natural gas

More people get cheap gas in Hungary

Winter Budapest gas

The government is enabling universities run by asset management foundations and companies owned by ethnic minority authorities to opt for fixed gas prices, rather than paying indexed prices, the energy ministry said late on Wednesday.

The fixed prices will be in place until the end of September, the ministry said.

So far, the option has been open only to state, municipality and church institutions.

Bodies originally targeted by the scheme will have to decide by Friday. The deadline for those newly included is Feb 2.

Although international gas prices are much lower now than they were last year, the market is still plagued by uncertainty, the statement said. The scheme aims to help institutions in making their utility costs more calculable, it said.

Central heating pump Hungary gas
Read alsoEuropean gas price cap ‘dangerous, harmful’

Hungary bought most Russian gas when prices peaked

Hungary paid almost four times more for Russian gas imports in 2022 as in 2021. According to Eurostat data, the bill in 2022 was EUR 7.353 billion in the first 11 months. In 2021, the government paid only the quarter of that, EUR 2.189 billion. The question is how gas prices will change in May.

Some experts say that countries that have fixed gas prices for both households and enterprises instead of cutting prices are better off.

Between January and May, imports ranged between 245 million and 424 million m³. The peak was in June with 751 million m³, followed by imports of 522-576 million m³ between August and November.

In the following months, in September, October and November, the monthly bill exceeded one billion euros. The government paid the most in October when the amount was EUR 1.3 billion.

“The government does not deliberately pour money into financing Russia’s war in Ukraine,”

– energy experts interviewed by 24.hu told the news portal.

PM Viktor Orbán does not want to change household tariffs

Many businesses also bought gas at the August peak, as analysts predicted further price rises. But across Europe, demand spiked during this period. The panic filling of gas storages has given rise to concerns that there will not be enough gas in Europe.

Gas industry experts define the market price as the price on the Dutch stock exchange, the benchmark in Europe. This is also the price to which the Russian Hungarian gas contract prices are linked. If prices fall, then with some delay Russian imports should also be cheaper.

Whatever the price on the stock exchange, Prime Minister Viktor Orbán does not want to change the household tariffs. At his end-of-year press conference, he made it clear that he would not change either the reduced tariff of HUF 102 (EUR 0.26) or the HUF 767 (EUR 1.93) tariff.

Either paying these gas prices or shutting down businesses

In 2021, the price per m3 was HUF 74 (EUR 0.19), in 2022 it was HUF 205.6 (EUR 0.53) and in October 2022 it was over HUF 1,300 (EUR 3.33). As we have already written about, the spas in the capital have it worst, with an eighteen-fold increase in gas prices.

Many entrepreneurs cannot afford the thirteen-fold increase in gas prices. The unilateral contract modification does not result in the cancellation of the contract with MVM Next. The company has offered to allow contractors to cancel their contracts if they are dissatisfied with the price. Since suppliers charge at roughly the same level, entrepreneurs either pay or shut down their businesses.

According to Eurostat data, the average purchase price in the first 11 of 2022 was HUF 572 (EUR 1.46) per m3. This amount is very far from both the reduced household prices and the multipled market prices offered to entrepreneurs.

Changes in May: from bad to worse?

Gas is not sold at a price of HUF 102 (EUR 0.26) per m3 charged to households. Therefore, each m3 of household gas has a deficit of HUF 470 (EUR 1.20).

The KSH estimates household gas consumption at 3.9 billion m³. If all of this were used at a reduced price, the reduction would generate a loss of HUF 1,833 billion (EUR 4,687,384,038). If the gas consumption of enterprises is similarly calculated at the market price of HUF 1,300 (EUR 3.33), the gas supplier would gain HUF 728 (EUR 1.86) per m³ compared to last year’s average purchase price.

The question is how the next storage period will develop, i.e. how expensive it will be to buy gas from May. Another question is how households and enterprises will feel about market changes.

“At the moment, the government’s energy policy does not reflect the market price and thus artificially drives up inflation,”

– said an investor of an energy company. The loss of the rationing is being cross-financed through energy tariffs charged to businesses. Meanwhile, the money is being collected back from the public, paying for the extra profit tax on expensive products that the government has created to finance the rent control fund.

