Hungary remains interested in keeping energy ties with Russia in order to avoid pain for its own consumers, the country’s Foreign Affairs a& Trade Minister Peter Szijjarto told a panel discussion at the Russian Energy Week conference in Moscow on Thursday, shortly after finalising a deal with Gazprom on deferred gas payments.
Hungary is also prepared to work with Russia and its own neighbour Serbia in securing Russian oil supplies after the European embargo on seaborne Russian oil imports comes in force in the beginning of December, the minister said.
With war raging at Hungary’s doorstep in neighbouring Ukraine, Szijjarto described the conflict as a war, though his hosts resorted to officially approved euphemism, “special military operation”. He called on both sides to negotiate a peace agreement.
Russian gas price
Following his meeting on Wednesday with Alexei Miller, executive chairman of Russian state controlled gas giant Gazprom, Szijjarto said that both sides have finalised an earlier deal to provide Hungary’s gas importer MVM with an option to defer part of payments for gas if its prices exceeds a certain threshold.
Szijjarto also agreed for Gazprom to re-route gas shipments to Hungary away from Ukraine and Slovakia, which were previously agreed to run at a rate of 1 billion cubic metres per annum last year.
After the agreed re-routing, 4.5 Bcm of Russian gas is expected to be delivered to Hungary each year via Gazprom-owned TurkStream pipeline that runs across the Black Sea to Turkey, with the onshore extension crossing Bulgaria and Serbia, against 3.5 Bcm contracted in 2021.
“Gazprom has affirmed its commitment to the long-term operation of the TurkStream pipeline as well as its commitment to the long-term predictability of gas shipments to Hungary”, Szijjarto said in a social network post, adding that the deferred payment deal means “no restrictions will be needed in Hungary with regard to gas consumption”.
The agreement will permit importer MVM to delay some of payments to Gazprom for a period of up to three years if gas prices surge during this upcoming winter.
The arrangement is understood to put a cap on Russian gas price for Hungary above the unrevealed threshold, with payments — which may run up to several billion US dollars — above this level to be deferred to a later date.
Speaking at the same conference earlier this week, Russian President Vladimir Putin and Miller reiterated that the country will not supply oil and gas to those countries that will implement their own capping mechanisms on Russian oil and gas, as proposed by G7 and European countries.
Oil connector for Serbia
Szijjarto also said that Hungary is moving forward with a plan to build a pipeline connector to Serbia to extend an existing segment of legacy Druzhba pipeline that carries Russian oil to the country via Ukraine and Slovakia.
He added the connector may be built within “one and a half years” and will permit “our brothers and sisters in Serbia” to restore Russian oil supplies after the European Union’s eighth package of sanctions, approved earlier in October, banned Russian seaborne oil cargoes from reaching the country via Croatia.
In May, the EU granted Hungary and Slovakia an exemption from the Russian oil embargo, with ther Russian oil deliveries via Druzhba to continue uninterrupted.
Last year, Hungary received between 80,000 and 95,000 barrels of Russian oil via Druzhba according to the Russian Energy Ministry.
Russian export statistics to the country has been withheld from the public domain since the introduction of international sanctions against Moscow.
Russian state controlled oil producer Gazprom Neft holds the controlling stake in Serbia’s largest oil and gas producer Naftna Industrija Srbije (NIS), while Gazprom has a 6% minority shareholding in NIS.
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