Russia Signs Gas Supply Contract with Hungary via Ukraine Bypass Pipeline

Transport via Turkey Stream Gas Pipeline Established in 2019
Ukraine's Gas Transit Fees Expected to Plummet..."Will Protest to the EU"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Russia's signing of a long-term contract to supply natural gas to Hungary through a gas pipeline bypassing Ukraine has sparked strong opposition from Ukraine. Ukraine claims that the contract is part of Russia's strategy to isolate the country and exacerbate its economic difficulties, and has announced plans to request the European Union (EU) to assess the legality of the contract. In response, Hungary has condemned this as interference in its internal affairs, escalating the dispute among the involved countries.

According to Russia's TASS news agency on the 27th (local time), Russia's state-owned gas company Gazprom signed a gas agreement with Hungarian energy company MVM at the Hungarian Ministry of Foreign Affairs in Budapest, Hungary, on the same day. Gazprom stated in its own release, "We have signed two long-term gas supply contracts in Budapest," adding, "The total supply volume is 4.5 billion cubic meters per year, and the contract period is 15 years."

The main point of this gas contract is that it will use the 'TurkStream' pipeline, newly constructed in 2019, instead of the existing pipeline through Ukraine that Russia previously used to export natural gas to Hungary. The TurkStream pipeline passes through the Black Sea and connects to Turkey, bypassing Ukraine.

Alexey Miller, CEO of Gazprom, explained, "Starting from the 1st of next month, Hungary will receive Russian gas through the TurkStream pipeline and the Southeast Europe gas pipeline." Of the 4.5 billion cubic meters of natural gas Hungary will receive, 3.5 billion cubic meters are planned to be supplied via Serbia, and the remaining 1 billion cubic meters via Austria. The contracted supply volume corresponds to about half of Hungary's annual gas demand, which is estimated at 9 to 10 billion cubic meters.

In response, Ukraine strongly opposed the contract and expressed dissatisfaction. The Ukrainian Ministry of Foreign Affairs issued a statement saying, "We are surprised and disappointed by Hungary's decision to sign a gas import contract with Russia's Gazprom that bypasses Ukraine," adding, "This is entirely a political decision without economic justification, and Hungary has made a wrong decision that harms Ukraine's national interests and bilateral relations for the benefit of Russia." The statement emphasized, "We will request the European Commission of the European Union (EU) to evaluate the legality of this contract."

Hungary, in turn, has protested, calling it interference in its internal affairs. Hungarian Foreign Minister P?ter Szijj?rt? strongly opposed the criticism at a press conference, stating, "Energy security for Hungary is not a political issue but a matter of security, sovereignty, and economy," and added, "You cannot warm your home with political statements."

Previously, Ukraine also strongly opposed Russia's Nord Stream 2 pipeline project, which directly connects to Germany. If Russia's pipelines bypassing Ukraine become fully operational, the volume of gas transported through the existing Ukraine transit pipelines is expected to decrease significantly, leading to a sharp reduction in transit fees, which are a major source of income for Ukraine.

This content was produced with the assistance of AI translation services.