Gazprom stores some of its natural gas in Hungarian facilities

I guess it is high time to talk about Vladimir Putin and natural gas.

First, Putin’s trip to Serbia. Serbia and Russia have had close ties for more than a century. The only exception I can think of is the 1948-1954 period when Tito was considered to be the “chained dog of the imperialists.” But otherwise in all conflicts Russia stood by Serbia. Serbia’s financial situation is pretty grim at the moment, and I understand that without Russian help Belgrade would be in even greater economic and financial trouble than it is. The closeness of the two countries is demonstrated by the fact that the date of the celebration of the 70th anniversary of the liberation of Belgrade by the Red Army was moved forward to accommodate Vladimir Putin’s schedule. The military pomp on display to impress the Russian president was noteworthy, especially in view of Serbia’s insistence that she wants to become part of the European Union.

Putin decided to use this opportunity to deliver a stern message to Europe. He warned Brussels that as long as the Ukrainian crisis is not settled, naturally in favor of Russia, gas supplies to Europe might be disrupted just as happened in 2006 and 2009. He said that he himself will do everything to avoid such an eventuality, but if it does happen it will be the fault of the European leaders.

Almost at the same time news reached the West that Hungary will store Gazprom gas. You may recall that Hungary purchased the German-owned E.ON gas storage facilities in 2013 for an incredibly high price. The story of that purchase is well summarized in an article in the Budapest Beacon, according to which the Hungarian state-owned company, MVM, may have lost $2.6 billion as a result of the deal. Given the pervasive corruption in Hungary, analysts were certain that the purchase of E.ON’s business units was “a success story for certain business circles but a huge loss for the national economy as a whole.” This assessment might not be on target. It is more likely that Viktor Orbán’s eagerness to purchase E.ON at whatever price stemmed from a deal with Gazprom to use Hungarian storage facilities. Aleksey Miller, CEO of Gazprom, visited Budapest in October 2012. At that time Miller agreed to such a deal, but only if the storage facilities were in the hands of the Hungarian state. A year later Orbán obliged.

gaztarolok

So, what kinds of storage facilities are we talking about? E.ON Földgáz Storage Zrt. has five underground facilities in which it can store 3,740 million cubic meters of natural gas. According to Hungarian sources, these underground storage facilities are the best and the largest in the region and  fourth in size in Europe. As a result, in 2009 Hungarians were more or less unaffected by the gas shortage when Russia stopped the flow of gas through Ukraine to Europe.

I was pretty sure by the end of September that something was afoot concerning Russia’s use of Hungary’s storage facilities, but it was only on October 10 that I read an AFP report which noted that although Hungary is steadily buying gas from Russia, it is also storing Russian-owned gas. The article noted that “it is unusual for the company to store gas still owned by Gazprom, which is locked in a dispute with Kiev that some fear could see transit through Ukraine halted for the third time in a decade.” According to the spokesman of MVM, the owner of the facilities, “with this agreement Gazprom will be able to comply with its long-term contract obligations, should there be problems on the transport routes.”

Kyiv Post tersely noted the Russian-Hungarian deal without adding any editorial comment. But Kiev must see the deal as an antagonistic move because, with it, Russia can supply gas to Europe at the same time that it squeezes Ukraine.

As for the amount of stored gas owned by Hungary, this number is difficult to estimate. Throughout September the Hungarian media was full of complaints about Hungarian tardiness in filling the country’s storage facilities. In mid-September HVG claimed that they were only 58 percent full. Moreover, if one can believe MTI, a month later, on October 16, the situation was exactly the same. Opposition politicians naturally blame the Orbán government for its tardiness and predict terrible consequences come winter. But I suspect that something else might be behind the procrastination of the Hungarians. The Russian-Hungarian deal to store Russian gas in Hungary was signed only at the end of September, and it is very possible that in return for its “generosity” Hungary managed to get a lower price on Russian gas. I can’t think of any other rational explanation for not filling the storage facilities as quickly as possible. Especially since other European facilities are 80-90% full. Perhaps we will eventually learn the real story, although I’m sure that the Hungarian government will do its best to conceal it.

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61 comments

  1. plg, you and your colleagues loitering at this blog are ridiculous. You think you can dupe readers by your primitive comments.

    You know exactly that if the US did this before the elections, it would’ve backfired and would’ve been interpreted even by people who otherwise sympathize with the US as a blatant effort to intervene in the domestic affairs and to help the opposition.

    Moreover this could not possibly have helped the opposition during the elections, because the opposition lacked good, credible candidates, so the US would’ve looked like a loser, trying to intervene but failing. I guess they also realized a long time ago that the current opposition in its current form is weak and hopeless.

    The US duly waited and did something vague, let’s see how this plays out. I don’t think there’s smoking gun evidence or if there is the US would reveal it (like wiretaps), although hopefully it will.

    The interest of the Americans I guess is somehow to make Hungary realize that Hungary can’t just betray NATO and the EU by becoming essentially Russian agents within these communities.

    The Europeans don’t really care about this, they are anyway in bed with Putin in various ways from Schröder to the City to VCP and other bankers of Austria, to mention some well-known examples. But since the NATO is paid for by the US and is ultimately backed by its military, they care about this a bit more.

    My fear is that it’s too late. By now Orban, his strohmen, the foreign service etc. apparatuses are so deeply involved with the Russians that it’s just almost impossible to do an about face.