European gas price cap ‘dangerous, harmful’

Central heating pump Hungary gas

The planned European gas price cap would have a negative effect on gas markets, boost speculative activity, and it could undermine financial stability, ruling Fidesz MEP András Gyürk said on Wednesday.

Gyürk said in a statement that Fidesz had long maintained the position outlined in an impact study by the European Securities and Markets Authority (ESMA), namely that the gas price cap will prove to be a harmful and dangerous measure.

The cap was agreed on in December and is scheduled to come into force on Feb. 15.

According to the study, the gas price cap could result traders quitting European markets en-bloc, he said. “Additionally, the number of transactions carried out outside the gas market could increase, further reducing the transparency of gas markets and making way for speculation,” he added.

The study showed that the gas price cap has no influence on the price dynamics of natural gas, and a drop in prices could mainly result from favourable weather, gas storage capacities filled to a high level, and people’s willingness to make sacrifices, he said.

“It has become clear that various ideas from Brussels have proven unsuited to reduce energy prices. It is high time for Brussels to draw the salient conclusions and not to introduce gas price caps,” he added.

Read alsoHere is the Hungarian government’s big announcement concerning utility prices

Azeri gas means the energy security of Hungary

The increased natural gas production in Azerbaijan can play an important role in the energy security of Hungary and central Europe, Péter Szijjártó, the minister of foreign affairs and trade, said on Tuesday, adding that this required regional infrastructure developments supported by the European Union.

The severe energy crisis has made Azerbaijan more important for Europe, Szijjártó told a press conference held jointly with Azerbaijan’s economy minister, according to a foreign ministry statement. He argued that increased natural gas production in the South Caucasus country was the best option for Europe to diversify its gas supplies in the short and medium term.

“It has become clear to everyone that it’s no longer enough to just talk about so-called diversification, but it is something we are forced to do,” Szijjártó said. “If Europe can’t acquire new energy sources, if it can’t build new energy supply routes, then energy supply won’t be secure.”

It is in Hungary’s interest to incorporate Azeri energy sources into its energy mix as soon as possible, the minister said, adding that this required large-scale infrastructure developments in south-eastern and central Europe, too. New interconnectors have to be built and delivery capacities have to be increased, Szijjártó said. This requires EU support and resources, he added.

Szijjártó said Hungary has turned to the European Commission together with Bulgaria, Romania and Slovakia, asking Brussels to treat the matter as a priority and provide support for the developments needed to guarantee the region’s energy security.

He welcomed Azerbaijan’s aim to double gas supplies to Europe by 2027. He also underscored the importance of creating the contractual and physical conditions needed to deliver the gas from the southern corridor to the central part of Europe.

Szijjártó said this situation would make it clear whether the EU had only been paying lip service to diversification and the importance of central Europe’s energy security, or if it was actually prepared to take steps to guarantee it.

Both sides are politically committed to the gas deliveries, Szijjártó said, adding that the Hungarian government was hopeful that Azeri gas could start contributing to Hungary’s energy security as soon as possible. Talks between Hungarian and Azeri energy companies are already under way, he added.

Szijjártó said the foundations for a gas supply agreement were sound, noting that Hungary and Azerbaijan already had a strategic partnership. This, he added, will be raised to the next level during a visit by Azeri President Ilham Aliyev this month, he added.

He said that whereas the Hungarian opposition had criticised the government’s initial talks on developing cooperation with Azerbaijan over a decade ago, leading European politicians were now all wanted “to have their photo taken with the Azeri president”.

“The world has changed a lot over the past decade, but we still hold the same position as in the past,” Szijjártó said.

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Hungarian and European gas storage levels are high

burner natural gas

Gas storage levels are high across Europe, including in Hungary, thanks to a mild winter, Energy Minister Csaba Lantos said on Sunday.

Though Europe continues to receive gas from Russia, a protracted war cannot be ruled out, the minister told public broadcaster Kossuth Radio, adding that a rise in gas prices was also a possibility.

