Hungary joins Gazprom pipeline, as Trump touts US LNG

Hungarian Foreign Minister Péter Szijjártó. [European Council]

Hungary signed a deal with Russia’s Gazprom to link the country with the Turkish Stream pipeline by end-2019 yesterday (5 July), a day ahead of President Donald Trump’s trip to Poland, where he is expected to promote US LNG exports.

“This will improve Hungary’s energy security a great deal, so it is in our strategic interest for this cooperation to start,” state news agency MTI quoted Foreign Minister Péter Szijjártó as saying.

Natural gas supplies to eastern Europe have been a major area of competition between incumbent pipeline power Russia and the United States, which is touting its liquefied natural gas (LNG) potential in the region via onshore LNG terminals.

Trump is expected to use fast-growing US LNG supplies as a political tool when he meets in Poland on Thursday with leaders of a dozen countries, including Hungary, that are captive to Russia for their energy needs.

Trump to promote US LNG exports at Warsaw summit

US President Donald Trump plans to promote US liquefied natural gas (LNG) exports at a meeting next Thursday (6 July) in Warsaw with a dozen leaders from Central and Eastern Europe, a region heavily reliant on Russian supplies.

Szijjártó, who is in Moscow, told MTI by phone that he had agreed with Gazprom CEO Alexei Miller to join Turkish Stream with a link that could enable Hungary to import 8 billion cubic meters of gas a year, close to the country’s total consumption.

The Gazprom-sponsored pipeline Turkish Stream, also called Turkish Stream, will pump 31.5 billion cubic metres per year of Russian gas to Europe under the Black Sea, helping Moscow limit the gas transit through Ukraine.

Gazprom plans a first line of the gas pipeline to supply gas to Turkish consumers, while the second will serve customers in South and South-Eastern Europe. The capacity of the first and second threads of the Turkish Stream will be 15.75 billion cubic meters each. Construction is scheduled to be completed by the end of 2019.

The entry point of the first thread is on the European territory of Turkey and the gas is expected to be used mainly by Turkish clients. The entry point of the second thread is not yet decided.

According to reports the Bulgarian authorities have suggested that one of the threads of Turkish Stream should go to the Bulgarian shore, where South Stream was planned to land. South Stream was canceled by Russia in 2014 in the wake of the Ukrainian conflict and EU sanctions. Another option is that the second thread be parallel to the first, but the entry point into EU territory remains unknown.

Russian PM: Turkish Stream will enter EU via Bulgaria or Greece

Russia is in negotiations with Greece and Bulgaria regarding the entry point on EU territory of the Turkish Stream gas pipeline, Russian Prime Minister Dmitry Medvedev is quoted as saying by the Russian press.

Hungary, which relies on Russian imports via Ukraine for nearly all of its gas use, has sought to diversify its imports geographically as well as by supplier for years.

Asked by Reuters how the American LNG potential and Russian gas square up in Hungary’s energy plans, a Foreign Ministry spokesman could not immediately comment. Hungary’s ambassador to Washington told a business forum in Budapest earlier this week that he would be keen to import American LNG as well.

The EU said it wanted to separate the owner of the pipeline from the owner of the gas, but analysts also said it wanted to prevent Russia from shipping gas to Europe bypassing Ukraine, downgrading its geopolitical significance.

International interconnectors between Hungary and possible trade partners Romania and Croatia also remain to be built, while Szijjártó said Croatia is not expected to complete a long-planned LNG import terminal any time soon.

That terminal, planned for the Adriatic island of Krk, would be capable of bringing US gas to Hungary.

Szijjártó noted Bulgaria and Serbia had already signed agreements with Gazprom, which stipulate financing to be cleared by the end of 2017, permits secured by end-2018, for the gas link to reach Hungary by 2019.

“It is also a serious business opportunity for Hungary because despite all the communication hypocrisy European need for Russian gas is growing at an extraordinary rate,” he said.

Subscribe to our newsletters