims to build an informal community of passion-ate women determined not only to build fruitful professional and personal rela-tionships, but also to be advocates for the next generation of talents. Almost 70 female leaders at group level are members of the network.

SuSTAINABILITY AND cSR ANALYSTS ALREADY cONSIDER DIVERSITY TO BE

A SIGNIFIcANT SuccESS FAcTOR.

zdrAVkA demeTer bubAlo, group HumAn reSourCeS

VICe preSIdenT

donnA dArzenTAS, group Sd&HSe

SenIor VICe preSIdenT

MR. ZSOLT HERNáDI OPENS THE FIRST wOMEN’S LEADERSHIP NETwORK EVENT HELD ON 15 JuLY

FOR 60 FEMALE LEADERS.

THE cLIENT AND EFFIcIENcY IN FOcuS

hat has MOL Finance achieved so far? Financial management – accounting, treasury,

credit risk management, tax, financial review, controlling , IT – is responsible for continuously offering solutions that can support the business in fulfilling its goals. In addition, it is our job to pro-vide a credible and reliable picture to management and shareholders of busi-ness operations and the performance of MOL Plc. and its subsidiaries.Last year, we primarily focused on financial centralisation within Hungary in line with our intention to improve our services. We established an integrated service centre covering five areas: financial services, in-formation technology services, corporate services, HR services and group-level fi-nancial services. We have transferred all financial and IT activities from Hungari-

“THE IDEA THAT GuIDES uS FORwARD IS TO BEcOME A cOMPETITIVE FINANcIAL AND

IT cOMPETENcE cENTRE wHIcH PROVIDES RELIABLE SERVIcES TO ITS cLIENTS.”

what were the steps implemented in it?We have also made a great leap for-ward in IT services. We have been quite open to employee feedback, as a result of which, we replaced the mobile phones of more than 8 000 colleagues for exam-ple. In addition, we purchased 1,700 new computers in 2014, and we will do the same this year. Our goal is to replace all computers older than 6 years by the end of this year, and computers older than 5 years by the end of 2016. It is unusual to think about server opera-tion and software functionality as a ser-vice where the client is in focus. Still, I believe we can transfer to a service centre of this nature.

what kind of tasks will the MOL Finance team face in the near future?Continuous renewal is our task as well, and we definitely find beauty in this duty.

an subsidiaries to MOL and MOL Hungary Service Centre.

what are the benefits of financial centralisation?Firstly, in any common service pro-vider, one of the key steps is to devel-op standardised processes. Secondly, now that colleagues providing finan-cial and IT services are in the same or-ganisation, they can contact and com-municate with each other and discuss various professional issues more easily. Thirdly, the new structure gives us a high-er level of availability. ultimately, the en-tire system has become much more efficient, ensuring less cost to our cli-ents. Thanks to our disciplined, de-voted and hard-working colleagues we could reach important milestones in service level and business support based on this setup.

Interview with Dr. Ákos Székely, MOL Hungary CFO

28 MOL GROuP Panorama

finance, MSC finance, MSC

August 2015 29

I picture the innovation of finance and IT mainly as process innovation. We will organise each step in a way that the final outcome is a clear, simple and more effi-cient provision of services in line with the relevant business needs. Re-thinking and centralising financial and IT services was quite successful and we achieved major results in Hungary. We wish to roll this solution out also to other MOL Hungary Flagship’s subsidiaries in the future. The idea that guides us forward is to become a competitive financial and IT competence centre which provides reliable services to its clients.I am fully convinced that, with such a great and professional financial team on board, all the results will be delivered. I am very glad and proud working with colleagues enthused over building inno-vative financial services.

dr. ákoS Székely, mol HungAry CHIef fInAnCIAl offICer

BuSINESS cARDDr. Ákos Székely joined MOL Hungary in

2013 as subsidiary CFO. He has worked as a CFO in six companies since – both

within MOL Hungary and Slovnaft. His most recent CFO positions were at TVK

and Petrolszolg. He was appointed Chief Financial Officer of MOL Hungary on 1 May

