Hungary cuts off Russian gas to Ukraine

Moscow and Budapest signed a long-term gas supply agreement. For the first time in history, blue fuel will flow to Hungary bypassing Ukraine. In Kiev, this decision was perceived extremely negatively, calling it “political and economically unjustified.” But the injured party in this situation is only Ukraine – the new contract deprives it of the scheme of a virtual gas reverse, which Kiev will again have to buy from Russia.

Gazprom on Monday signed a 15-year gas supply agreement with the Hungarian energy group MVM. The signing ceremony took place in Budapest, at the Foreign Ministry building. It was attended by Minister of Foreign Affairs and Foreign Economic Relations Peter Siyarto and Deputy Head of Gazprom, General Director of Gazprom Export Elena Burmistrova, RIA Novosti reports  . According to the contract, Hungary will receive 4.5 billion cubic meters of gas per year. Of the total energy carrier, 3.5 billion will come through Serbia, that is, from the south, through the Turkish Stream pipeline, and another 1 billion through Austria, that is, through Nord Stream 2.

The upcoming signing of the contract became known on Friday – it was announced by Siyjarto, adding that Alexey Miller himself, the head of Gazprom, is expected in Budapest on Monday. True, Miller did not come in the end, sending a deputy, but he made public a statement in which he stressed that the agreement was concluded thanks to the efforts of companies to develop national gas transmission systems in Bulgaria, Serbia and Hungary. Miller called route diversification an important part of the new agreements.

“The long-term contracts signed today guarantee reliable, stable supplies of Russian gas for the next 15 years,” Miller promised. According to him, Budapest will receive the first gas through the Turkish Stream pipes and gas pipelines of the countries of Southeast Europe on October 1, when the agreement comes into force. It is calculated until the end of 2036 and provides for the possibility of changing conditions in ten years.

And Siyjarto, speaking at the ceremony, immediately declared that the agreement was “not political”, and added that Ukraine should not interfere in the internal affairs of Hungary, reports  TASS . Thus, he answered in absentia the  angry reproaches that sounded from Kiev even before the ceremony began.

The fact is that the Ukrainian Foreign Ministry expressed in advance its “surprise and disappointment” in this regard. The contract was called “an exclusively political, economically unjustified decision taken to please the Kremlin and to the detriment of the national interests of Ukraine and Ukrainian-Hungarian relations.” Kiev believes that such a step by Budapest does not correspond to the principles of the agreement signed in 1991 on the foundations of good-neighborliness and cooperation between the two countries. “In the future, it will be more profitable for Hungary to receive gas in transit through the ramified gas transportation system of Ukraine,” they say in Kiev.

The Foreign Ministry also canceled a meeting of the joint Ukrainian-Hungarian commission on economic cooperation, scheduled for next Wednesday. In addition, Kiev promised to apply to the European Commission with a request to assess the compliance of the Russian-Hungarian treaty with European energy laws.

Russian Foreign Ministry spokeswoman Maria Zakharova explained Kiev’s desire to write “denunciations” to the European Commission. In her opinion, this behavior is  caused by “envy” of  Budapest. The European Commission itself has so far refused to comment on the deal concluded in Budapest. “We have heard about this, but did not see confirmation and details, so it is too early to comment at this stage,” said a representative of the commission.

“For Kiev, the contract means a big problem,” admits Stanislav Tkachenko, professor of the Department of European Studies at the Faculty of International Relations, St. Petersburg State University, an expert of the Valdai Club. – At the diplomatic level, relations between Hungary and Ukraine are already conflicted. However, Kiev will confine itself to a complaint to Brussels and will not be able to take any other, more decisive measures. “

Tkachenko is confident that neither Brussels nor even Washington will interfere. “Now everyone is for himself. In the situation of post-like economic recovery, inflated gas prices and falling interest in Ukraine around the world, nothing remarkable from the point of view of protecting its interests will be done, ”the political scientist predicts.

As for the contract itself, it is beneficial for both Budapest and Moscow, Tkachenko believes. In the face of rising energy prices in Europe, Hungary will ensure itself an uninterrupted supply for a decade and a half. At the same time, confidence in Gazprom in the European Union as a supplier will increase, which will positively affect the value of its securities, Tkachenko suggested.

According to him, for the past ten years Moscow has been preparing for the fact that long-term contracts will disappear altogether, and the absence of such agreements makes investments in infrastructure risky. “However, the situation is changing. Partly for political reasons – Hungary has perhaps the best relations with Russia out of all EU countries, Tkachenko recalled. “The insanely high gas prices in the spot market also play a role.” The expert does not exclude that now many European countries, following Hungary, will gradually return to the practice of long-term contracts: “Among them may be Austria and Italy. The energy problems in Great Britain are already obvious. “

Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund, also believes that nothing threatens the contract from third countries. “The two commercial companies come to an agreement. Why should they ask the opinion of some third party who has nothing to do with this issue? ” He asks.

Yushkov also recalled that Gazprom and Naftogaz have a transit agreement until the end of 2024, which means that until then, at least theoretically, Kiev has nothing to worry about.

“Stop Gazprom pumping gas through Ukraine, it is still obliged to pay, as stated in the contract (the take-or-pay rule,“ take or pay ”). So the Ukrainians will receive their money for transit as well. Moreover, the demand for gas in Europe is such that even with the launch of the second Nord Stream, Ukraine will certainly keep the physical volumes of gas pumped, ”the expert explained.

“But after 2024, no one owes them anything. Let them offer favorable terms, then Gazprom will consider the issue “,


– added Yushkov. Meanwhile, in Kiev, not only the Foreign Ministry reacted extremely nervously to the news from Budapest. General Director of the “Operator of the gas transmission system of Ukraine” (GTS of Ukraine) Serhiy Makogon did not rule out that his country is threatened with a significant reduction or even a complete stop of gas transit to Hungary. “The technical capabilities of Nord Stream 2 pose critical risks to the existing transit through Ukraine,” warned Makogon.

The experts immediately had an explanation why the GTS are making such panic predictions. “In order to understand the meaning of this statement, it is worth recalling that it is from Hungary that Ukraine allegedly imports significant volumes of gas by reverse. But in fact, it does not import, but takes it from the transit pipe. And now these volumes will not be there, ”noted the   Russia in Global Affairs telegram channel .

“Ukraine is afraid that the volumes of gas that Gazprom is supposed to supply to Europe, it will now distribute among fixed buyers,” agrees Professor Tkachenko. “And starting from January 1 of next year, Moscow will tell Kiev:“ We will fulfill the contract and pay you $ 1 billion, following the take-or-pay rule, but we will stop transporting the energy carrier ”. Then an economic catastrophe awaits Ukraine. After all, she took gas directly from the pipe, which now can no longer pump the energy carrier in the opposite direction. Thus, half of Ukraine, including all industrial regions, will remain without gas. “

The contract signed on Monday gives Moscow such political leverage on Kiev as it could only dream of, Tkachenko concludes.