Could Hungary be cut off from Russian gas supplies?

Current court cases against Gazprom in the EU could result in several countries, including Hungary, being cut off from Russian gas.

A significant government decree was published in Thursday night’s Hungarian Gazette (Magyar Közlöny), aiming to prevent EU gas market enforcement cases against Gazprom from affecting the operation of the Hungarian state gas distributor, MVM, Portfolio reports.

Ongoing court cases could lead to the cessation of gas deliveries from the Russian company to the Hungarian state gas provider, as Gazprom would not have access to the payments initiated by MVM. Arbitration courts have previously ruled against Gazprom in various European cases due to halted gas deliveries in 2022 and in a larger claim.

Russian gas supply is not guaranteed

Photo: depositphotos.com

Such rulings can become enforcement cases approved by regular courts, meaning that funds could be seized from compliant entities if Gazprom cannot compensate them due to the European Union’s enforcement system. Affected countries could include Slovakia, Austria, and Hungary.

The Hungarian government aims to prevent this potential disruption with the decree issued on Thursday, ensuring that EU-appointed executors cannot seize payments made by MVM to Gazprom. The government stated that the decree is intended to guarantee Hungary’s uninterrupted gas supply and maintain economic and social order.

The statement specifies that “the counter value of natural gas to be paid to the contractual partner cannot be seized or enforced to secure or satisfy the claims of a third party due to its conflict with Hungarian public order.” The decree follows several European companies winning cases against Gazprom, resulting in claims against the Russian company. If these claims were enforced, payments initiated by companies in contract with Gazprom could be seized, potentially cutting off MVM from the Russian gas supply. This would jeopardise the long-term gas transport contract signed in 2021 for 15 years.

Photo: depositphotos.com

The total compensation fees at the EU level could swell to tens of billions of euros, as EU arbitration courts may award substantial damages to plaintiffs in over ten ongoing cases. This could present serious challenges for regional companies still purchasing Russian gas, as executors could seize commissions on their Russian gas purchases for the next several years.

The region remains dependent on Russian gas, at least until 2027, when the completion of Croatian, Italian, and Slovakian infrastructure developments is expected, potentially replacing the missing gas supply.

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