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Russia begins extra gas flows to Hungary on top of contracted volume: official

Highlights

Additional 2.6 mil cu m/d supply in August: Menczer

Part of plans to take extra 0.7 Bcm of Russian gas

Schedule for additional September gas under discussion

Hungary has begun receiving additional gas supplies from Russia on top of its contracted volume, Tamas Menczer -- an MP in the ruling Fidesz party -- said on Facebook, as Budapest looks to ensure winter gas supply security.

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Russia began delivering an additional 2.6 million cu m/d to Hungary via the TurkStream pipeline and associated onshore infrastructure on Aug. 12, Menczer said.

Hungarian foreign minister Peter Szijjarto had traveled to Moscow in late July in an attempt to secure 0.7 Bcm of gas from Russia in addition to the 4.5 Bcm/year of gas it contracted to buy in September 2021.

"Considering today's European market conditions, it is clear that acquiring such a large quantity of gas is impossible without Russian resources," Menczer said.

He said that following Szijjarto's agreement with Moscow, Russia's Gazprom has now begun flowing additional gas, with the 2.6 million cu m/d flow set to continue until the end of August.

"The September schedule is already being discussed," he said. "It is the duty of the Hungarian government to ensure the country has a safe supply of gas."

Under a 15-year supply deal agreed to in September 2021, Gazprom supplies 4.5 Bcm/year of gas to Hungary, with 3.5 Bcm/year supplied via the TurkStream pipeline and the gas grids of Bulgaria and Serbia, and 1 Bcm/year via Austria.

Szijjarto was tasked with securing additional gas volumes as part of a seven-point plan put in place by Budapest July 13 after it declared a state of emergency in energy and banned energy exports.

Despite the war in Ukraine, Hungary retains relatively close relations with Russia and objected to the EU's agreement to cut gas use by 15% this winter.

Budapest has also been opposed to the imposition of certain sanctions against Moscow, and its ban on exports puts it at odds with EU policy on gas supply "solidarity" whereby neighbors can help each other out with deliveries in the event of an emergency.

Storage capacity

Hungary has one of the EU's largest gas storage capacities at some 67.7 TWh (6.4 Bcm), and a stock level of around 32% of capacity would normally be sufficient, Menczer said.

"But unfortunately we are not living in normal times. This is why the government decided that 700 million cu m of gas should be purchased on top of the already contracted volumes," he said.

Hungary's gas storage sites are currently filled to around 57% of capacity, according to data from Gas Infrastructure Europe.

Concerns over winter gas supply security have kept European gas prices at sustained highs.

The Dutch TTF month-ahead price reached an all-time high of Eur212.15/MWh March 8, according to the Platts price assessments from S&P Global Commodity Insights, and was last assessed close to that record at Eur206/MWh Aug. 12.

Hungary's seven-point plan also included a proposal to increase domestic gas production to 2 Bcm/year from 1.5 Bcm in 2021.

Apart from domestic production and imports from Russia, Hungary can also access regasified LNG imported into the Croatian LNG terminal at Krk to help meet demand, which totaled some 11 Bcm in 2021.