Hungary reportedly set to deepen gas ties with Moscow

By bne IntelliNews January 8, 2015

bne IntelliNews -



Hungary is seeking to more than double the amount of gas Gazprom stores in the country, local media reported on January 7. There are also claims Hungary could sell gas storage and distribution assets to the Russian gas giant, as Budapest appears ready to provoke more fury in Brussels and Washington by strengthening ties with Moscow.

While on a visit to Moscow in December, Hungarian Foreign Minister Peter Szijjarto proposed to more than double storage volumes of Russian gas to 1.5bn cm as of April, Vilaggazdasag claims, citing unnamed sources. Hungary’s facilities can store about 6bn cm of gas.

Hungary and Gazprom signed an agreement in September allowing the Russian gas giant to store up to 700mn cubic metres (cm) of gas in the Central European country, as well as raising supplies. That came as Poland and Slovakia - the others in the region feeding Ukraine with EU gas - reported huge cuts in deliveries from Russia.

Days later, Budapest halted supplies to Ukraine. Last month, Hungary said gas shipments could resume in January, however, there have been no reports that the route has been reopened yet.

Local media reports have suggested that Gazprom wants to buy a stake in Hungarian gas storage facilities, but Vilaggazdasag sources could not confirm that. In December, the development ministry denied allegations that Budapest is considering selling some of its storage facilities this year.

These issues might be put up for discussion during a planned visit by Russian President Vladimir Putin’s to Budapest. Local media suggest the controversial meeting is set to take place in March. The head of the Prime Minister’s Press Office confirmed on January 7 that Budapest is discussing a date for a visit by the Russian leader. 

That meeting, and potential deals on gas storage and even the acquisition of facilities, will increase international pressure on Prime Minister Viktor Orban. In late 2014 he came under fire from Brussels and Washington over his perceived lean towards Moscow.

That helped spark ongoing protests in Hungary, and Orban has toed a more concilatory line in recent weeks. However, true to form, the PM appears to have decided to plough on with his programme.

In January 2014, Orban surprised observers when he cancelled an international tender on expanding Hungary's sole nuclear power plant Paks. On a visit to Moscow, he agreed a €10bn loan from Moscow in return for handing the contract to Russian state nuclear agency Rosatom.

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