9th Aug 2022

Hungary seeks to buy more gas from Russia

  • Hungarian foreign minister, Péter Szijjártó, was given Russia’s prestigious Order of Friendship last December — two months before Russia's invasion of Ukraine (Photo: consilium.europa.eu)
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Hungary wants to buy close to a billion cubic metres of Russian gas, its foreign minister Péter Szijjártó said on Thursday (21 July) during a rare visit from a top EU official to Moscow since Russian invaded Ukraine in February.

"In the current international situation, the most important thing for us is to ensure Hungary's energy security. Therefore, I would like to talk and reach an agreement today on increasing the current volume of gas delivered to Hungary from Russia," Szijjártó told a press conference.

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Following negotiations with Russian foreign minister Sergei Lavrov, he said the Hungarian government expects to purchase an additional 700 million cubic meters of natural gas in addition to the quantities already specified in the long-term contracts.

Lavrov said Russia would consider the proposal from Budapest.

Hungary has been one of the most vocal opponents of EU sanctions on gas, and although the government eventually went along with six EU sanctions packages, it secured an open-ended exemption from oil embargo.

Szijjártó, who was given Russia's prestigious Order of Friendship a few months before the February invasion, has said Hungary has no way of decoupling from Russian energy sources fast enough without badly damaging the economy.

Hungary depends on Russia for about 85 per cent of its gas, making it one of the most vulnerable EU countries to a cut-off of Russian energy supplies.

Hungary's prime minister Viktor Orbán, long seen as the closest EU ally of Russian president Vladimir Putin, has said the EU has "shot itself in the lungs" with the sanctions.

Orbán's ties with Moscow have unsettled Hungary's western partners. Hungary has adopted a neutral position on the Ukraine war, in contrast to its regional partners, such as Poland.

Hungary's request to Russia could be seen in EU capitals as undermining the bloc's unity which is already under pressure with surging energy prices and inflation.

Budapest's move comes as the EU presented a new plan on Wednesday to reduce the bloc's gas use by 15 percent over the next eight months — amid fears over further disruptions of gas from or a full cut-off of Russian gas flows this winter.

Some member states, including Poland, Spain, Greece and Portugal, have pushed back against EU calls to curb demand.

Sanctions blamed for 'war inflation'

Back in Budapest, Orbán is facing one of his biggest challenges of his more than a decade-long rule, as the economic pressures keep mounting, and EU funds remain suspended due to rule-of-law concerns.

The government was forced last week, in a major policy shift, to cut back on subsidising utility prices, which have kept household utility bills at a fraction of the market prices.

Millions of Hungarians may face a steep rise in the cost of gas and electricity exceeding monthly average consumption.

Inflation is over 10 percent for the first time in more than 20 years, while the forint has plunged almost 10 percent against the euro since Russia's invasion, the biggest drop among emerging market currencies.

Orbán's government has set out over a billion euros of spending cuts and freezing of funds, according to a Bloomberg estimate, while Hungarians have been protesting last week over the scrapping of a tax rule benefitting small businesses.

The government has also put a cap on some basic food stuff and petrol for Hungarian cars, for which the EU launched a legal probe saying it breaks single market rules.

The Budapest government has blamed the war in Ukraine for the inflation but instead of pointing the finger at Russia, government messages have said the "sanctions prolong the war," and the only peace can put an end to the "war inflation".

EU ministers struggle over 15% gas-cut plan

The meeting comes as the Russian state-controlled Gazprom announced that supplies through the Nord Stream 1 pipeline to Germany would drop to just 20 percent of capacity, starting Wednesday.

Orbán: West should focus on 'peace' not winning in Ukraine

As well as calling for direct US-Russia peace talks, Viktor Orbán cited the "great replacement" theory, which claims there is a plot to dilute the white populations of the US and European countries through immigration.

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