Hungary pushes for flexible gas deal with Russia

By bne IntelliNews February 6, 2015

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Hungary hopes to negotiate a new flexible gas supply agreement with Russia, said Prime Minister Viktor Orban ahead of the controversial visit of President Vladimir Putin to Budapest later this month. 

The deal might not be long term, but should be time flexible, and should take into consideration the volatility of oil and gas prices, Orban said on February 5, according to MTI. The PM said in late January that Hungary urgently needs to agree a new gas  deal with its main supplier as the existing contract with Gazprom expires at the end of 2015.

Orban underlined that a favourable deal on gas supplies from Russia would allow Budapest to confront the demands of the European Union to limit state control over energy prices. The government has taken over much of the country's gas infrastructure, including the main gas importer, over the past few years.

Despite his country having been a member of the European bloc since 2004, the PM repeated his recent statement that Hungary should strive to maintain a balance in relations between Brussels and Moscow. Countries in Central Europe could benefit from maintaining friendly relations with both Russia and Germany, he said. Orban has already received heavy criticism from Brussels and Washington for his perceived lean towards Moscow during the Ukraine crisis.

During Putin's visit​ on February 17, the Hungarian PM said he will be looking for a contract that will help the government maintain its recent effort to cap utility prices. Budapest is also expected to push its plan to more than double storage of Russian gas in Hungary. Currently, the country is hosting 700mn cubic metres.

Hungarian facilities can store some 6bn cm of gas. In a recent statement Gazprom has also said it is examining options of storing more gas in the country. The move is seen as a threat to Ukraine, which currently transports a large chunk of Russian gas headed into the EU.

Following the cancellation of the South Stream project, Hungary is also hoping to set up a link to Russia's proposed "Turk Stream" pipeline - which is another possible topic of discussions during Putin's visit.

Moscow said in January that it wants to divert all gas supplies away from Ukraine and deliver it to the Turkish-Greek border. The EU has said the scheme is unrealistic, as contracts earmark the point of delivery, and there is not the infrastructure in place to carry the gas across the continent. Hungary suggested it could co-ordinate a project to pipe some of that supply to Central Europe.

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