Hungarian foreign and trade minister Peter Szijjarto (left) and, also seated, Gazprom CEO Alexey Miller (Photo credit: Gazprom)
Hungarian foreign and trade minister Peter Szijjarto (left) and, also seated, Gazprom CEO Alexey Miller (Photo credit: Gazprom)

Hungary Wants Tie-in to Gazprom's Turkstream

Hungary has signed accords with Gazprom to link into the 31.5bn m3/yr Turkstream gas pipe project which the Russian giant recently began building.

“The new natural gas transport route to Hungary could be established by the end of 2019”, Hungary’s foreign affairs and trade minister Peter Szijjarto said in Moscow July 5, after concluding an agreement with Gazprom CEO Alexey Miller on Hungarian projects relating to the new pipeline.

The declaration by Hungary comes on the eve of a visit to Poland July 6 by US President Donald Trump in which export of US LNG into central Europe, via Poland, is expected to be promoted; a month ago Poland imported its first US LNG cargo, a spot purchase by state-run PGNiG.

Szijjarto said that Hungary’s most realistic scenario for connecting to the Southern Gas Corridor is co-operation with Gazprom, which has begun construction of the Turkstream gas pipeline.

He said Hungary had taken this action, because Romania had still not enabled the two-way flow of gas and because the Croatian LNG import terminal is not yet under construction, meaning the issue of energy security is still a major challenge for central Europe.

“Accordingly, successfully connecting to the Southern Gas Corridor so that we can also purchase gas from the south, is a question of national security for Hungary,” said Szijjarto. He added that Bulgaria and Serbia have already signed agreements, according to which financing of domestic pipe projects must be established by end-2017 and required permits must be acquired by end-2018 to enable the pipeline from Serbia to Hungary to begin operations by end-2019, carrying up to 8bn m³/yr gas to Hungary if required.

Gazprom supplied 5.7bn m³ to Hungary in 2016, so 64% of Hungary’s 8.9bn m³ consumption.

“This will significantly improve Hungary’s energy security,” said Szijjarto, adding “despite all kinds of communications hypocrisy, European demand for Russian gas is increasing dramatically” and that Gazprom last winter had assured a record 24-hour supply of 0.64bn m³ of Russian gas to Europe.

The authoritarian government of Viktor Orban has been a consistent ally of Russia when it comes to gas policy, with state utility MVM – Hungary’s main gas importer – showing little interest in Polish and Croatian plans to develop LNG projects that might diversify gas supplies to central Europe and highlighting the costs and practical difficulties in implementing such schemes.

However the economics of the Gazprom-owned Turkstream project are opaque, and it is often seen as a strategic rather than commercial project.

Gazprom added July 5 that Miller and Szijjarto had met and “discussed gas supplies to and gas storage in Hungary, as well as gas transit to third countries” as well as “the development prospects of gas transmission capacities in the territory of Hungary.” Gazprom said both had “signed a roadmap to implement a number of measures aimed at developing Hungary’s gas transmission system.” Gazprom also said that it and MVM “signed a memo of understanding… reflecting [their] intent … to continue long-term co-operation with regard to Russian gas supplies to Hungary.”

 

Mark Smedley

 


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