Commenting on European Commission President Ursula von der Leyen’s remark that the European Union could face a gap of 30 billion cubic metres of gas, Lantos said that around 25 large liquefied natural gas (LNG) terminals were being built across the bloc which could give the EU access to LNG.

Once those terminals are built, Europe will be able to say that it is truly independent from Russian gas, Lantos said. He added that though the LNG terminals were under construction, the winter of 2023-2024 would be a “tough” one for the continent.

Hungary, however, is in a slightly different position given the relatively high number of gas storage facilities in the country, Lantos said. As long as the Serbian pipeline is functioning, those storage facilities will be filled, he added.

The minister noted that the government will continue to provide cheap gas for Hungarians up to average consumption levels. The gas price above the threshold for average consumption is also below the market price, he said, noting that the government has decided not to raise that price in the current heating period ending on 30 April.

Lantos also talked about the need to strengthen Hungary’s energy sovereignty. “We are highly dependent on foreign suppliers when it comes to energy,” he said. “This dependence has to be reduced.”

Though Hungary’s natural resources are not limitless, “we are not completely helpless,” Lantos said.

He noted that in 2021 the country’s annual natural gas consumption came to around 10 billion cubic metres, 1.5 billion of which can be produced domestically. The aim, he said, was to increase domestic natural gas extraction to 2 billion cubic metres a year.

Also, Hungary will continue to make use of weather-dependent renewable energy sources like solar and wind energy, Lantos said. Hungary’s solar plants were originally planned to reach a capacity of 6,000 megawatts by 2030, but that goal is now ahead of schedule, he said.

Meanwhile, Lantos said the upgrade of the country’s nuclear plant in Paks could be completed by 2032.

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Hungarian energy minister: Government not to raise ‘over-cap’ gas, electricity prices

refuel-gas

The government is not planning to raise the retail prices of gas and electricity for amounts over the average consumption, Energy Minister Csaba Lantos announced on Thursday.

Household utility prices, up to average consumption, have been capped under a government programme in an effort to “protect Hungarian families from sanctions-related surcharges”, the ministry quoted Lantos as saying.

According to the statement, Hungarian households will “continue to buy natural gas at the cheapest price and electricity the second cheapest in Europe”. Keeping the “over-cap” prices level, the government will ensure that “the overall burden on some 6 million consumers will not increase,” the statement said.

“The government will continue to do everything to maintain its programme, launched 10 years ago, to reduce the price of utilities,” the statement said. It noted that systems fees, to be paid on top of consumption, would not be raised in January, either.

The statement also added that Hungary’s recently established energy ministry was to guarantee affordable prices and stable services to consumers.

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Talks start on Oman crude, gas imports

Szijjártó Péter_Oman

Experts and companies have started talks on importing natural gas and crude oil from Oman to Hungary, the Hungarian minister of foreign affairs and trade said on Thursday, after meeting his Omani counterpart, Sayyid Badr Albusaidi.

At a joint press conference after the meeting, Péter Szijjártó warned of the dangers of slapping price caps on crude oil and natural gas in the European Union.

Such a measure would harm supply security, investments into new energy resources would be delayed and prices would grow, Szijjártó said. “Instead, we would need to increase the production of fuels worldwide to curb prices and to ensure supply security,” he said.

Hungarian oil and gas company Mol and Oman’s state oil company have built a strategic partnership over the past years, and they are in talks on launching joint trainings, on the manufacturing of sustainable fuels and on implementing Hungarian technology, he said.

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Oman, which is currently producing over one million barrels of crude daily, is working to become the world’s primary green hidrogen producer, an opportunity for Hungarian companies, Szijjártó said.

An agreement on investment protection between Oman and Hungary is now in force, and a mixed economic committee will also meet soon, while Oman is also planning to open an embassy in Hungary, he said.

The two ministers signed a cooperation agreement on diplomatic training and water management, and Hungary is offering 50 grants for Omani students wishing to study in the country, Szijjártó said.

Szijjártó called on the EU to scrap visa requirements for Omani citizens.

In response to a question, Szijjártó warned of “politicising” the issue of energy supplies. Hungary’s government sees diversification as a process of “involving as many resources as we can, rather than excluding others,” he said.

