Russia's Gazprom gives Hungary deferred payment deal on gas
1. Deferred payment on Russian gas
To mitigate the impact of global prices, the Hungarian MVM Group and Russia's Gazprom have agreed on a deferred payment for the winter period ahead. According to the government, the inclusion of the possibility of deferred payment in the contract will increase the MVM Group's financing flexibility and liquidity security. The security of energy supply is guaranteed by the long-term gas contract signed in September 2021 and the additional gas volumes provided by Gazprom since then.
The details of the agreement are not yet known, so the announcement should be treated with caution. Several reports have emerged in recent weeks that the government is seeking a deferred payment from Gazprom to mitigate the effects of the energy crisis.
The fact that the postponement is for the winter period suggests that Hungary has actually only been given a few months' grace period. Overall, this may help MVM's management during a period of intensive energy use, but overall there does not seem to be any relief of national economic significance, such as an improvement in the country's external imbalances by "smoothing" the energy bill. (Of course, we'll be able to address this matter with greater certainty only after the details are revealed.)
2. Energy upgrades
In order to make more efficient use of the assets and capacities of MVM-owned Hungarian Gas Storage Ltd (MFGT), capacity restructuring and energy upgrades will be necessary in the medium term.
The restructuring will affect
- the MFGT's storage facility in Zsana, with the aim to expand storage capacity and boost compressor capacities,
- the storage facility of the MVM Group in Hajdúszoboszló, where the company has decided to extract 800 million cubic metres of cushion gas (in the longer term, largely using existing infrastructure elements, to implement alternative energy recovery, such as compressed air energy storage, and electricity generation using CO2-rich natural gas from the surrounding area),
- they are investigating the possibility of CO2 storage at the Hajdúszoboszló storage facility after the extraction of the cushion gas, in order to mitigate the CO2 production of the Mátra Power Plant and the future Tisza Gas-fired Power Plant, thus contributing significantly to the country's climate policy goals.
- The cost price of the gas from Hajdúszoboszló is extremely low, its market value at today's prices is about EUR 1.5 billion, i.e. HUF 650 billion, and the government believes that its utilisation can contribute to the maintenance of the reduction of the overheads and provide an opportunity for new energy security developments.
More to follow!