2015. In this position, he is responsible for MOL and SSC Finance/IT activities.

support and realisation of efficiency improvement programmes, centralised finance operation model, development of process optimisation and quality improvement of information services – these are only a few areas that the MOL Hungary Finance team focuses on. steps taken towards innovation, activities for improving client satisfaction, serving the business’ demand are about to deliver results in line with the targets set.

moments

August 2015 31

corporate responsibility and sponsorship

MOL GROuPSuMMER PARTY

This year’s Summer Party took place on 12 and 13 June 2015 at Club Aliga. With its 2 kilometre shoreline,

this is one of the largest resorts on Lake Balaton. More than 3,000 participants arriving from five

different countries made for a truly special event.

The purpose-built MOL Group Summer Party was the perfect place where employees and

their families could spend a nice summer weekend. Activities, for example a beach

volleyball tournament and a green box photo shooting were planned for all age groups.

Guests were invited to personally meet MOL Group Zengő Motorsport team driver norbert Michelisz and

could even play a racing simulator with him. The 2015 Summer Party will also be long remembered for the

concerts by The Carbonfools and Budapest Bár.

30 MOL GROuP Panorama

DONATION TO SOS cHILDREN’S VILLAGE

cROATIAInA continued to support SOS Children’s Village

Croatia with a donation to the Ladimirevci SOS Children’s Village in Slavonia. InA is now a gold

sponsor of the SOS family from the “Trešnja” house, as well as the “Različak” house in the Lekenik

SOS Children’s Village. The InA Volunteers Club also held creative workshops with children from

the Ladimirevci SOS Children’s Village. During its five years of cooperation, InA has donated more

than one million Kuna (over EuR 130,000) to SOS Children’s Village Croatia.

GOLDEN AMOS AT THE PRESIDENT’S PALAcE

Slovnaft supports and recognises those Slovak teachers who encourage students to study science through its Golden Amos

Awards. This year, the patron of this nationwide poll was the President of the Slovak Republic, Andrej Kiska, who welcomed

the winners at the Presidential Palace. The Slovnaft award was handed over by Slovnaft Human Resources Director Erika

Burianová. The winning physics teacher Ľubomíra Záhumenská is from Trenčín.

MOL TEAM ExcELS AT 1ST EuROPEAN GAMES

Almost 5,000 European sportsmen and women competed in the 2015 European Games, an

event held for the first time. The most successful sportswoman supported by the company was

Danuta Kozák, who won gold both in the singles and in the 500 metre kayak four. Of the MOL-supported

sportsmen Miklós Dudás’s gold medal is the most important achievement.

GREEN BELT uPDATESIna: In 2014, InA selected the 12 best Green Belt projects

from a field of 58. Six of these were completed from March to July 2015. For the new tender, announced in April 2015,

137 entries were received, an increase of 135% over last year. The tender was expanded to nature parks and volunteer fire

brigades, as well as nGOs and educational insitutions.MOL Hungary: Over the past ten years, MOL Hungary’s Green

Belt initiative has planted more than 80,000 plants over 1.5 million square metres with the help of over 20,000 participants.

In 2014/2015, grants were allocated to 33 winning communities, 9 of which were condominiums and 24 parks.

MOL romania: MOL Romania and the Partnership Foundation jointly supported 47 environmental protection

projects with a sum of ROn 640,000 (around EuR 145,000) via the Green Belt programme in 2014/2015. As part of the

urban Green Spaces initiative, 25 projects were selected from 86 in 2015 to renovate schools, libraries, parks and

daycare centres in 17 counties. Meanwhile, 22 natural Protected Areas projects were selected out of 60. The funds

will be allocated to Junior Ranger camps, as well as events and exhibitions in 11 counties.

