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With the halt of Russian gas supplies to Europe via Ukraine, a sensational geopolitical opportunity has emerged from which Hungary could benefit, a source told Index. The source, who asked for anonymity and is an active gas trader, indicated that the events have tripled the value of the Hungarian gas system.
As reported by Hungary Today, Russian energy company Gazprom announced on January 1 that it had lost the technical and legal ability to continue transporting gas through Ukraine, which led to the pipeline being shut off. Fortunately, Hungary will continue to receive Russian gas via the TurkStream pipeline.
Index now reports that for years everyone had been hiding how much money they were making from Russian gas supplies, but by shutting down trading, politicians have revealed many previously unknown details. The Ukrainians said they were losing $800 million a year by not renewing the contract. The Russians are reported to be losing $6 billion. In addition, the Slovaks are also losing a lot of money, and the contract’s termination will be felt most in Austria and Slovakia, as Hungary has shifted its purchases to TurkStream.
The source revealed to Index that
in terms of GDP, the Ukrainians are losing much more money, even though they are communicating only the raw numbers and comparing it to the Russian loss.
The market source, a representative of one of the companies involved, who has been trading Russian gas for years, also pointed out that the European Union was always behind the previous contracts, but now it was not at all in favor of extending the contract.
The expert emphasized that perhaps the biggest mistake was Slovak Prime Minister Robert Fico’s trip to Moscow. “This gave the Ukrainian nationalists a chance to communicate to the leaders in Kyiv that “you want to sign a supply contract with these people, who are quietly going to Moscow to make a deal.”
There are currently three scenarios emerging to solve the situation.
One is replacing Russian supplies to Central and Eastern Europe with LNG. Another option is that Russian gas could be replaced by Azeri gas via Ukrainian pipelines. The third scenario is a new type of gas agreement between the EU, Ukraine, and Russia.
Meanwhile, the source told Index that now with the halt of gas transport, the pipeline could become a possible Russian target. Since the gas pipelines run above ground at compressor stations, and the trail was marked with yellow signs before the war, this pipeline is not difficult to hit, he added.
Looking at Hungary’s role, in recent years interconnectors (interconnecting pipelines) have been built which can transport gas in both directions with the neighboring countries. In practice, Slovenia is currently Hungary’s only neighbor with which the country’s gas pipeline system is not interconnected, a shortcoming that will be remedied by the Hungarian-Slovenian agreement signed in Budapest in October 2023.
As Nord Stream 1, 2, and the other pipelines – with the exception of the TurkStream – have been slowly phased out between Russia and Europe since 2022, Hungary’s role has been significantly enhanced.
Today, only the TurkStream can transport gas from Russia, which happens to enter the European Union through the Hungarian-Serbian border.
Hungary continues to bring Russian gas to Europe, so according to the market source, the value of the Hungarian gas system has tripled with the shutdown of Russian-Ukrainian-Slovak transit. “The Slovak transit shutdown has thrown a sensational opportunity to the Hungarians, so the Hungarian gas system can now really become a regional champion, but it would need a better and more predictable regulatory environment,” the international market source concluded.
Meanwhile, Foreign Minister Péter Szijjártó highlighted in a post on his Facebook page that the competitiveness of the European Union has deteriorated dramatically in the recent past, one of the main reasons being that natural gas prices in Europe have become much higher than those of our competitors.
The Foreign Minister wrote: “However, the increase in European gas prices has been mainly driven by measures that artificially reduce gas volumes, such as the sanctioning or political exclusion of certain sources of gas and the blocking of certain supply routes. It is also quite clear that the people of Europe are the ones who are suffering as a result of these decisions. However, because we in Hungary have worked very hard in recent years to ensure that we can buy natural gas from as many routes as possible, Hungarian energy supplies are secure, even if we are also affected by price rises on the European natural gas market.”
He emphasized that since the closure of the Ukrainian transit route became definitive in mid-December, the price of natural gas on the European market has increased by 20 percent.
So, as Ukraine seeks to join the EU as a candidate country, it has once again put the European economy in a difficult situation with another decision.”
“This is particularly true for Central Europe, so we caught up with our Slovak Foreign Minister colleague Juraj Blanár to review the situation in the wake of Ukraine’s decision. We agreed that the Association Agreement between the EU and Ukraine should be respected by both parties, and that this agreement also provides for the maintenance of energy transport routes,” Péter Szijjártó recalled.
The Foreign Minister also said that he remembered the discussions years ago about whether to build the TurkStream gas pipeline, which would create the Russia – Turkey – Bulgaria – Serbia – Hungary transport route bypassing Ukraine. “And I remember well the threats that came from our allies, just as I remember well how they tried to talk us out of this project in a ‘friendly’ way. If we had not been able to resist ‘friendly’ pressure then, we would be in a very, very difficult situation as a landlocked country,” he concluded.
Featured photo via Facebook/Péter Szijjártó
