Hungary signs deal to link to Russia's Turkish Stream gas pipeline

By bne IntelliNews July 5, 2017

Budapest has signed a deal with Russia's Gazprom to link Hungary with the under-construction Turkish Stream pipeline by end-2019.

The deal - which could mean deliveries of up to 8mn cubic metres (cbm) a year of gas, a figure close to Hungarian consumption - was struck on July 5, a day before President Donald Trump was due in Poland, where he was expected to promote fast-growing American LNG exports to Central and Eastern European leaders.

Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto met with Gazprom CEO Alexei Miller in Moscow to hammer out the agreement.

“It is a matter of national security interest for Hungary to have a gas import possibility also from the south, in view of the fact that Romania has still not enabled the two-way flow of gas and the Croatian LNG terminal is not yet under construction,” Szijjarto said.

Although Hungary’s annual gas needs have dropped more than 20% over the past five years, the country depends heavily on Russian gas. Half of its demand is met by Russian imports sent by pipeline via Ukraine.

Hungary has long sought to diversify its gas imports. The proposed terminal on Croatia's Adriatic island of Krk, from which US gas could hypothetically one day be sourced by the Hungarians, is also considered an option.

Hungarian governments proved fervent supporters of the Russian South Stream pipeline project that was to ship some 63bn cbm/year of Russian gas across the Black Sea and through the Balkans and Hungary to a gas hub in Austria. But the project was blocked by the EU in 2014 as it did not comply with European competition and energy legislation.

In the same year Ankara and Moscow signed a memorandum of understanding for the construction of Turkish Stream, which will bypass Ukraine in bringing Russian gas across the Black Sea to the Turkish market and Europe.The pipeline project is 50:50 owned by Gazprom and Turkish state oil and gas company Botas.

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