Economy
Hungary set to bypass EU over South Stream with law amendment
How to make the USA more angry with Hungary, we asked our readers on Tuesday, but we did not have the faintest idea that the government has been holding the best answer to that and it beats every idea we have ever had.
Parliament’s economic committee helmed by Antal Rogán, the head of the ruling Fidesz party’s parliamentary group, has submitted an amendment proposal to a bill submitted by Fidesz MP Roland Mengyi that would practically make it possible for Hungary to start building the South Stream pipeline without consulting either the European Union or other international organisations.
Could build however it wants
As the rationale of the document says, the amendment would facilitate any gas company to construct the pipeline that is not a certified transmission system operator, i.e. it would not have to comply with any rules under which TSOs must operate.
What regulations are we talking about? For instance, a TSO cannot just decide on a whim to start building a pipeline without international approvals as the national development plans need to be harmonised and controlled. The TSO may start development projects that are included in an approved 10-year development plan. Moreover, once that plan is approved, the development projects must be carried out.
This rule was made not by chance, but because large natural gas transmitting pipelines are always cross-boarder, giant and vastly expensive projects that shape the geopolitical situation therefore it is crucial for the participating countries to be in appropriate harmony.
With the approval of the above amendment proposal any gas company would be able to build gas pipelines in Hungary on a simple nod from the Hungarian Energy Office. In that case the different international co-ordination bodies would have no jurisdiction.
Although the amendment proposal does not specify any pipeline construction project, the only one on the agenda right now is South Stream. This happens to be the pipeline which Hungary would be able to start building only if it bypassed international organisations.
According to plans
If the planned modification of the law is indeed aimed at this, we can expect both the European Union and its ally, the United States, which have implemented sanctions against Russia for its conflict with Ukraine, to be furious. The EU is against Moscow’s endeavours to expand its imperial reach, a tool of which is the South Stream pipeline in its current form. It has taken up a rigorous stance on this issue, declaring that it would not negotiate on the building of the pipeline until the Russia-Ukraine conflict is settled.
Irrespective of the fact that officially the project is in a standstill, Russian President Vladimir Putin has called his allies into action behind the scenes. Gazprom CEO Alexei Miller met Hungarian PM Orbán on 22 September in Budapest and the company said in a statement that the subject of their discussion was gas supply in Hungary in the winter and the South Stream project which “is progressing according to plan".
Odd timing
A few days after the Orbán-Miller meeting Hungary's gas pipeline network operator FGSZ announced it was indefinitely suspending gas supply to neighbouring Ukraine for technical reasons. Ukraine was fuming over the move and interpreted it as the outcome of the Russian-Hungarian meeting. It was in the open for some time now that Moscow does not take it well that the “enemy" Ukraine is receiving gas from Hungary. The explanation Budapest delivered was that filling up the gas storage units for the winter was the priority therefore it had to halt reverse gas flow to Ukraine.
Let’s admit, it was more than a lame excuse. The depleted storage units indeed had to be filled back up, as the turning off of the gas tap seemed to be a realistic risk due to the Russia-Ukraine conflict.
However, there were interesting developments also during the filling up process, for instance, a proposal submitted by Fidesz MP Roland Mengyi a few days after the Orbán-Miller meeting. The MP, who is a stranger to energy issues, proposed the amendment of the gas law, as a result of which Gazprom was allowed to transmit natural gas into Hungarian storage facilities without obtaining a trade permit.
On paper it will have several hundreds of millions of cubic metres of gas abroad so it will not have to pay taxes until it sells this volume to a Hungarian company. If it wants to sell it that is. In case the flow of Ukrainian transit gas is stopped neighbouring countries could also be queuing up for this stashed gas reserve.
And now there is Rogán’s amendment proposal to top this off nicely.
Hungary’s Foreign Minister Péter Szijjártó will meet Victoria Nuland, the Assistant Secretary of State for European and Eurasian Affairs at the United States Department of State, and special energy envoy Amos Hochs in Washington on Wednesday. South Stream is likely to be discussed there.
