Hungary Discusses 15-Year Gas Deal With Gazprom

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Hungary has reached preliminary agreement on a 15-year gas supply contract with Russia’s Gazprom, Minister of Foreign Affairs and Trade Peter Szijjarto was quoted as saying last week. Szijjarto discussed Russian gas imports at a meeting with Gazprom CEO Alexei Miller on the sidelines of the St. Petersburg International Economic Forum on Jun. 3. Russian sources say no documents were signed to formalize the preliminary discussions. Such a long contract could be a big win for Gazprom when buyers tend to push for shorter deals, including in southern and Eastern Europe which used to rely heavily on Russian pipeline gas but is now getting access to more LNG imports. But Hungary is understood to be offering a deal that could be terminated in five and 10 years, which would reduce its long-term risks. Szijjarto said last year that would secure long-term supplies but at the same time give an opportunity to quit the deal if better opportunities arise and the market situation changes (LNGI Jun.25'20). The new contract may come into force on Oct. 1, replacing a deal that expires at the end of September, Szijjarto said, without disclosing the size of the planned contract. The price for gas supplies has yet to be agreed on, he said. Gazprom only said Szijjarto and Miller discussed “current matters and opportunities with regard to strengthening cooperation in gas supplies” and the ongoing expansion of Hungary’s national gas transmission system, which should start receiving gas from Gazprom’s Turk Stream pipeline in October. Gazprom has several contracts for gas supply in Hungary. One industry source says contracts for 4 Bcm/yr should expire this September. Hungary imported 8.6 Bcm from Gazprom in 2020, down 18% from 2019.

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