Friday, November 27, 2020
Home Oil & Gas Hungary strikes deal with Gazprom to secure gas supplies for 2020

Hungary strikes deal with Gazprom to secure gas supplies for 2020

Hungary will purchase an additional 2.2 billion cubic metres (bcm) of gas from Russian energy giant Gazprom, thus assuring the country’s gas supply for 2020. The announcement followed a meeting between the Hungarian minister of foreign affairs and trade Péter Szijjártó and his Russian counterpart Sergei Lavrov.

The parties also concluded an agreement about the shipment of 1.5 bcm of natural gas in 2021 with the potential to increase the volume to 4.2 bcm.

Since 2015 Hungary inked only one-year deals with Gazprom. Although the contract was partially renewed in 2019, with domestic storage being filled to capacity and deliveries secured by the end of the winter, there was no major contract signed with the company about gas transport from March.

Hungary is also involved in one of Russia’s flagship project, the Turkish Stream – or TurkStream – a 930 kilometres long pipeline running along the bottom of the Black Sea to supply gas to South and Southeast Europe. The TurkStream will carry Russian gas on two parallel strings with an annual capacity of 15.75 bcm of gas each. The first one will ship gas to Turkey while the second line will continue to Europe, via Bulgaria, Serbia and Hungary. The pipeline project is a strategic element of Moscow’s efforts to circumvent its traditional gas transit routes to Europe from the South and cut off Ukraine from the shipments.

“As a first step, Hungary will start building a 15 kilometres stretch of the pipeline connecting the Serbian-Hungarian border to the national grid. This will enable the supply of 6 bcm of gas in the initial period,” explained Mr Szijjártó.

The TurkStream project was initially estimated to cost 11.4 billion euros, but actual figures are probably much higher. The pipeline is expected to operate at full capacity from 2022.

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