“The excellent experts in Brussels and Budapest who are trying to spin energy supply as a political issue are either living in a dream world or have an interest in shaking Hungary’s energy security,” he said.

On another topic, Szijjártó rejected the notion that Hungary was pursuing “veto politics”. “We support the [EU] decisions in line with Hungary’s interests and reject those opposing them,” he said.

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Read alsoHungary could receive Qatari natural gas in 3 years

Hungary could receive Qatari natural gas in 3 years

qatar szijjártó

In the desperate quest for alternatives to replace Russian natural gas supplies, Hungary found itself negotiating with Qatar. Recently, an agreement has been born through which Hungary will be able to import natural gas from Qatar. If everything goes according to plan, the Croatian ports will be upgraded and in just three years, Hungary could receive LNG.

Péter Szijjártó announced that the agreement had been made on Wednesday in Doha — reports 24.hu. MVM will buy natural gas from QatarEnergy as soon as possible. The Minister of Foreign Affairs emphasised that Europe was battling a severe energy crisis. The continent needs to import as much natural gas from as many places as it can to secure a stable supply of the European markets.

Why Qatar?

Qatar is a leading exporter of natural gas. It has the third-largest reserve in the world. In terms of LNG exports, the country is in second place on the leaderboard. It is also beneficial that the Middle-Eastern country realised the situation and it started investing heavily in its infrastructure. Soon, Qatar will be able to both extract and transport even more natural gas.

The minister stressed the European Union’s responsibility to help with the development of new infrastructure. Southern and southeastern ports need a larger capacity to accommodate the larger influx of Qatari natural gas. A lot depends on Croatia now, as Hungary is already the number one user of their ports. If they keep their promises, then Hungary could start importing Qatari natural gas.

Qatar is currently a major player on the world stage and Hungary nurtures a good relationship with the country. During the announcement, Szijjártó said that there was no political obstacle hindering any stage of the upcoming development.

The growing influence of Qatar

Qatar is becoming a major investor in Hungary. Last year, a new record was broken and the bilateral trade reached 60 million dollars. There is a direct connection between Doha and Budapest which is available almost every day of the week. Therefore, this connection helps a lot to revitalise the struggling tourism sector. Szijjártó also encourages other European countries to build stronger ties with the countries of the Persian Gulf. He emphasised that the basis of this relation should be mutual respect.

The minister added, that the two countries were on the same page regarding the war in Ukraine. They both condemn the war and want peace, promptly.

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Hungarian FM: The gas cap proposal is harmful and dangerous

Szijjártó Péter

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.

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.

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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African natural gas could end the dependence on Russia for Hungary

Since the start of the war in Ukraine, Europeans have been frantically searching for alternatives to Russian natural gas. Algeria has excellent opportunities to step up as a natural gas exporter as, without Russian exports, there is a great hiatus in the market. Algeria already exports natural gas to southern Europe and other countries prioritise Algerian imports too.

Robert Golob, the Slovenian prime minister, announced that Slovenia planned to build a pipeline to connect to the Algerian grid. This way Slovenia could reduce its dependence on Russia, and it would be able to transport Algerian natural gas to Hungary too. Slovenia has already signed an agreement on the already existing pipelines that run through Italy and could import Algerian natural gas. This agreement means 300 million cubic metres of natural gas a year, which can reduce Russian imports by a third for the small country.

Algerian natural gas

According to Portfolio.hu, Golob said that they wanted to help their neighbours, Austria and Hungary to reduce their dependence on Russian imports. He added, that alone they would not be able to do this as they needed a connection to other grids. But, Hungary could import natural gas from all of its neighbours. Still, 85 percent of natural gas is imported from Russia through TurkStream from the south. However, Golob had a discussion with Viktor Orbán, in which they agreed that the goal was to build a pipeline that could be operational in 2-3 years.

The diversification of Hungarian imports is the main interest for Orbán. He pointed out three possible new sources for imports. The first option is the Algerian import through a new Slovenian pipeline. The second option is Romania, mainly the natural gas from the newly discovered underwater gas fields. Finally, the third option is to expand the Croatian connection, so that more LNG could be imported through ports. Orbán added, that Hungary was interested in all three options. The prime minister also said, that despite the already existing alternative pipelines, their capacity was not enough for total diversification.

