Environmental Impact Study FGSz Ltd. Implementation of the Croatian Transit Gas Pipeline Városföld – Bátmonostor section

11.1 Brief description of the project and activities

The strategic objective of FGSz Ltd. is to increase volumes of transit natural gas transmission, and to implement the alternative natural gas supply route at the south region crossing the national border. This is why an Agreement on Development was signed on March 3, 2009 with the Croatian Plinacro d.o.o. company with the purpose construct a transmission pipeline between Városföld and the Hungarian-Croatian border, Slobodnica, the design border is the mid-stream line of river Dráva. This pipeline will be later upgraded and able for two-way transmission. Implementation of this project will improve the security of gas supply and support diversifying transmission routes and sources.

Following its modification in 2008, ’s structural plan includes the trunkline of the Croatian transit natural has pipeline, as Appendix no. 2. of the National Regional Development Plan.

The total length of the gas transmission pipeline will be 205 km, and the diameter 800 mm (DN800). The transmission pipeline will proceed between Városföld compressor station and Drávaszerdahely international measuring station, via Bata compressor station and the interim section valve stations, partly following the existing trunkline. We also plan a branch-off pipeline from Kozármisleny - Pécs-I. with approximately 2.2 km length and 300 mm diameter (DN300).

As part of the environmental licensing process the Environmental Impact Study will be broken down onto the said two trunkline sections, because the area concerned is located in and thus belong to the area of competence of two environmental authorities.

— Városföld compressor station — Bátmonostor section valve station cca. 115.5 km. — Between Bátmonostor section valve station — Dráva river crossing (in the area of Szaporca ) cca. 89.5 km, and Kozármisleny — Pécs I. branch-off point 2.2 km. Olajterv Plc., as the designing company prepared the required documentations for the Városföld- Bátmonostor section of the trunkline and submitted them to the Lower-Tisza Regional Environmental Protection and Nature Conservation and Water Management Authority, which performed the preliminary investigation process, and issued its resolution no. 60916-1-8/2009. This resolution prescribed the preparation of an environmental impact study for the relevant section as pre-condition for issuing the environmental permit. The maximum volume of natural gas to be transmitted will be 7.5 bcm/year (15 °C and 1.01325 bar). The pipeline will be equipped with cathodic protection and PE passive insulation, and will be made of seam-type steel pipe with the following design and operational parameters: The trunkline of the planned pipeline will dominantly run parallel with the existing hydrocarbon transportation pipelines.

Environmental Impact Study FGSz Ltd. Implementation of the Croatian Transit Gas Pipeline Városföld – Bátmonostor section

A new compressor sub-station will be implemented at Városföld, as an ancillary project, next to the existing compressor station in order that we can fully ensure the transit transmission requirements. Pipe connections will have to be implemented between the said new compressor station and the existing gas technology junction. The environmental permit of the station will be amended in a separate process as this is required for expanding the compressor station at Városföld. Enhanced noise prevention and protection solutions will be applied for installing the new compressors in order that full compliance with the relevant standards can be fully ensured.

The project will include the implementation of underground section valve stations at appropriate distances based on the length and volume of natural gas to be transmitted and in order that security of gas supply can be maintained. The section valve stations existing at , Szank, Kunfehértó, Felsőszentiván and Bátmonostor will need to be expanded, and a new station will be constructed at . The required instrumentation will be provided in containers. The pipeline can be shut off at the said stations, if this is required.

The pipeline will be in most cases implemented using the open ditch method. The construction zone designated for the pipeline implementation will be as it follows:

− 35 m in-field, with asymmetric structure (20 m towards parallel pipelines, and 15 m on the assembly side), − 30 m in forest and bushy areas, with asymmetric structure (10 m towards trees and bushes, and 20 towards opening or clearance), − 40 m at public road, railway and dirt road crossings (20-20 m symmetric).

11.2. Environmental impacts and impact zone of the project implementation

Environmental impacts arising from or related to the project will dominantly emerge during the implementation phase caused by moving trucks and other heavy-duty machines used for construction works. The largest impact will arise from moving the habitat of flora and fauna.

During the project implementation phase level of air pollution will be periodically increasing along the routes of transportation. This impact will be indeed periodical and higher level of air pollution can only be expected during daylight, and no irreversible effects can be foreseen. The impact zone of air pollution will be 50m from the mid-point of two-digit public roads, and 25 m from the mid-point of three-digit public roads.

Noise load along the routes of transportation caused by higher traffic will not cause major changes versus the noise load arising from the current traffic. During the operations of heavy duty machines we will not exceed the noise load limit defined for cca. 80 meter from the construction zone even in case of operations of heavy-duty machines during daylight, measured in the residential areas (small city, family house area, villages), including the facilities enjoying specific protection, like schools, cemeteries and green zones. During the implementation phase the noise load will cause additional load (at various levels) to facilities under specific protection only for a short period of time, i.e. maximum for one month, due to permanently advancing construction works.