Parliament’s economic committee helmed by Antal Rogán, the head of the ruling Fidesz party’s parliamentary group, has submitted an amendment proposal to a bill submitted by Fidesz MP Roland Mengyi that would practically make it possible for Hungary to start building the South Stream pipeline without consulting either the European Union or other international organisations.
Could build however it wants
As the rationale of the document says, the amendment would facilitate any gas company to construct the pipeline that is not a certified transmission system operator, i.e. it would not have to comply with any rules under which TSOs must operate.
What regulations are we talking about? For instance, a TSO cannot just decide on a whim to start building a pipeline without international approvals as the national development plans need to be harmonised and controlled. The TSO may start development projects that are included in an approved 10-year development plan. Moreover, once that plan is approved, the development projects must be carried out.
This rule was made not by chance, but because large natural gas transmitting pipelines are always cross-boarder, giant and vastly expensive projects that shape the geopolitical situation therefore it is crucial for the participating countries to be in appropriate harmony.
With the approval of the above amendment proposal any gas company would be able to build gas pipelines in Hungary on a simple nod from the Hungarian Energy Office. In that case the different international co-ordination bodies would have no jurisdiction.
Although the amendment proposal does not specify any pipeline construction project, the only one on the agenda right now is South Stream. This happens to be the pipeline which Hungary would be able to start building only if it bypassed international organisations.
According to plans
If the planned modification of the law is indeed aimed at this, we can expect both the European Union and its ally, the United States, which have implemented sanctions against Russia for its conflict with Ukraine, to be furious. The EU is against Moscow’s endeavours to expand its imperial reach, a tool of which is the South Stream pipeline in its current form. It has taken up a rigorous stance on this issue, declaring that it would not negotiate on the building of the pipeline until the Russia-Ukraine conflict is settled.
Irrespective of the fact that officially the project is in a standstill, Russian President Vladimir Putin has called his allies into action behind the scenes. Gazprom CEO Alexei Miller met Hungarian PM Orbán on 22 September in Budapest and the company said in a statement that the subject of their discussion was gas supply in Hungary in the winter and the South Stream project which “is progressing according to plan".
Odd timing
A few days after the Orbán-Miller meeting Hungary's gas pipeline network operator FGSZ announced it was indefinitely suspending gas supply to neighbouring Ukraine for technical reasons. Ukraine was fuming over the move and interpreted it as the outcome of the Russian-Hungarian meeting. It was in the open for some time now that Moscow does not take it well that the “enemy" Ukraine is receiving gas from Hungary. The explanation Budapest delivered was that filling up the gas storage units for the winter was the priority therefore it had to halt reverse gas flow to Ukraine.
Let’s admit, it was more than a lame excuse. The depleted storage units indeed had to be filled back up, as the turning off of the gas tap seemed to be a realistic risk due to the Russia-Ukraine conflict.
However, there were interesting developments also during the filling up process, for instance, a proposal submitted by Fidesz MP Roland Mengyi a few days after the Orbán-Miller meeting. The MP, who is a stranger to energy issues, proposed the amendment of the gas law, as a result of which Gazprom was allowed to transmit natural gas into Hungarian storage facilities without obtaining a trade permit.
On paper it will have several hundreds of millions of cubic metres of gas abroad so it will not have to pay taxes until it sells this volume to a Hungarian company. If it wants to sell it that is. In case the flow of Ukrainian transit gas is stopped neighbouring countries could also be queuing up for this stashed gas reserve.
And now there is Rogán’s amendment proposal to top this off nicely.
Hungary’s Foreign Minister Péter Szijjártó will meet Victoria Nuland, the Assistant Secretary of State for European and Eurasian Affairs at the United States Department of State, and special energy envoy Amos Hochs in Washington on Wednesday. South Stream is likely to be discussed there.
