Gazprom: 60% rise in gas prices expected in Hungary this winter

Gas prices could rise by up to 60% during the winter heating season, according to the latest announcement by Gazprom. This could make the energy crisis even more critical in countries that use Russian gas – including Hungary as well.

During the summer months, Gazprom’s European gas exports have fallen by 59%. From mid-June until the end of July, Gazprom cut back gas supplies to Germany on Nord Stream 1 by around 60%, due to turbine issue. Soon after, this has been reduced even further, as a result of which currently it sends only 20% of capacity to Germany on this very important route.

60% price increase expected

As a result of all this, gas prices on European exchanges have started to skyrocket again from mid-June, from the range of around EUR 80-90/MWh. With the rise of the last few days, we are now in the range above EUR 220, although it was below EUR 50 a year ago – reported by Portfolio.

According to Gazprom’s statement published on Tuesday, the price of natural gas has reached USD 2,500 per 1,000 cubic metres and could exceed USD 4,000 this winter. With this, Gazprom predicts an additional gas price increase of at least 60% by winter. This would lead to a very rough gas market situation in the winter. Additionally, it might also overwrite the new Hungarian system on overhead costs, meaning that the government may not be able to offer the preferential price even to those with below-average consumption.

What will happen to overheads cuts in Hungary?

Gazprom’s signal could have very serious negative consequences for the recently announced rules on the Hungarian gas market. The winter rise in gas prices on the stock exchange and the increase in the Hungarian state’s gas procurement costs would represent a huge additional burden for the state. This is due to the fact that it sells gas to the population for HUF 102 (~EUR 0,25) per cubic meter as part of a reduction in the overheads. If someone exceeds the limit, the price of a cubic metre of natural gas is HUF 732 (~EUR 1,80). This will rise further in October when it will rise to HUF 752 (~EUR 1,85). Meanwhile, Russians outlined at the beginning of this week that gas prices could come in at around HUF 1600-1700 (~EUR 3,94-4,18) in winter.

The market price for next year will be set around Christmas – reported by Független Hírügynökség. This could be significantly higher than the current price if the 60% increase predicted by Gazprom will come true. Since natural gas is also used in thermal power plants, the price of electricity may also rise. This can cause further difficulties in the whole system of overheads cuts. In the worst-case scenario, Hungarian households will need to face an extremely hard situation. People will have to spend a large part of their income on overheads at a time when general inflation is out of control, and everything is becoming more expensive.

Read alsoHungarian high school asks parents for money to help with utility bills

Source: portfolio.hu, fuhu.hu