The Slovenian route is important for one more reason. Golob added, that the new route would be able to transport hydrogen too. Hydrogen is a popular alternative to natural gas and it is much cleaner. The new pipeline would be a much-needed help for Hungary’s scheduled green transition. Finally, the North African infrastructure would be beneficial for multiple reasons. First, it would reduce the dependency on Russian imports. In the long term, it would allow reducing dependency on fossil fuels too.

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Hungary could be given exemption from EU’s oil price cap

It appears that Hungary will be given an exemption from the European Union’s planned price cap on Russian oil imports, the minister of foreign affairs and trade said in Brussels on Thursday, adding at the same time that “several dangerous proposals are still on the table”.

Under the current plan, the oil price cap would not apply either to pipeline deliveries or deliveries by sea if they became necessary due to unviable pipeline delivery, the foreign ministry cited Péter Szijjártó as saying after a meeting of EU energy affairs ministers. This latter exemption is important given the disruptions to crude deliveries via Ukraine, he said.

If these exemptions were not applied the volume of Russian oil deliveries would drop, causing prices to rise, Szijjártó said.

As regards the European Commission’s other proposals, the minister criticised the solidarity mechanism aimed at avoiding sharp disparities of gas supply across the bloc, calling it “yet more power aspirations on the part of Brussels aimed at eroding the energy-policy sovereignty of member states”.

He said member states had failed to reach agreement on the proposal at the meeting after “a significant number of them” resisted the idea.

Szijjártó said Hungary had helped to ensure that the scheme for joint EU gas purchases would be voluntary, thereby preventing the country from “getting stuck on unfavourable platforms”.

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He noted that under the scheme member states would have to notify the EC six weeks in advance of their intention to discuss gas deliveries, “at a time when quick decisions are needed”.

“This is obviously nonsense — madness; we don’t even understand how it could have made it into the proposal,” Szijjártó said.

He also criticised the part of the proposal that would require member states that have enough gas in storage to turn some of it over the countries facing trouble in times of crisis.

“Imagine a situation in which someone from Brussels can order us to turn the gas purchased with the money of the Hungarian people for the Hungarian people and for operating the Hungarian economy … over to another country,” Szijjártó said.

Given that gas prices are higher when storages are being filled up than when the gas is being used, such a proposal would open the door to speculation, he said, arguing that no one would have an interest in buying gas when the storages have to be filled up, which would constitute a risk to energy security.

Szijjártó said member states had also begun talks on imposing price caps on gas imports, but had not reached a decision. The ministers will next meet on Dec. 13 to continue the talks, he added.

Szijjártó called the proposal “dangerous, pointless and inadequate”, saying there was a risk of gas deliveries being withheld from Europe or diverted somewhere else. “Moreover, it does not fall in line with the decision reached at the European Council’s last session,” he added.

Szijjártó said the closing statement issued at the last European Council session declared that the price caps on natural gas would not apply to long-term gas supply agreements. Yet under the latest plan this would not be the case, which the Hungarian government considers “unacceptable”, he said. Hungary will fight to achieve an exemption from the gas price cap as well, Szijjártó added.

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Hungary’s gas reserves may not be enough for the coming winter

Winter Budapest gas

Hungary and natural gas are not very compatible it seems. Since the start of the energy crisis, the country has been struggling with its supplies. This week, Hungary had to start using its stored gas, instead of using imports. Even by now, the level of stored gas had fallen to about 87 percent, which is the second lowest level in the European Union.

As the cold weather approaches gas consumption increases. Hungary has the capacity to store about 6.4 billion cubic metres of gas and it still has 6 billion left according to Népszava.hu. The worst place goes to Latvia, where the storage facilities are only filled to 60 percent. The peak amount of gas was reached this week and it will only go down from here most likely. Although the percentage might seem high, it is the second lowest amount in the European Union. The European Union has the capacity to store hundreds of millions of cubic metres of natural gas and 96 percent of it is filled. Belgium reached the highest percentage with 100 percent.

