Russian gas supplies to Austria disrupted: Will this threaten Hungary’s gas supply?

As Russian gas supplies to Austria face disruptions over pricing disputes, concerns mount for Hungary’s gas supply, which still heavily relies on Russian imports. Despite a significant decline in Russia’s market share since the Ukraine conflict, Hungary remains one of the countries maintaining substantial purchases. This situation underscores the challenges in the European gas market, where geopolitical tensions and rising prices are pushing nations to seek alternative energy sources. What will happen to Hungary’s gas supply?

Pricing disputes

As Reuters reports, Russian gas supplies to Austria were disrupted for a second consecutive day on Sunday due to pricing disputes, prompting other European buyers to acquire the unsold volumes. This incident underscores the ongoing challenges within the European gas market and the collective efforts to diminish reliance on Russian energy sources. Historically, prior to the war in Ukraine, Russia was the predominant gas supplier to Europe; however, it has since lost a significant portion of its clientele across the continent. Despite these shifts, countries such as Slovakia, Hungary, and the Czech Republic continue to import substantial amounts of Russian gas, while Italy and Serbia maintain smaller volumes.

The region’s gas supply

As Pénzcentrum writes, Gazprom has halted gas supplies to OMV, the Austrian energy company, following OMV’s threat to seize gas as compensation in a contractual arbitration dispute. Consequently, deliveries to Austria were also suspended on Sunday, although total daily gas deliveries to Europe via Ukraine remained stable at 42.4 million cubic metres. The Slovak state-owned company SPP confirmed its ongoing imports of Russian gas and noted an increase in demand from other European buyers, indicating that interest in Russian gas persists despite the geopolitical tensions.

The situation surrounding Hungary’s gas supply is particularly noteworthy, as Russian gas remains a more cost-effective option compared to alternatives. Austrian officials have stated they possess sufficient gas reserves to manage the shortfall and can source additional supplies from Germany and Italy if needed. As colder temperatures drive up heating demands, European countries are withdrawing from gas storage facilities earlier than in previous years, intensifying the urgency for reliable energy sources.

What will happen to Hungary’s gas supply?

Concerns regarding Hungary‘s gas supply are intensifying as supply and weather factors threaten gas stocks at the end of winter. Aldo Spanjer, Chief Commodity Strategist at BNP Paribas, noted that significant volumes of liquefied natural gas (LNG) may need to be procured during the summer to meet the European Union’s storage targets. The European benchmark price for gas at the Dutch TTF hub recently reached EUR 45.72 per megawatt-hour, the highest in nearly a year, signalling market tension and worries about future supplies.

As Russia’s market share declines due to the ongoing conflict in Ukraine, Hungary remains reliant on Russian gas, particularly if Ukraine ceases its transit route by year-end. In such a scenario, Hungary’s gas supply will predominantly depend on imports from Slovakia and a new pipeline running through Turkey. This shift is crucial as Gazprom’s remaining supplies to Europe are expected to diminish, necessitating that Hungary adapt its energy strategy to secure reliable sources amidst rising prices and increased competition for LNG across Europe.

Source: depositphotos.com

Read also:

• Breaking: Hungary has the most expensive electricity in Europe as of 11 November
• Hungary surpasses gas storage target, reaches 90% capacity ahead of EU deadline

Featured image: depositphotos.com