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BUSINESS FOCUS - COOPERATION BETWEEN SLOVNAFT AND HUNGARIAN MOL SHOULD BRING BETTER OPPORTUNITIES AND INCREASE COMPETITIVENESS

Eastern group tests power

SLOVNAFT, the major Slovak oil refinery, has operated since 2004 as a company fully integrated into the multinational MOL Group.
The integration project named Futura, preparing the member companies (Slovnaft, Hungarian MOL, and Hungarian chemical complex TVK) for fully integrated operation, took all of 2003 to complete, and this year should see the first benefits from the joint operation. It was the first integration to include only partners from eastern Europe.


SLOVAKS and Hungarians test their joint might.
photo: Courtesy of Slovnaft

SLOVNAFT, the major Slovak oil refinery, has operated since 2004 as a company fully integrated into the multinational MOL Group.

The integration project named Futura, preparing the member companies (Slovnaft, Hungarian MOL, and Hungarian chemical complex TVK) for fully integrated operation, took all of 2003 to complete, and this year should see the first benefits from the joint operation. It was the first integration to include only partners from eastern Europe.

"In the beginning, only 20 people took part in the project," Ferenc Dénes, the manager of the Futura project, told The Slovak Spectator. "However, by September 2003 there were several hundred specialists working in teams to solve various tasks. The projects required the fulfilment of about 600 tasks."

Dénes said that the integration should bring synergy benefits of about $140 million (€128.8 million) to the group.

"The goal was to create a new integrated company from two existing companies," he added

There was no special team dedicated only to integration. The group wanted to escape a situation where people come up with ideas in theory that employees consider unworkable in practice. The Futura team linked people responsible for the everyday operation of the MOL Group to work on the integration projects.


MOL and Slovnaft heads sign Futura for the future.
photo: Courtesy of Slovnaft

Project Futura was carried out in several phases. It resulted in a united organisational structure with integrated management. Slovnaft, MOL, and TVK have conjointly run activities such as marketing, promotion, supply chain management, harmonised production portfolio, integrated production, harmonised investment projects, raw materials purchasing, logistics, and foreign market sales since January 2004.

All three companies remained independent legal entities. The group still uses their internationally known brands to enjoy their good market positions.

"Despite the fact that MOL is nearly our 100 percent shareholder, we consider our relationship more one of cooperation than one between owner and owned. This partnership is one of the basic principles of the integration in the MOL Group," Vratko Kaššovic, general director of Slovnaft, told The Slovak Spectator.

He continued: "Another key principle is equal opportunities for all workers of the group, and the third principle is using a common language. The official language of the group is not Slovak or Hungarian; it is English."

He also said that the group wanted to optimise all the activities and take advantage of the knowledge and experience of all members of the group. This means that not all activities are organised from one centre.

As management considers Slovnaft in Bratislava to be the most experienced in petrochemistry, activities in this field for the whole group are managed from Bratislava. The human resources manager also has his seat in Bratislava.

The group believes that the integration will increase its competitiveness and strengthen its position in the market. The integration has enabled the three companies to operate on a market wider than that on which they worked individually.

Markets located in northern MOL Group territory - Slovakia, the Czech Republic, and Poland - will be served by Slovnaft's brand. The group will use the brand MOL in its southern territory - Hungary, Romania, Serbia, and Slovenia. This determination basically follows the traditional operation of these brands on the mentioned markets.

In 2004, investments in Slovnaft should reach about Sk8.5 billion (€210 million). Most of them should leak into improving refinery technologies, ecological projects, and spreading the filling station network in Slovakia, the Czech Republic, and Poland.

The MOL Group processes 13 million tons of raw oil annually and has about 850 filling stations in seven countries of the central and eastern Europe.

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