How bad is the situation?

The government did not yet report anything about the latest data, so the calculations are based on international sources. The government usually emphasises the percentage of the stored amount compared to the annual usage. Using this metric, Hungary becomes the fourth best-performing country in the European Union. The only problem is that the country has only 54 percent of its annual usage stored currently, while Lativa, for example, stands at 125 percent.

The current situation is extremely interesting as Hungary went against the rest of the EU and kept buying gas from Russia. This was not a good deal, as the prices soared and in the end, Hungary had to pay more. In previous years, the government filled up the storage facilities to about 97 percent. By now only the TurkStream operates, through which it can buy natural gas from Russia. The taps were closed for all other countries or they shut those themselves.

The Hungarian Energy and Public Utility Regulatory Authority (MEKH) said that compared with the country’s annual consumption the storage units are 54 percent full which is 26 percent above the European Union average. Currently, this is enough to satisfy residential gas consumption. The European Union’s regulations state that Hungary must store 35 percent of its five-year average consumption by 1 November, which it has exceeded. Therefore, there is no imminent danger.

Only Viktor Orbán voted against the common help-out framework, as the country supposedly does not want to help others. However, looking at the data, it is Hungary who might get in trouble and might need the help of other member states.

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Gap in the market: Utility costs may change in Hungary

Natural gas burner

Hungary had to start using its stored natural gas, while suppliers struggled to find storage. Recently natural gas imports fell to their lowest since April and the level of natural gas in storage significantly decreased. This happened during an abundance of natural gas supplies in the European markets. This could have meant enormous profits for the country considering the amount of storage capacity left.

Since Monday natural gas transports halted from the direction of Austria due to scheduled maintenance. This means that a third of natural gas supplies were cut off. At the same time, Russian imports decreased significantly. The combined interruption means that only about half of the usual amount of supplies have arrived in Hungary, reports G7.hu. Due to the missing amount, it is no wonder that the storage facilities had to be used.

An abundance of natural gas

In the past month, natural gas supplies kept arriving in Europe, while most storages were already filled to the brim. Because of the unusually hot weather, consumption was not as high as expected so the demand for natural gas dropped. Therefore, the price of natural gas dropped to almost all-time lows. Because of the war, the supplies became uncertain. Usually, the spot and forward price of natural gas is almost equal, due to the recent abundant supplies the spot price dropped.

This gave an opportunity for those countries that could store more natural gas to stock up and then sell it later for increased prices. The difference between the price per cubic metre of natural gas spot price and the forward price was about 0.75 euros. Hungary could have stored roughly 45 million cubic metres a day. If it all would have been used, it could have meant about 3.2 million euros in profits according to G7.hu.

It is not so easy

The aforementioned deal seems easy enough, but there are factors that must be considered. It is likely that Hungary would not have been able to sell its natural gas immediately, which would have meant a difference in prices. Of course, this could have still generated huge amounts of revenues for the country. There were times when the difference between the two prices was 0.1 euro. Even then it was worth stocking up, but this time the difference is 0.5 euros. Considering the numbers, stocking up would have been a great idea for every market participant who uses large amounts of natural gas.

However, there is another problem. The storage capacity is often reserved years in advance. For this reason, only a few profited from the cheap natural gas, those who had reserved storage capacity that was unused. Fortunately, one of these could have been MVM, which could mean lowered utility costs. However, this information has not been verified yet.

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Serbia calls for Hungarian help

orbán vucic

Even though it is not a member of the EU, Serbia is still seriously affected by the EU sanctions against Russia. That is because it could indirectly find itself in a situation where its oil imports are blocked. Thus, the country’s leadership is trying to ease Serbia’s 100 percent dependence on oil and gas from Russian sources. In this, the energy cooperation that has started between Hungary and Serbia could play a major role.

The country is in a tight spot because it is vulnerable to the indirect impact of EU sanctions against Russia. Serbian President Aleksandar Vucic, in an interview with the Financial Times, described a number of initiatives to end Serbia’s dependence on Russian energy. Among these, energy cooperation with Hungary could play a prominent role, napi.hu writes.