MOL PAKISTANOn 14 May 2015, MOL Pakistan held a sponsorship ceremony with the district

administration of Kohat (TAL Block-KPK) for the distribution of computers and donations for cancer treatment. Speaking on behalf of MOL Pakistan, Mr. Saadi Faraz

said, “MOL Pakistan considered it a privilege to honour the bright students of Kohat-TAL Block. True to its traditions, MOL Pakistan supports investments in communities

where MOL is operating.” Guest of honour Mr. Shahryar Afridi of MnA Kohat added that with the “donation of PKR 200,000 (around EuR 1,800) for cancer patients, MOL

Pakistan had taken a great step towards the eradication of this fatal disease.”

August 2015 33 32 MOL GROuP Panorama

very year, nearly 3.3 million tonnes of used rubber tyres are “produced” in the Eu, with 30 to 40,000 tonnes of tyre waste

being discarded in Hungary. unfortunately, the recycling of these used rubber tyres in large volumes has yet to be solved, resulting in several million used rubber tyres being deposited in landfills all over Europe, causing a major environmental problem. However, rubber bitumen can be produced if we add rubber granulate recovered from used rubber tyres. The use of rubber bitumen can offer solutions both for improving road quality and environmentally friendly utilisation of used rubber tyres. It enables the construction of asphalt roads made from mixed bitumen and rubber granulate, resulting in significantly better road quality and a longer lifetime as opposed to traditional bitumen. The Institute for

Transport Sciences performed two lifecycle analyses of asphalt roads constructed during the R&D project (between 2004 and 2011), as well as roads built after the new manufacturing plant opened. They found that the expected lifetime of the asphalt roads made from rubber bitumen is 50% longer, and they cost 30% less throughout their lifecycle versus roads made from ordinary bitumen. The study also demonstrated significant CO2 emission reductions for rubber bitumen roads. (This can be explained by increased lifetime and significantly reduced maintenance costs.) Based on these benefits, the analysis also highlighted the significance of the product due to its extensive applications and potential impact on the national economy. MOL Hungary also participated in the preparation of Hungarian road management regulations and standards for rubber bitumen.

MOL rubber bitumen, winner of the Hungarian House of

Quality award and holder of the Ecolabel Certificate, offers high-quality roads and

environmentally-friendly solutions.

At the company level, one unit of product will potentially generate more profit than ordinary bitumen. Regarding sales, MOL had HuF 56 million net revenue in 2013 (the year when the product was introduced into the market) and HuF 134 million in 2014. The product significantly reinforces MOL ’s commitment to social responsibility, environmental protection and sustainable development. Rubber bitumen won the Hungarian House of Quality Award in 2013 and became an Ecolabel Certificate holder in 2014. In March 2015, MOL and Strabag submitted a joint application for construction of a bypass road near Villányi Street (Budapest) using rubber bitumen and won the Prize for Innovation in Environmental Protection at the 23rd Hungarian Innovation Grand Prix. The entry titled “Rubber bitumen – road to the future” won the MOL HSE Chairman Award in the Eco-efficiency category in 2015.

MOL’S EV/EBITDA

investor relations

PERFORMANcE OF MOL SHARE PRIcE IMPROVES

“MOL’s 20% share price increase since the start of 2015 has been underpinned by strong operational performance, which was also supported by the robust Downstream external environment. Additionally, improving sentiment towards Hungary was also a key catalyst. From early May, share price decreased slightly, mainly as a consequence of MOL’s decreasing weight in the MSCI* indices and increased worries over Greece that also affected CEE stocks.”

áDáM HORVáTHHead of Investor Relations

MOL trades close to its three-year average, slightly above integrated companies due to higher Downstream exposure.

science

wHat is Ev/EBitDa?The share price of a company is often evaluated on a simplified multiple basis. EV/EBITDA is one of the most common multiples for valuation in the Oil & Gas sector. EV/EBITDA is the quotient of► Ev: Current Enterprise

Value, the sum of market capitalisation, net debt and minority interests; and

► EBitDa: 1 year forward looking expected Earnings Before Interests, Tax, Depreciation and Amortisation

TARGET PRIcE cONSENSuS Q1 results were followed by a significant target price update by analysts. Based on the multiples and analyst consensus, our stock is marginally undervalued.