Environmental Impact Study FGSz Ltd. Implementation of the Croatian Transit Gas Pipeline Városföld – Bátmonostor section We will restore the original flow direction and other circumstances at any and all dicthes, holes, trenches, and periodical waters or streams etc. we are going to cross during the project implementation when the relevant pipeline section is implemenetd. As all legal requirements will be fully complied with, we will not calculate with any pollution caused to surface waters. Following the implementation of the pipeline using the open ditch method we will restore the original surface, re-fill the humus layer saved in the relevant areas, and remove any redundant sub-soil (full recultivation). The productivity of the soil will be restored. No long term damage can be expected from breking up or moving the soil. The project implementation will have major impacts onto the flora and fauna of the area. Habitats, including animals and vegetation will be destroyed within 30-35 meter zone of the pipeline. However the said disturbance will not exceed the consruction zone, the access roads and depots. This damage is reversible and repairable, as habitats and flora and fauna will be regenerated in due time after the construction. Various resctrictions will be set forth in time and space and all such regulations should be fully followed in order that flora and fauna can be protected and its exposure reduced, then, finally regenerated. The relevant agricultural areas can be taken out of cultivation only temporarily and for the implementation phase. Sub-soil will be exposed only to tolerable impacts due to the pipeline construction works, and the humus layer will be removed, stored then re-filled following the restoration of its productivity. Compliance with various preventative actions and restrictions, as well as careful preparation and supervision of the implemenetation process will be critical for mitigating the said impacts. The affected areas can be quickly and efficiently regenerated through appropriate recultivation, and long term detrimental effects can be avoided.

11.3. Environmental impacts of operations, and their impact zone Operations of the planned pipeline between Városföld - Bátmonostor and the implemented facilities and stations will not cause major impacts onto the environment. As the sole impact certain air pollution will be eventually caused, nearly every 15-20 years, when the natural gas inside in the given section of the pipeline will be flared off as part of the regular maintenance activities for safety reasons. In exceptional cases, like irregular events, cases of emergency, certain volume of natural gas will need to be inevitably released into the air (flare-off) without having it burned, in order that more serious accidents or injuries can be prevented. This is very rare, and thus will cause no long term, deterioration in the quality of the ambient air in the region. The exact volume of such gas is always subject to the length of the pipeline section that needs to be vented off. The quantities of waste materials produced during operations will cause no major increase in the waste balance of FGSZ Ltd. Operations will have neutral impacts in case of certain environmental elements, (noise, surface and underground waters). Operations of the pipelines will cause no major changes in the current structure of land usage.

11.4. Environmental impacts of abandonment and its impact zone Operations will be foreseeably maintained for several decades, abandonment will not happen within foreseeable timeframe. In case of abandonment, the pipeline will be cleaned up with pigging operations. If there is any abandonment, the best solution will be to leave the pipes down in the earth. Environmental Impact Study FGSz Ltd. Implementation of the Croatian Transit Gas Pipeline Városföld – Bátmonostor section

If the pipeline is removed from earth, the impacts of operations will be similar to those of the construction works. Certain work phases will be dropped, like terrain preparation and pressure tests. As a result of decreasing number of heavy-duty machines the air pollution will be lower by nearly 20-30 %. Impacts along the trunkline will be practically the same as during the construction process in respect of noise, waste materials, soil and humus.

Eventual changes that may occur during several decades elapsing until the abandonment of operations will require actions aiming at the protection of soil, arable land and values of ecology and nature and the supervision of certain effects of recultivation (e.g. ecology, land usage). The right-of-way zone that belongs to the pipeline will cease to exist, and the original mode of land usage will be fully restored.

When operations are abandoned, the equipments of the installed facilities will be dismantled and decommissioned, the area recultivated, and the original land usage will be restored. Au official audit will be held to verify that there was no damage caused to the environment, and the recultivation has been completed.

11.5. Environmental protection actions

The soil and flora/fauna are the environmental elements facing the greatest exposure and impacts, and we can moderate such effects by carefully planned and implemented preventative actions, considerate preparation of the territory, as well as providing full-scale and professional recultivation following the completion of works. Disturbing impacts onto the air and noise time-to-time arising from construction works can be mitigated by following a careful timetable of such works and organisational actions.

11.6. Emergency and safety FGSZ Ltd. is implementing safe operations of gas transmission pipelines based on its quality assurance system (ISO 9001:2000) certified and regularly revised in accordance with laws and regulations.