End of Putin-Orbán friendship? Russian gas very expensive for Hungary
The Hungarian government decided during the summer that it would create a special natural gas reserve to prepare for the coming energy crisis. Therefore, it took out a brutal high euro loan and announced that it would buy Russian gas using it. However, a government decree published yesterday showed the purchase was much more expensive than previously calculated. What happened with the Putin-Orbán, Lavrov-Szijjártó friendship and the promise that Hungary would be able to buy cheap Russian gas?
Extra gas for a lot of money
A short government decree was published in the Hungarian Gazette last evening. Based on that, mfor.hu wrote that Hungary’s latest, large-amount gas purchase in July-August was much more expensive than the stock exchange price.
As we reported before, the government decided to take out a euro loan to create a special gas reserve, up to a maximum of EUR 1,850 million. In July, Foreign Minister Péter Szijjártó met Russian Foreign Minister Sergey Lavrov to ask Gazprom to buy an additional 700 million cubic metres of gas. The discussion was successful and the Russians started to transfer the amount. Of course, nobody released information about the price the two ministers agreed on.
Based on the new decree, the extra amount of gas will be owned and stored by the Hungarian Hydrocarbon Stockpiling Association (MSZKSZ) at least until 1 April 2023, which marks the end of the heating season in Hungary. László Palkovics, the minister for innovation and technology, defined the maximum amount of storable gas as 7,811,000 MWh. That transfers to 740,379,147 million cubic metres, stored separately from other security reserves.
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More expensive than the stock exchange price
As mentioned above, the original sum separated for the transaction was EUR 1.85 billion covered by the loan. However, that amount was raised to EUR 2.012 billion in the recently published government decree. That is probably because the previous amount was too low since the Russian gas became more expensive than the government calculated.
If we do the math, we can see that the government could buy 1 MWh of gas for EUR 257.50. However, the gas price on the Dutch stock exchange was below EUR 100 in June and between EUR 100 and 200 in July. Furthermore, Péter Szijjártó, Hungary’s foreign minister, announced the purchase on 21 July.
Mfor.hu writes that, of course, nobody could check out the contract. Thus, they can only guess. They believe the Russian gas the Hungarian government bought was much more expensive than the stock price.
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Source: mfor.hu
L O L .. Is Orban copying also Putin’s incompetence? That will be a couple of decades in prison. Maybe even in this decade 🙂
It would seem, from the lack of comments, that the high price of gas is of no interest to the Hungarian public. I found the article especially disturbing. Only two kinds of people pay a higher than market price for a widely-traded world commodity which has a published price: the stupid and the corrupt. I wonder, which of these labels would Mr. Szijjártó find most apt? I, for one, do not believe that he is stupid.
As I have commented on a previous article, what is our government doing speculating in commodities, buying and selling crude oil and natural gas? Do they also trade pork bellies, live hogs, feeder cattle, sugar, wheat, corn, copper and other commodities? If this article is any indication, they are not very skilled traders…
BTW, “stock market” means “részvénypiac” and “stock price” means “részvény ár”, “Commodities market” (árúpiac) and “market price” (piaci ár) would translate more accurately.
Question: why would you negotiate to pay OVER the market price for a commodity?
https://www.reuters.com/business/energy/hungary-will-not-agree-eu-gas-price-cap-will-need-exemption-2022-10-20/
“Hungary will not agree to an EU price cap on imported gas because it would end Russian deliveries, a senior aide to Prime Minister Viktor Orban said, adding that if the EU decides on a cap it would have to exempt Hungary, as it did for oil.”
Our Politicians appear to WANT to pay more. Not unlike the ROSATOM deal (our most expensive project – there was a Euro alternative, which was turned down) and then there is the $2.1 billion, Hungarian tax-payer funded China Belt and Road Budapest and Belgrade rail project (contracts are secret here, too – but don’t worry – Lorinc Meszaros’ Opus Global will be involved to ensure success). And does anyone remember the mess around the M3? https://hungarianfreepress.com/2016/05/17/russias-metrovagonmas-and-the-budapest-metro-refurbishment-a-curious-arrangement/ . Let’s opt for Russian Metrovagonmash refurb – not the cheapest and over time more expensive than new Alstom cars!
No wonder the EU wants more transparency and accountability – even though our citizens seem to not care
@Ballantine
Yes, corrupt. We also paid over the odds for the Sinopharm vaccine, which as we know proved to have little to no effect. That too was overseen by Szijjarto, as he was the one who went to China to negotiate…..
Love the pseudo intellectual, know- it- all- comments, high-minded hubris…. Think. Your butts aren’t going to be freezing,as many of your EU colleagues’ surely will.Try. Loose the negative vibe! 😉