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Hungary to acquire stake in major gas field in Azerbaijan

Hungary will acquire a stake in Azerbaijan’s Shah Deniz gas field, one of the largest in the world, the Hungarian Minister of Foreign Affairs and Trade said in Baku. Péter Szijjártó underlined that the historic agreement will place Hungary’s natural gas supply security in an entirely new dimension.

At a joint press conference with his Azerbaijani counterpart, the Hungarian minister announced that a “historic agreement” had been signed. Hungary will purchase a stake in Azerbaijan’s Shah Deniz gas field, one of the largest in the world, with an annual production of nearly 30 billion cubic metres (bcm), said Mr Szijjartó.

“The agreement places Hungary’s natural gas supply security in an entirely new dimension. We will essentially have ownership over a substantial part of our natural gas needs,” he underlined.

He pointed out that this represents “a historically unprecedented situation for Hungary’s energy supply,” providing the country with much greater protection against “major energy market price fluctuations and uncertainties” than ever before.

Hungary’s state-owned energy holding, MVM Group has signed an agreement with the Azerbaijani state-owned Southern Gas Corridor CJSC (SGC) to acquire a 5 per cent stake in the Shah Deniz offshore gas and condensate field production-sharing agreement in Azerbaijan. The agreement sets out how much each side can extract from under the Caspian Sea by 2050. The transaction, which constitutes the largest investment in the history of MVM Group and is expected to close in a few months, is not charged to the state budget, the company used its own resources.

The agreement is another important milestone that was reached this year in the strategic partnership between the Hungary and Azerbaijan. Firstly, Hungary purchased natural gas from Azerbaijan for the first time, amounting to 50 million cubic metres. According to the Hungarian minister both sides are prepared to continue the cooperation.

Secondly, by July, a joint venture between Azerbaijan, Georgia, Romania and Hungary will be established, tasked with delivering green energy produced in the Caspian region to Central Europe,” revealed Péter Szijjártó.

Finally, he also noted the investments of the Hungarian MOL Group in Azerbaijan have reached two billion dollars, making MOL the third-largest owner in Azerbaijan’s largest offshore oil field. He noted that MOL was responsible for extracting more than five million barrels of oil, accounting for 15 per cent of the company’s total group-level production.

As a continuation of this cooperation, negotiations have begun between MOL and SOCAR regarding a framework agreement for the procurement of liquefied natural gas (LNG), he announced.

“Since Azerbaijan is a new player in our energy supply, this situation ensures a much more stable energy supply for us, providing significantly greater security in our energy supply,” the minister emphasised.

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