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    Hungarian Election Bolsters Gazprom

Summary

Hungary’s Viktor Orban has won its third consecutive election, retrenching Gazprom's influence there.

by: Daniel Stemler

Posted in:

Natural Gas & LNG News, Europe, Political, Elections, Balkans/SEE Focus, Infrastructure, Liquified Natural Gas (LNG), Storage, Pipelines, BRUA Corridor, Turk/Turkish Stream, News By Country, Austria, Hungary, Romania, Russia

Hungarian Election Bolsters Gazprom

Hungary’s conservative Fidesz party, led by PM Viktor Orban, won its third consecutive national election April 8, gaining a two-thirds parliamentary majority and entrenching Russia-friendly Orban’s sway.

Reinforced by his landslide victory, Orban is seeking to transform Hungary into a regional gas hub, but not one that strives for Europe's gas supply diversification.

Last year, Hungary announced that the Brua pipeline project (Bulgaria-Romania-Hungary-Austria) will end on Hungary’s southern border and not be built to Austria’s Baumgarten hub. This followed Budapest’s July 2017 signature of an agreement to back TurkStream. According to a recent report in Romanian business daily, Business Review, “Hungary’s strategy is to buy up all the natural gas exported by Romania through Brua, fulfil its own needs and then re-export the surplus to the clients of its choice.” 

The article remarks that this would go against the interests of Romania, but that Bucharest lacks “any real counter-strategy” and it may have to rely on Austrian OMV and ExxonMobil’s joint development of the Neptun deepwater gas field in the Romanian Black Sea to frustrate Budapest’s plan.

Hungary’s best interest would be to strengthen its regional hub role and boost use of its large state-owned gas storage facilities, according to Ders Nemeth, founding managing director of Hungarian energy consultancy firm Wattler. That would require building a proper interconnector from Romania, backing Ukraine’s role as a gas transiter, and keeping bi-directional flows across the region both north and west. “In late February/early March there were some days when Hungarian prices were €30/MWh ($10.80/mn Btu) below the western prices, yet traders couldn’t transport a single cubic meter of gas to more expensive markets,” Nemeth told NGW.

The Krk LNG import terminal in Croatia, together with Swinoujscie LNG import terminal in Poland, could boost central European energy. The Three Seas Initiative, driven by Poland, is looking to build a North-South gas corridor running between the two LNG import terminals. But construction of the Krk floating terminal hasn’t started yet, despite the EU allocating a €101.4mn grant to it last year.

If Hungary does plan to develop a regional gas hub, then Orban will need to balance the needs of the region as a whole, rather than solely prioritise the aims of its Russian ally.