Hungary to buy E.ON's Hungarian gas units

Hungarian Prime Minister Viktor Orbán and E.ON Chairman-CEO Johannes Teyssen have signed a letter of intent, which states that state-owned energy firm MVM will buy the German utility company's gas trading and storage units located in Hungary.

A statement issued by the Prime Minister’s Office said on Friday that the parties will continue talks that are scheduled to end Dec. 15. A sales agreement is to be signed by Jan. 31 at the latest.

E.ON Földgáz Trade Zrt. is the biggest natural gas trader in the country, and supplies every Hungarian gas distributor and therefore indirectly every household customer.

The statement claims that Hungary's energy policy endeavors to establish long-term security of supply, and accordingly it has an interest in expanding its activities within the fields of natural gas distribution and storage through the MVM Group.

“In the spirit of mutually fruitful Hungarian-German economic and trade relations that are based on decades of tradition, the signatories to the declaration expressed their intent to continue negotiations in good faith and taking into account the interests of both parties so that the E.ON Group's stake in the Hungarian natural gas industry may – assuming mutually favorable terms and conditions and the acceptable management of any risks that may arise by the parties – be transferred to MVM,” the statement declares.

E.ON purchased majority ownership in MOL’s natural gas business in 2005 for EUR 2.1 billion. In 2011, E.ON’s revenues from the Hungarian natural gas sector reached EUR 1.95 billion with the Government obtaining an option to repurchase E.ON's stake in the company, which will expire in 2016.