Economy 16 October 2024, 9:37am

Hungary MVM CEO sees major changes in gas portfolio by 2035

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The Chief Executive Officer of Hungary's state-owned energy company said he welcomes Foreign Minister Péter Szijjártó's negotiations with Russia's Gazprom in St. Petersburg, but MVM's goal is that by 2035 no country should have a share of Hungarian gas purchases greater than 30%, news portal Telex reported.

Mátrai Károly, az MVM Csoport vezérigazgatója

Károly Mátrai welcomed the talks of Minister of Foreign Affairs and Trade Péter Szijjártó with Gazprom in St. Petersburg.

The 1+1 year contract amendment will allow Hungary to buy additional gas from the Russian company if necessary. At the same time, MVM's Strategy 2024-2035 gives priority to the diversification of gas procurement.

Our goal is that by 2035 no country should have more than a 30% share of Hungarian gas purchases,

Mátrai told Telex in a podcast. To this end, MVM is already actively working on contracts with Turkish and Azeri partners, as well as gas via supplies from the Krk LNG terminal in Croatia.

Regarding liquefied natural gas (LNG), Mátrai explained that although the possibility of buying additional capacity in Germany and Poland is being explored, this market is still very fluid. Due to high transit fees, LNG is currently only competitive in areas close to the coast.

In Central Europe, gas through the pipe has no rival for the time being.

MVM recently acquired a 5% stake in a major natural gas field in Azerbaijan. According to Mátrai, this is more of a financial investment for the time being, as the gas produced has already been sold. The commercial contract signed at the same time as the stake purchase guarantees a good return for the company until 2030.

By 2029, the development of the gas field is expected to produce an additional 2 billion cubic metres of gas per year, which could potentially reach Hungary, although probably in the form of swaps due to the high transport costs caused by the long distance.

Mátrai also spoke about the positive effects of the introduction of the dual pricing system. "Consumers have become much more aware and spending on energy upgrades has increased significantly," he said. As a result, the proportion of consumers above the band limit has fallen to below 2% from 15-20%.

The dual pricing system is that the government has set thresholds for gas and electricity consumption, under which households pay a reduced price and above which they pay the much higher market price. The average monthly electricity consumption set by the government is 2,523 kilowatt-hours per year, which is 210 kilowatt-hours per month. For natural gas, it is 1,729 cubic metres per year, or 144 cubic metres per month. Households pay HUF 36 for one kilowatt/hour up to the average annual consumption and HUF 70.1 above that. For gas, the price per cubic metre is HUF 102 up to the average consumption, and HUF 747 above that.

The country's annual gas consumption has also fallen significantly, from 10 billion cubic metres in the previous year to below 8 billion cubic metres this year. According to Mátrai, this will greatly help MVM's energy decoupling goals.

The CEO underlined Hungary's important role in Ukraine's energy supply and did not exclude the possibility of a possible expansion in Romania. He considered MVM's expansion in the Czech Republic a success worth continuing.

Finally, the CEO noted that MVM can be considered a company with the capacity to go public, despite the fact that it is state-owned and operates in a regulatory-intensive sector.