Hungary, Russia agree new gas contract terms

Hungary's government and Russian state-controlled Gazprom have agreed on the terms of a new gas supply deal for the next 10 years, although they have yet to sign an agreement.

The parties agreed on 4.5bn m³/yr for 10 years starting from 1 October, with the option of extending it by a further five years, Hungarian foreign minister Peter Szijjarto said. A Gazprom source said the parties had reached an agreement in principle.

The new contract is to replace a 4.2mn m³/yr deal that expires at the end of this month, Szijjarto said.

Hungary will receive 3.5bn m³/yr through Serbia and the remainder through Austria under the deal.

Hungary until now has received much of its supply through Ukraine (see graph). But the scheduled October commissioning of a new Serbia-Hungary link will enable it to take gas from the 15.75bn m³/yr second string of Gazprom's Turkish Stream pipeline, delivered onwards through Bulgaria and Serbia.

Szijjarto said the agreed price is more attractive than under the contract, which is to expire, although he provided no further details. The minister has previously said the price formula should reflect Hungary's lost transit role following the start-up of Turkish Stream. Turkish Stream deliveries to Bosnia-Herzegovina and Serbia began earlier this year, reducing Hungary's transit role.

Hungary's system operator, FGSZ, will auction 221.2 GWh/d of capacity at the entry point from Serbia for the 2021-22 gas year on 9 September.

Gazprom sold 6.2bn m³ to Hungary from October 2020-June 2021.

In addition to supply under the expiring contract, Gazprom has sold up to 2bn m³/yr to Hungary through subsidiary WIEE since 2018 and smaller volumes under deals with trading company MET since 2019.

By Anastasia Goreva and Paul Martin

Key Hungarian border flows TWh