Economy
Hungary unexpectedly halts gas supply to Ukraine "indefinitely"
FGSZ halts gas transmission to Ukraine
“FGSZ Ltd interrupted the gas transmission to Ukraine through the separate pipeline from Testvériség (Brotherhood) pipeline on the afternoon of the 25th September 2014 for an indefinite period. As a result of the action the gas transmission has been stopped from 18.00 on 25th September 2014," FGSZ said in a statement on Thursday.
“The reason for interruption, that according to information received from system users, from the 26th September 2014 gas day onwards the demand for incoming delivery increases significantly. In order to manage the security supply and preserving the network balance, the Beregdaróc network point connection has to be altered to enable all pipelines to be suited for inward transmission," it added.
According to FGSZ, up to 6,1 billion cubic metres of gas per year - 16.8 mcm per day - has been delivered to Ukraine since March 2013. The company added, though that the capacity is not guaranteed, as it is "dependent on prevailing technical and commercial conditions," the company said.
Naftogaz is perplexed
Naftogaz reminded that this decision by Hungary’s FGSZ follows a meeting between Gazprom Chief Executive Alexei Miller and Hungarian Prime Minister Viktor Orbán that took place on Monday 22 September 2014.
“It comes only hours before the next trilateral meeting between Ukraine, Russia and the EC which is due to start on Friday morning in Berlin," it added.
The halt of the transit capacity supply is “unexpected and unexplained", Naftogaz said.
It noted that Ukrtransgaz has a contract with FGSZ which regulates the flow of gas between Ukraine and Hungary in both directions. The two operators do not have a standard interconnection agreement, although Ukrtransgaz has repeatedly requested to sign one, in accordance with requirements of the Energy Community regulations, it added.
“FGSZ was not available to provide any additional information about the reasons and the duration of the interruption to either Ukrtransgaz or Naftogaz. According to Naftogaz information, the Western European gas suppliers have not received any plausible explanation of the current situation from FGSZ either," Naftogaz said.
It said it “deeply regrets" this decision of FGSZ and calls on its Hungarian partners to “respect their contractual obligations and EU legislation."
“Such a decision goes against the core principles of the European Union single energy market."
The company called on the European Union “to ensure a collective solution to the energy security of Europe and the respect of EU internal rules," adding that “neither EU countries nor Ukraine should be put under political pressure through energy blackmail."
Naftogaz also it hoped such a sudden halt will not have any unexpected effects on the Ukrainian transit system stability.
Hungary speeds filling of gas storage units
Hungary will increase imports of natural gas from Friday to speed up the filling of its gas storage facilities in preparation for winter, Hungary’s Development Ministry told state-owned newswire MTI.
"Filling up Hungarian gas storages is the absolute priority," the ministry said in a statement.
The ministry underlined that natural gas transit remains uninterrupted despite the Russia-Ukraine conflict. Hungary’s gas supply is ensured; the size of safety gas buffers is in line with regulations and the storage units are filled up to 56.6% of their capacity, with filling set to be accelerated from now on, it added.
Orbán says Hungary cannot find itself without energy
In an interview with public radio MR1 aired on Friday morning PM Orbán confirmed that Hungary's storage would be boosted in the coming weeks.
He also said that, regardless of the severity of the Ukraine crisis, Hungary cannot get into a situation in which its people do not get the energy they need.
"I had talks with the Russians, the leader of Gazprom, about this, that we will need a large amount of gas in the coming period to increase the stored volumes," he said. "And we will get this large amount."
Orbán did not indicate how much additional gas Hungary, which also exports gas to Ukraine, would receive from Gazprom.Kicking a guy when he's down
“Talk about kicking a guy when he is down," commented Timothy Ash, strategist at Standard Bank in London, in an emailed note to clients.
He suggested that the Gazprom deal could be part of Moscow's strategy on Ukraine.
“Hungary also suspended reverse gas supplies to Ukraine last night. This comes after Gazprom's CEO, Alexi Miller, met Orban on September 22, and reflects perhaps on Hungary's own EUR10bn deal for an upgrading of its nuclear power facilities, significantly funded by Russia. Orban stated today that Hungary's energy security comes first," he added.
Ash cited Gazprom as reiterating last night that it views "reverse flows" as illegal under existing energy contracts made with companies in Europe. Gazprom “seems eager to ensure that Ukraine does not get the extra supplies it has been seeking thru this source and sufficient to get it through winter," added Ash.
Russia and Ukraine are slated to meet later today to try and wring out an energy deal, brokered by the EU.
“This will be a key test as to whether Moscow is willing to really de-escalate the crisis in Ukraine following on from the 5/9 and 19/9 ceasefire agreements. Who was it spoke about using "divide and rule" in Europe? Moscow appears to be using every card in its hand over Ukraine," concluded Ash.
