Hungarian FM: The gas cap proposal is harmful and dangerous

Though European Union member states have yet to reach a decision on the introduction of a price cap on gas imports, Hungary has succeeded in having two “particularly dangerous” provisions removed from the proposal put forward by the Czech presidency, the minister of foreign affairs and trade said in Brussels on Tuesday.

The Hungarian government maintains its position that introducing a price cap on gas “is a bad idea and it is useless”, Péter Szijjártó told a press conference, after a meeting of EU energy ministers. He said that most EU member states, with the exception of Hungary, would accept the introduction of a price cap, but stated different opinions concerning the details of the planned measure.

“We think that the price cap is a bad thing, it is unnecessary and it is a dangerous idea raised as a solution to tackle the energy crisis,” Szijjártó said. The measure, if introduced, would be “a rude artificial intervention in the gas market, something the EU has never done before”, he said, calling such a step “extremely dangerous” in an important, sensitive and vital market without an impact study at hand.

Szijjártó said the price cap had been designed as a measure to respond to record high gas prices in the summer, noting however that prices had gone down and stabilised without any intervention in the past couple of months. He warned that the scheme could also allow wide-scale speculation, putting the EU at a disadvantage.

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What’s even more important is that the proposal would seriously endanger energy security, Szijjártó said, arguing that it was physically impossible to completely replace Russian natural gas in the medium term, and the price caps would further reduce the volume of gas the bloc would have access to.

“The whole proposal is harmful, dangerous and threatens the security of European energy supply,” Szijjártó said, adding that it gave room to speculation and could lead to price increases. He said the plan went against the European Council’s guidelines according to which the price cap could not apply to long-term supply agreements and had to take into consideration the specific energy situation of member states.

Szijjártó said the price cap interfered with pricing on the Dutch TTF gas hub and would impact long-term gas supply agreements. At the same time, the minister welcomed that two provisions had been removed from the proposal. One of them concerned the regulation of prices when it came to transactions outside the gas exchange, Szijjártó said, adding that this would have restricted member states’ freedom to procure gas as it would have made bilateral agreements without the application of the price cap impossible.

The other proposal would have required member states to consult the European Commission prior to amending any long-term gas supply deals, Szijjártó said, adding that this provision “would have totally destroyed the security of Hungarian gas deliveries”. As no agreement was reached at Tuesday’s meeting, the price cap plan will be back on the agenda next week, the minister said.

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Meanwhile, Szijjártó said he had spoken to Russian Deputy Prime Minister Alexander Novak by phone on Monday, who he said had “expressed openness” to amending the long-term gas delivery agreement between the two countries if it became necessary because of the price cap. “What matters most to us is the security of Hungary’s natural gas supply; this is what we have to guarantee, this is the top priority,” the minister said.

Asked about Monday’s agreements among EU finance ministers concerning Hungary, Szijjártó said Hungary had fulfilled all of the European Commission’s demands and expectations for unblocking funding. He welcomed that the EU had “finally listened to and considered” Hungary’s stance when it came to providing aid to Ukraine and the aid package being provided to the country will now be covered by the EU budget.

Concerning the global minimum tax, Szijjártó also welcomed that it had been made clear that the local business tax can be included in the calculation of the minimum tax, allowing Hungary to introduce it without having to raise taxes.

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Source: MTI