“It’s crazy that we didn’t think about the regional interconnection of energy infrastructure before,” said the Serbian head of state, “we didn’t prepare for the war in Europe, which will change everything.” In recent years, Serbia has imported all its gas and half of its oil from Russia. Now, however, it is the case that, due to the entry into force of the EU oil import embargo, from December, oil from Russian sources cannot be shipped from Croatia to Serbia.

In addition, unless Brussels makes an exception to the restrictions on Russian ownership, NIS (the Serbian oil company) will not be allowed to do business with European companies. The end of the story may be that it will have to close shop after receiving its entire oil supply via Croatia through the Adriatic pipeline.

MOL might be able to help Serbia with this. According to three sources familiar with the situation, several groups considered buying a majority stake in Gazpromneft’s majority owner, Financial Times writes. These include the Serbian government and Hungarian energy company MOL. However, negotiations on a sale have stalled. MOL did not wish to comment on the issue.

Vucic says they should consider all options, including alternative sources of oil, but if the restriction on ownership comes into force, it will cause serious problems. If NIS is isolated in the market, they will intervene, but they are not there yet. Vucic held separate talks with Hungarian Prime Minister Viktor Orbán on the possibility of Hungarian-Serbian energy cooperation.

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Russian gas prices continue to rise for Hungary

Gas Hungary

Hungary has already had a rather unfavourable deal with Russia back in August when it purchased gas at a price 12 percent higher than the benchmark exchange price two months earlier. However, this fact contradicts an earlier statement issued by Minister of Economic Development Márton Nagy.

Ever-increasing gas prices

Contrary to the earlier statement of the Minister of Economic Development, Márton Nagy, the Russian gas price did not follow the stock market price of one month but two months earlier. Népszava found this out on the basis of the updated foreign trade database of the Central Statistical Office. The two arcs almost coincide with a delay of at least two months.

The small difference is not so minor. Since January, Vladimir Putin has been charging Hungary more and more for fuel, even by stock market standards.

In February, Márton Nagy said that Hungary purchased its fuel at a fifth of the world market price. However, in reality, we were charged 30 percent more than its stock market value. The Orbán government refuses to reveal the official price, but the KSH data gave an accurate estimate.

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Concerning contradiction

The Hungarian government has claimed that the Hungarian-Russian gas contract signed in October 2021 would provide the gas needed to maintain the cuts. After the elections, Prime Minister Viktor Orbán admitted that the price followed the stock market. At the time, Orbán said that it was not the price but the availability of fuel that was important.

The government officials declined to disclose the data supporting their allegations, citing the confidentiality of the contract. The two-month delay means Hungary will have to pay horrendously high gas bills between September and December, 24.hu reports.

By August, the average exchange price per thousand cubic metres was EUR 2,305, far exceeding all previous levels. Therefore, during the storage period in October, Hungary was transferring hundreds of millions of euros to Moscow.

According to Népszava, this is the reason for extra profit taxes, the August residential gas tax hike and the payment rescheduling agreement between the Hungarian-Russian state gas trader in early October.

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PM Viktor Orbán looked startled when asked how much utility bills he pays

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The Hungarian PM Orbán Viktor was caught off guard when asked during a parliamentary session about the exact amount he pays in utility bills for his houses in Budapest and Felcsút, as well as his estate in Hatvanpuszta.

Momentum MEP Dániel Bedő posed the above-mentioned question to the Hungarian Prime Minister in front of all the attendees of the session. Orbán bypassed the inquiry by answering that, according to the law, he could even live in a residence, but he did not use that option, rtl.hu reports.

The amount you pay in overheads is a private matter. For all we know, Orbán shares a home with his wife. The Hungarian prime minister added that Mrs Orbán would be probably more competent to answer Bedő’s question.

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Outrageous: Hungary is buying Russian gas for a five-fold price

Natural gas burner

It is no secret that Hungary is overly dependent on Russian natural gas supplies. This has multiple reasons, but the most important one was its favourably low price. How the turntables, in recent times Hungary pays more for natural gas than anybody else. The government promoted this move by saying that Hungary bought natural gas for a fifth of the European market prices.

