Gazprom and Hungary agree on additional gas deliveries for winter

Gazprom and Hungary agree on additional gas deliveries for winter
Hungary has been in talk with Moscow in the summer to obtain an additional 700 mcm of gas above the 4.5 bcm level. / bne IntelliNews
By bne IntelliNews September 5, 2022

Hungary and Russia’s gas giant Gazprom have signed an agreement that will guarantee the delivery of up to 5.8 mcm gas per day to Hungary in September and October above the volume stipulated in the country's long-term contract signed in October, Hungary’s Foreign Minister Peter Szijjarto said.

Gazprom delivered an extra 2.6 mcm of gas per day in August on top of its 15-year contract with the Russian gas giant, which guarantees the annual supply of 4.5 bcm of gas through Serbia and Austria, bypassing Ukraine.

Hungary has been in talk with Moscow in the summer to obtain an additional 700 mcm of gas above the 4.5 bcm level.

Hungary has opposed proposals for EU sanctions on Russian gas as well as calls for a voluntary 15% cuts in member states’ gas demand until the end of March next year. The government has blamed EU sanctions for the soaring energy prices in Europe.

It has gone against the rest of the bloc by continuing to deepen its reliance on Russia.  Viktor Orban's regime has boasted about how its good relations with Russia has given it favourable prices for gas and will enable it to ride out the current energy crisis. However, it has not revealed the cost of its gas deals with Russia, with an opposition website claiming that the price is above the market rate.

The Hungarian government has also been forced to end its freeze of domestic tariffs, one of its signature economic policies. Three months after his landslide April election victory, the Orban government was forced to give up on its key policy as the budget gap widened and the forint weakened to historic lows.

Due to Hungary’s geography, being a landlocked country, "it is physically impossible to ensure Hungary's energy supply without using and taking into account Russian gas sources", Szijjarto said.

The additional volumes contribute to the safety of Hungary's energy supply, Szijjarto said, adding that there will be sufficient gas in Hungary. Reserves in Hungary's gas storage facilities have exceeded 36.5% of annual average consumption, compared to the EU average of 21.5%. Gas reserves stood at 61.3% of the total capacity of 6.33 bcm last week.

Russia's Gazprom accounts for around 90% of Hungary's gas imports under a 15-year contract signed in October last year that guarantees at least 4.5 bcm of annual supply.

 

 

 

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