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Russian natural gas to Hungary to be rerouted, bypassing Ukraine

pipeline

Budapest, Hungary – It was less than a month ago that I described the “considerable shift in Ukrainian-Hungarian relations, for the better.” I based my analysis on a speech Hungarian President János Áder delivered at the Crimean Platform Summit, where “the participants reaffirmed their support of Ukraine.

His speech was strongly supportive of Kiev and critical of Moscow.” In return, President Volodymyr Zelensky conferred the First Degree of the Order of Prince Yaroslav the Wise on János Áder.

The planned meeting of the Joint Ukrainian-Hungarian Intergovernmental Commission on Economic Cooperation, to take place this week, was another sign of rapprochement between the two countries.

Hungary inks long-term gas deal with Russia

Well, my assessment was far too optimistic. I didn’t pay enough attention at the time to the new long-term contract for natural gas with Russia’s Gazprom that was scheduled to be signed by the end of September.

Although Hungary has been an importer of Russian natural gas ever since 1975, the two countries signed their first long-term contract only in 1996. This contract was set to expire in 2015. The Orbán government, however, managed to extend the deal until 2021. Since the Russians were not ready to offer another extension, the Hungarian government began negotiations in 2018 for a new long-term contract.

Yesterday the representatives of Magyar Villamosművek (MVM) and Gazprom signed the contract, according to which Gazprom will supply Hungary with 4.5 billion cubic meters of natural gas a year for ten plus five years. The price is a trade secret, but Foreign Minister Péter Szijjártó says that it is more favorable than the price agreed on in 1996.

According to people familiar with the deal, the current price of Russian gas is understandably linked to the prevailing very high price of natural gas on commodity exchanges. The foreign minister stressed that “energy supply in Hungary is a security, sovereignty, and economic issue, not a political one,” and he said that the reality is that, in the absence of real, viable alternatives, the most secure and predictable way to guarantee Hungary’s energy supply at the moment is through a long-term contract with Gazprom.

What Szijjártó didn’t advertise was that the natural gas that will arrive in Hungary after October 1 will not come via the old route, through Ukraine, but via TurkStream, stretching from Russia to Turkey across the Black Sea.

“This game cannot go on forever”

In bypassing Ukraine, the Russians are depriving Kiev of millions of dollars in transit fees. Szijjártó may insist that the agreement with Gazprom is not a political issue, but the Ukrainian government thinks otherwise. The Ukrainian foreign ministry issued a statement saying that Hungary’s deal was a “purely political, economically unreasonable decision” that was taken “to the detriment of Ukraine’s national interests and Ukrainian-Hungarian relations.”

Dmitro Kuleba, the Ukrainian minister of foreign affairs, was quoted by the Ukrainian news agencies as saying that “we have a country here, Hungary, which is a member of the European Union and NATO, and which also has special relations with Russia. This game,” he continued, “cannot go on forever; sooner or later it will end in a conflict.”

Russia was unimpressed. Maria Zakharova, director of the Information and Press Department of the Russian Ministry of Foreign Affairs, insisted that Ukraine’s request from the European Commission to assess the legality of Hungary’s gas contract with Gazprom is nothing more than “envy” for Hungary’s favorable long-term contract. And Dmitry Peskov, the Kremlin’s press secretary, sees no reason for Ukraine “to be hysterical about the Russian-Hungarian gas supply contract.” He called attention to the fact that President Putin had expressed a “readiness to continue gas transit via Ukraine after 2024 in the event there are relevant economically profitable and reasonable conditions.”

UKRINF, Ukraine’s telegraphic agency, published an opinion piece by Yevgeny Matyushenko, a freelance journalist, who called the Russian-Hungarian gas deal “a stab in Ukraine’s back.” The author provided a lengthy list of Ukrainian grievances about acts committed by Hungary over the years, such as blocking the NATO-Ukraine Commission meetings and demanding changes to legislation on state language and national minorities.

“A stab in Ukraine’s back”

The Ukrainians think that “it is obvious who is actually managing this game against Ukraine, putting an ‘energy knife’ into the hands of Budapest.” Matyushenko also believes that, by signing the contract at this particular time, Russia is also helping Viktor Orbán politically, before the forthcoming national elections.

Ukraine’s reaction raised Szijjártó’s ire, especially Kiev’s decision to turn to the European Union. He called the Ukrainian chargé into the ministry and told him that Hungary considers Ukraine’s attempt to undermine the country’s secure gas supply unacceptable. He said that “the Ukrainians have nothing to do with what we agree to and with whom.”

Hungary considers it a serious violation of the country’s sovereignty and national security interests that  the Ukrainians “want to prevent the secure supply of gas to [the] country, the heating of Hungarian people’s homes, and the operation of its industry.” This is especially unfriendly “after all the support Ukraine has received from Hungary, such as ventilators, medical equipment, care for soldiers, holidaying for children, and the financing of investments.”

What next for Hungarian-Ukrainian relations?

I don’t think that too many objective observers would doubt that underlying Russia’s plan to use alternate routes to supply Europe with natural gas is its goal of weakening Ukraine both politically and economically. The Hungarian government has been abetting Russia in this game for a number of years. It is hard to determine whether Szijjártó is telling the truth when he brags about “the enormous success” of the Gazprom long-term contract, but it is likely that the price that was offered depended on rerouting the flow of gas.

In fact, according to news reports, there was a mad rush to finish the connection between the Serbian and the Hungarian sections of the pipeline.

Népszava reported on January 1, 2021 that, while Serbia had completed the section of the network that will transport Russian gas from Turkey to the Hungarian border, the Hungarians were aiming to finish the job by October, which the Russians had set as an absolute deadline. The Russians had a right to be annoyed with their Hungarian partner. Earlier reports indicated that the government had been hoping to finish the job by 2019, at which point they had to ask for an extension from the Russians.

Ukrainian-Hungarian relations have been strained for years due to the presence of a Hungarian minority in Zakarpattia, a region west of the Carpathian Mountains. The Ukrainians watch the all too frequent visits of Fidesz politicians to this region with a great deal of suspicion and have recently barred three of them from entering the country.

Unfortunately, I now foresee another difficult period in Ukrainian-Hungarian relations, which may lead to a further deterioration of U.S.-Hungarian relations.

By the Hungarian Spectrum, an official partner of Kafkadesk.

Coordinated by Ábel Bede, Kafkadesk's Budapest office is made up of a growing team of freelance journalists, editors and fact-checkers passionate about Hungarian affairs and dedicated to bringing you all the latest news, events and insights from Hungary.