    Moreover many in the Fidesz top echelon – despite what they may leak reassuringly to their contacts at the embassies – are actually very OK being outside the NATO and the EU — as a result they may see no downside (Simicska’s circle would be a bit more upset, but will he win his game against Orban, I’m not so sure).

    It was already discussed here, and this is my assumption too that Orban has mentally prepared himself for Hungary’s exit from both NATO and the EU, but he didn’t dare to initiate the exit himself, but if he (Hungary) is fired, than he will be more than OK with it. Timing is everything and his time may just have come to realize this. He’s a man wanting to be free and the chains of the international organizations are the last ones which hold him down, but not for long, I’m afraid.

  2. Tappanch exactly. You say:

    “The municipal assembly candidates ran as “DK-EGYÜTT-MLP-MSZP-PM-RÁTE”

    Hajdu ran only as “DK”, yet he wrote the other parties on his poster too, saying he was the same as the assembly candidates. He was not the same. He was nominated only by DK. His “toredekszavazat” went ONLY to DK and not to the other parties. It was misleading the voters.

    But even if the other parties had no candidates it does not mean they were supporting him. LMP had no candidates in many places. Jobbik had no candidates in many places (small towns villages and similar). Even MSZP didn’t have candidates in all places. Does this mean by your logic that MSZP was supporting Jobbik? (if in that town MSZP had no candidate and Jobbik did) Or Jobbik supported MSZP? By not running?

    The most importan question Tappanch:

    Why did MSZP vote to condemn Hajdu’s campaign violations? You say that MSZP were SUPPORTING Hajdu. If they did, why are they voting to condemn his violations. Why are they voting to say that Hajdu cheated? If they were really supporting him?

    Why did MSZP vote against Hajdu and DK? Answer this question please.

  3. Ah, the trolls are back!

    @plg:

    I can just imagine how the Fidesz controlled media would have screamed about “meddling in the internal affairs …” (you remember that from Communist times, don’t you?) if Mr. Goodfriend had announced this before the elections!

    @KTP:

    What about that “open voting” that has been reported? Btw, that was just like in Horthy times …
    And the gerrymandering and changes in the rules for the Budapest elections? Any comment on that?

    PS:

    I can’t count how often I had to tell people in Germany about the results of the parliament election in Hungary:

    No, Fidesz did not get two thirds of the votes, only about 44%!

    They just changed the system to get two thirds of the seats in parliament …

  4. Dear Apologist for the Fidesz Mafia:

    “When will these leftist parties and their supporters realize that the US does not care about them?”

    Correct. The US and civilized democracies generally couldn’t care less for the joke of an opposition here.

    They do, seemingly, care about what the Fidesz/Jobbik thug regime is doing and specifically the damage it may inflict on a NATO country.

    Orban has made several mistakes since his second victory; should have left RTL alone, should have left the NGOs alone- absolutely no threat to him and his fellow Mafioso. Instead…

    Our Chief Shepherd should really read his recent history- start by researching how Milosevic fell and who were the main parties responsible for waking up the Serbian populace…

  5. Wolfi you shouldn’t ask election questions until you answered the election question:

    If Hajdu, the DK candidate in XV. did nothing wrong, why did MSZP vote to condemn him for election violations?

  6. @KTP: Really, why. Seriously? Because Hajdu is a DK candidate and there isn’t much love lost between DK and MSZP.

  7. D7 Democrat, many thanks for the earlier reference, LeBor’s book was great, too bad it was written 10 years ago, I would’ve been curious what happened since then, although admittedly that’s beyond the topic of Slobo.

    My conclusion is a bit sinister. From the book it’s clear that Slobo was a goner only when Legija and the rest of his henchmen decided to abandon him. But that was only when these thugs realized that “power” is not with Slobo any more.

    The secret service in a dictatorship is always loyal to where “power” emanates from. In Hungary since about 2006 it emanates unquestionably from Fidesz, but obviously even from 1998 onwards Fidesz was very close to this spot at all points of time, but perhaps until 2006 the servicemen probably still wanted to play for two goalposts (kétkapuztak).

    Unfortunately Djindjic was assassinated by this very group of shady war criminals/agents, who supposedly already went over to the opposition.

    In other words, should anybody get rid of Orban could easily find him/herself in a position like that of Litvinenko or Yanukovich, who was poisoned with dioxin although he survived for the time being, until he/she establishes themselves as the unquestioned source of power, which takes time.

  8. Dr A,

    Orban’s problem, as I see it, is that the shady political/economic/security figures presently backing him are complete and utter pragmatists not Orbanist loyalists by any stretch of the definition.

    Milosevic always had that blind ethno-Serb-nat loyalty within his internal and external military who really only let go at the very last moment when it dawned on them that the forces ranging against them were too great to withstand. Orban doesn’t have that loyalty- I wouldn’t put money on even his own family standing behind him when push came to shove. The Oligarchs and their thuggish minions who presently maintain his regime will *change* as soon as they as they see the tea-leaves changing.

  9. @pig

    “If what goodfriend said was true, then he had credible information about corruption that he decided on purpose not to share before the election.”

    And he should’ve shared…with who: a bunch of corrupt politicians on the other side of the fence? Yeah, that would’ve helped. Nice thinking.

    (You’ve got no idea…but I do like your name.)

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