Hungary, Government ordered an export ban on energy

, SEE Energy News

The Hungarian Government ordered an export ban on energy, primarily natural gas, and scrapped a years-long cap on utility prices for higher-usage households.

According to the Minister of Prime Minister’s Office Gergely Gulyas, the measures, which also include a plan to boost domestic gas output to 2 billion cubic meters from current 1.5 billion, will take effect from August to ensure the continued supply of energy during the winter season.

Gas supplies to Europe have tightened and fuel costs have soared since Russia’s invasion of Ukraine in February and subsequent sanctions, leaving countries scrambling to refill storage and diversify supply channels. That has added to pressure on the Hungarian Government, who is facing his toughest challenge since taking power in a 2010, with inflation at a two-decade high, the forint at record lows.

Under a 15-year deal with Russian Gazprom signed last year, Hungary receives 3.5 billion cubic meters of gas per year via Bulgaria and Serbia, and a further 1 billion via a pipeline from Austria.

Minister of Foreign Affairs and Trade Peter Szijjarto said earlier that Hungary is in talks to buy more gas before the heating season, on top of its existing long-term contract with Russia, which supplies 85 % of the country’s gas needs. He said that Hungary’s gas storage facilities, which have capacity for 6.33 billion cubic meters of gas, are 44 % full, representing about a quarter of annual consumption.

However, data from Hungarian regulator MEKH however shows that the 2.74 billion cubic meters of gas stored as of mid-July was by far the lowest amount in the past four years, and well below the 4.5 billion stored last year and 5.4 billion a year earlier.

The Government also authorized state-owned MVM to purchase additional gas volumes on the free market. Minister Szijjarto estimates that it would be possible to buy 700 million cubic meters of gas before the start of heating season. According to unofficial information, the Government is looking for a syndicated bank loan of 1 billion euros to finance additional gas purchases.

Gulyas said for the time being Hungary’s gas supply was uninterrupted, and any future restrictions, should they be needed, would affect households as a last resort.

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