According to G7.hu, Vladimir Putin’s statement about the cheap natural gas meant for Hungary was an exaggeration. There might have been a point in time when the prices were truly a fifth of the European market prices, but now the country is paying five times the price. The fixed, long-term price agreements with Russian partners are just a myth as the agreements are based on stock market prices. The Russian natural gas prices usually follow the prices of the Dutch stock market by a two-month delay. After the soaring energy prices, not even the government could further promote Russian natural gas as cheap.

Horror prices

The fifth of the European market prices, according to analysts was at best fourth of the prices. This was still a great deal but because of the delays, steep rises in prices could create huge gaps in the market. However, this is true in the opposite direction too as the Russian prices will eventually follow the stock market prices. Russian natural gas is incredibly cheap when there are steep rises, but when there are steep falls, like now, Russian natural gas becomes horribly expensive.

If the estimations are correct, then Hungary bought Russian natural gas for about HUF 900 (EUR 2.18) per cubic metre. However, European market prices were only at about HUF 120 (EUR 0.29) at that time. Therefore, Hungary successfully paid five times the price for the Russian natural gas supplies. At a non-public meeting between the Hungarian and Russian foreign ministers, a new agreement was made in the summer. During the meeting, Hungary agreed to buy 700 million cubic metres of gas with a 1.85 billion euro loan. If this was the actual purchase price, then the price of natural gas was above HUF 1,000 (EUR 2.43) per cubic metre.

As we can see this is a periodically beneficial agreement. It is plausible that in the next two months Russian natural gas will be cheaper once again. The main problem is that the government does not use this formula to the country’s advantage. When natural gas prices for Hungary were very cheap compared to the European market prices, the volume of imports was quite low. In such unpredictable times, it is hard to guess when the prices will be favourable.

The government could save a lot of money by simply playing with the source of the imports. As now the price of Russian natural gas is high, the only thing the government should do is buy natural gas from the European markets.

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Good news: gas consumer prices to fall in Hungary

Natural gas burner

The world gas price has not been as low as it is now for three months. Hungary will also feel the price drop, but we will have to wait a little longer. For the time being, we are using the gas Hungary bought earlier, at a higher price.

Despite what the Hungarian government calls “sanction inflation” and the collusion of energy companies, as rtl.hu writes, the price of natural gas has not been so low in a while. As a result, the direction of gas procurement in Hungary has started to shift quite spectacularly in the last week or two, G7 reports. The route through which Russian gas arrives is slowly decreasing, and more gas is coming in from the north and west. While gas volumes from Serbia have decreased, imports from Austria have increased, and after a four-month break, deliveries from Slovakia have resumed.

With prices falling, this is a perfectly logical market process, but it also shows that the government’s argument about physical dependence on Russia is simply not true. Monday was the seventh consecutive day in which more than 40 million cubic metres of natural gas entered the country. This was not only unprecedented since the outbreak of the war, but also before.

It has now become clear that the measures taken to replace Russian gas have proved to be a good idea across Europe, and other gas producers are absolutely willing to take over the supply from Russia. The question is where the price drop will stop, what to expect this winter, and whether our wallets will feel the impact.

According to energy expert Attila Holoda, consumer gas prices are not expected to fall as much as market prices, because the gas that reaches Hungarians comes from several sources, some of it from the expensive gas that we already bought. He said that the price reduction could be around 15-20 percent, and we will have to wait for that.

Recently, the Hungarian Foreign Minister, Péter Szijjártó, was the only one who negotiated with Moscow on gas supplies. He said that, despite many people calling him a “piece of shit”, this is the reason why gas supplies to Hungarian households are guaranteed. But Attila Holoda said this was nonsense.

“We don’t live only from storage, we have domestic production and imports,” he said. And imports are increasing, and buyers who buy together in larger volumes can negotiate better prices on the world market – which is the thinking behind the EU’s joint gas purchases. The expert therefore does not think that it is necessarily wise for the Hungarian government to go it alone and buy less gas more expensively instead of relying on joint EU purchases.

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