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    Gazprom Holds Talks with Hungary

Summary

Gazprom has held talks in St Petersburg with a top Hungarian official, emphasising their “ongoing cooperation"

by: Mark Smedley

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Gazprom Holds Talks with Hungary

As part of this week's St Petersburg International Economic Forum, Gazprom CEO Alexei Miller met Hungarian foreign affairs and trade minister Peter Szijjarto on June 17.

Gazprom said both sides discussed “ongoing cooperation in the gas sector, placing a focus on Russian gas supplies to Hungary and its transit to third countries, as well as on the use of underground gas storage capacities in Hungary.”

Hungary has a warm relationship with Gazprom, as it has some indigenous production, plus easy access to cheap spot gas from western Europe. Before Gazprom scrapped its South Stream pipe project in 2015, Hungarian state utility and generator MVM was an active supporter of the scheme.

There was no statement June 17 from MVM, the country’s main Russian gas importer. However Gyorgy Harmati, chief adviser to MVM’s chief executive, described his company’s relationship with Gazprom as “good”, at an event in Brussels on May 26, adding that it had not suffered any major disadvantage from having most of its supply coming from this single source.

“We do not plan to leave out Russian molecules from our long-term portfolio,” said Harmati.

His remark contrasted with earlier statements from Polish government officials, implying Warsaw's policy now is to allow a 10.2bn m3/yr long-term Gazprom supply contract to Polish state-run PGNIG to lapse in 2022. PGNIG has not confirmed this is its corporate policy, although it does want to reduce its dependency on Russia. Poland and Lithuania now import LNG from the world market, but the latter used this lever to negotiate a cut in prices from Gazprom in late 2014. Hungary’s MVM is more sceptical about using LNG to diversify its gas supply portfolio than neighbouring countries.

Harmati also said June 26 that Hungary has a lot of gas storage capacity and that not enough use was made of it. Neighbouring countries were asking the EU for money to build storage facilities on their own territory he said which was “a total waste of money.”

Gazprom said June 17 that Russian gas exports to Hungary in 2015 grew by 15.2% cent to 6.14bn m3; it added that during June 1-15 this year, exports increased by 21.8% year-on-year.

BP’s Statistical Review of World Energy 2016 said that Hungarian gas demand rose by 6.6% in 2015 to 8.9bn m3, and said imports from Russia accounted for 65% of that, or 5.8bn m3. It did not give an indigenous production figure. The difference between Gazprom and BP’s figures for Russian imports can be accounted for by differing conversion factors.

 

Mark Smedley           

www.naturalgaseurope.com