“FGSZ Ltd interrupted the gas transmission to Ukraine through the separate pipeline from Testvériség (Brotherhood) pipeline on the afternoon of the 25th September 2014 for an indefinite period. As a result of the action the gas transmission has been stopped from 18.00 on 25th September 2014," FGSZ said in a statement on Thursday.
“The reason for interruption, that according to information received from system users, from the 26th September 2014 gas day onwards the demand for incoming delivery increases significantly. In order to manage the security supply and preserving the network balance, the Beregdaróc network point connection has to be altered to enable all pipelines to be suited for inward transmission," it added.
According to FGSZ, up to 6,1 billion cubic metres of gas per year - 16.8 mcm per day - has been delivered to Ukraine since March 2013. The company added, though that the capacity is not guaranteed, as it is "dependent on prevailing technical and commercial conditions," the company said.
Naftogaz is perplexed
Naftogaz reminded that this decision by Hungary’s FGSZ follows a meeting between Gazprom Chief Executive Alexei Miller and Hungarian Prime Minister Viktor Orbán that took place on Monday 22 September 2014.
“It comes only hours before the next trilateral meeting between Ukraine, Russia and the EC which is due to start on Friday morning in Berlin," it added.
The halt of the transit capacity supply is “unexpected and unexplained", Naftogaz said.
It noted that Ukrtransgaz has a contract with FGSZ which regulates the flow of gas between Ukraine and Hungary in both directions. The two operators do not have a standard interconnection agreement, although Ukrtransgaz has repeatedly requested to sign one, in accordance with requirements of the Energy Community regulations, it added.
“FGSZ was not available to provide any additional information about the reasons and the duration of the interruption to either Ukrtransgaz or Naftogaz. According to Naftogaz information, the Western European gas suppliers have not received any plausible explanation of the current situation from FGSZ either," Naftogaz said.
It said it “deeply regrets" this decision of FGSZ and calls on its Hungarian partners to “respect their contractual obligations and EU legislation."
“Such a decision goes against the core principles of the European Union single energy market."
The company called on the European Union “to ensure a collective solution to the energy security of Europe and the respect of EU internal rules," adding that “neither EU countries nor Ukraine should be put under political pressure through energy blackmail."
Naftogaz also it hoped such a sudden halt will not have any unexpected effects on the Ukrainian transit system stability.
Hungary speeds filling of gas storage units
Hungary will increase imports of natural gas from Friday to speed up the filling of its gas storage facilities in preparation for winter, Hungary’s Development Ministry told state-owned newswire MTI.
"Filling up Hungarian gas storages is the absolute priority," the ministry said in a statement.
The ministry underlined that natural gas transit remains uninterrupted despite the Russia-Ukraine conflict. Hungary’s gas supply is ensured; the size of safety gas buffers is in line with regulations and the storage units are filled up to 56.6% of their capacity, with filling set to be accelerated from now on, it added.
Orbán says Hungary cannot find itself without energy
In an interview with public radio MR1 aired on Friday morning PM Orbán confirmed that Hungary's storage would be boosted in the coming weeks.
He also said that, regardless of the severity of the Ukraine crisis, Hungary cannot get into a situation in which its people do not get the energy they need.
"I had talks with the Russians, the leader of Gazprom, about this, that we will need a large amount of gas in the coming period to increase the stored volumes," he said. "And we will get this large amount."
Orbán did not indicate how much additional gas Hungary, which also exports gas to Ukraine, would receive from Gazprom.Kicking a guy when he's down
“Talk about kicking a guy when he is down," commented Timothy Ash, strategist at Standard Bank in London, in an emailed note to clients.
He suggested that the Gazprom deal could be part of Moscow's strategy on Ukraine.
“Hungary also suspended reverse gas supplies to Ukraine last night. This comes after Gazprom's CEO, Alexi Miller, met Orban on September 22, and reflects perhaps on Hungary's own EUR10bn deal for an upgrading of its nuclear power facilities, significantly funded by Russia. Orban stated today that Hungary's energy security comes first," he added.
Ash cited Gazprom as reiterating last night that it views "reverse flows" as illegal under existing energy contracts made with companies in Europe. Gazprom “seems eager to ensure that Ukraine does not get the extra supplies it has been seeking thru this source and sufficient to get it through winter," added Ash.
Russia and Ukraine are slated to meet later today to try and wring out an energy deal, brokered by the EU.
“This will be a key test as to whether Moscow is willing to really de-escalate the crisis in Ukraine following on from the 5/9 and 19/9 ceasefire agreements. Who was it spoke about using "divide and rule" in Europe? Moscow appears to be using every card in its hand over Ukraine," concluded Ash.