“The shares have gone up nearly 20% in the past month [April], breaking out of the relatively narrow trading

range they were in last year. We think that MOL is making clear financial and operational progress, but that the next step in share price recovery will likely have to wait for a resolution in the InA dispute, which management acknowledged is unlikely to happen until after the next Croatian election towards the end of the year.”

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*MSCI is a market-leading index provider with a track record of over 40 years. Several index tracker funds are based on MSCI indices.

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MOL Ev/EBitDa (t+1)MOL average Ev/EBitDa (t+1) 2012-2015

T+1 refers to forward-looking 365-day analyst EBITDA consensus

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MOL RuBBER BITuMEN rOad

tO the Future

buy Hold Sell

ope Francis issued an encyclical on climate change, China and the uS signed a climate agreement last year, and even several leading

European oil companies have recently said they would support a carbon tax.Everyone is buzzing about fighting climate change ahead of December ’s un climate meeting in Paris. Below, we try to explain why the mood has changed.

sOLar revOLutIOnThe cost of solar panels has fallen 7% per year in the last decade. Assuming this continues (and there is a strong argument that it will), then it will be cheaper to produce electricity from solar panels than from a new nuclear reactor by around 2020. Electricity from solar panels may become cheaper than electricity from conventional power plants soon, all without state subsidies. In some countries, it’s already cheaper. Therefore, the need for nuclear and coal

power plants will fall. This has made (and will make) the fight against climate change considerably cheaper, as power generation is the single biggest source, accounting for over 25% of global emissions.

the WeaLthIer COnsume MOrE Luxury GOODsWorrying about the climate is a luxury good. During economic crises, voters don’t have an appetite for painful measures to reduce CO2 emissions. However, in recoveries, green issues come to the fore, as the chart above shows.Gallup regularly polls Americans on whether the environment or economic growth should receive priority. Since the start of the crisis (2009), the public deemed economic growth to be more important. But in 2014, this trend reversed and now Americans put the environment first. Fighting climate change seems to be cheaper than before, and many economies think they can afford to spend more on it. This has increased the probability that there will be an agreement

at the end of the year at the un climate conference in Paris. But don’t hold your breath. Such agreements do not say much about how countries would reach their goals and can later be withdrawn. With or without a deal, the 2-degree goal will not be met, as it would need draconian policy changes.

iF yOu Can’t BEat tHEM, jOin tHEMThe big European oil companies also felt this trend when they practically opted for a carbon tax in a recent joint statement. This tax would effectively crowd out coal-based energy production from the market, but would probably boost natural gas demand. And, more importantly, (though the oil companies did not stress this) the carbon tax would not displace oil in transportation: high excise taxes in Europe is currently equivalent to a carbon tax of around EuR 200 per tonne of CO2. An additional tax of EuR 20 per tonne would only push fuel prices higher by a mere 5-10 cents per litre.We also believe that a gradually rising carbon tax would be the best option: it would reduce emissions where it is the cheapest to do so.

barrel per day

wHY EVERYONE SuDDENLY wANTS TO SAVE THE wORLD

the Expert’s Column. The Chief Economist Team’s insight and guide to today’s trends and tomorrow’s developments. Read more at barrelperday.com

barreL PEr Day

it’s been hard to miss: everyone is talking about stopping climate change again, due to cheaper renewables and better performing economies.

enVIronmenT or eConomIC

groWTH?

WHICH SHould geT A prIorITy?

– uS poll

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István zsoldos Chief economist – manager

péter Simon Vargha Chief economist

34 MOL GROuP Panorama

next issue: INA flagship

member of mol group

MOL TRULY BELIEVES IN CREATING A SUSTAINABLE FUTUREIT’S OUR RESPONSIBILITY.

MOL_Reloaded_2_150805.indd 1 2015.08.05. 17:19