Cheap Russian gas is a myth: the gas Hungary is getting is even more expensive than the stock market price
The Russian natural gas Hungary buys is even more expensive than the stock market price. In February, the average price was almost HUF 400 (EUR 1.08) per cubic metre.
As G7 and Forbes reported, contrary to the government’s messaging about cheap Russian gas, Hungary actually receives natural gas at a price higher than the stock market price. This price of HUF 400 is roughly six times the price that the public service provider MVM receives from the citizens for the same amount of gas. In addition, imports have also increased, probably because domestic storage was very empty at the end of the winter, according to G7.
Why so expensive?
As we can read in Forbes’ article, contrary to a common misconception, Hungary does not receive natural gas at a fixed price, but it is linked to its listing on the stock exchange. However, the amount to be paid does not follow the market price immediately but with a lag of one or two months.
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As a result, in February, Russian gas arrived in our country at a much higher price than the average market price. This can be explained by the fact that stock market prices have been very hectic in recent months and were much lower in February than in January or December (a historic high).
Russian imports, on the other hand, reached a historic peak in just the second month due to the time lag.
Price of gas
As Forbes reported, according to Eurostat data, Hungary bought a cubic metre of Russian gas for HUF 394 (EUR 1.06). The estimated price of gas is about HUF 66 (EUR 0.18) after the overhead cuts, but the bill paid by the population includes not only this but also the cost of delivering the gas, the network fee, and VAT, so
a residential consumer pays about HUF 110 (EUR 0.3) per cubic metre.
According to G7, under the Russian-Hungarian agreement, MVM purchases 4.5 billion cubic metres of gas per year (375 million cubic metres per month) from Gazprom. Since the price rise, Russian imports have been much lower: between November and January, the monthly average was roughly 220 million cubic metres, and the 430 million cubic metres in February did not exceed the contracted volume by much.
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Source: G7, Forbes
Gas is not bought on the ‘stock market’, stocks and shares are. Gas is bought on the wholesale market at spot price.
you would prefer to have no gas, lets try again in winter
Either The Kremlin or Forbes appears to be wrong. Or, potentially, Mr. Orban engaged in some really poor negotiating?
http://www.en.kremlin.ru/catalog/countries/HU/events/67690 :
“Russia supplies Hungary with natural gas under long-term contracts that were extended last year to 2036. Thus, Hungarian consumers can buy gas at prices below the market spot prices that have substantially increased in Europe recently.
It is also important that Russian gas is distributed further into Western Europe through Hungarian territory. Hungary has invariably confirmed its reputation as a reliable partner in the transit of Russian fuels. Naturally, we are willing to build up mutually advantageous cooperation in this area, also taking into account the role of natural gas as the cleanest and most eco-friendly fuel as we transition to a green economy.”