Economy 4 December 2024, 4:03pm

Gas levels in Hungarian storages dropping fast

Portfolio

The fill level of underground gas storages in Hungary has decreased Since the beginning of the gas year at the second fastest rate in the last 13 years, Portfolio has spotted on Wednesday. The 13.5 percentage point decline is a consequence of the more persistent cold weather, with November this year being the coldest since 2011. The unusually rapid depletion of gas storage facilities is not only a Hungary-specific phenomenon. At the pan-European level, there has not been such a rapid fall in fill levels between October and the end of November since 2016.

At the start of the gas year on 1 October, underground gas storage in Hungary was 93.6% full, but the latest data from 2 December shows that it the storage level is now down at only 80%,

with a 13.5 percentage point difference, the second largest since 2011, after 18.8% in 2021,

and the third largest in the time series after the 10.8 percentage point drop in 2011. All this highlights that the US sanction on Gazprombank has put Hungarian security of supply under the spotlight.

It is worth noting, however, that it is not so much the Hungarian gas storage fill ratio that is interesting, but the rate of the gas levels in relation to domestic gas consumption:

the Hungarian rate of 51.5% is still the third highest in Europe, after the Austrian rate of 99% and the Slovakian rate of 55.4%.

It is also important to note that not only is the depletion of gas storage unusually fast in Hungary, but it is also happening at a pan-European level, as Reuters analyst John Kemp pointed out in his recent summary: this year showed the fastest drop in gas storage levels since 2016, from 1 October to 29 November, also due to colder weather.

This, along with the future of the Russia-Ukraine transit contract and the Gazprombank sanction, is a major factor in why the price of the earliest futures contract on the Dutch TTF gas exchange, which is the benchmark for Europe, is trading near a one-year high of around €48/MWh.

TTF 241204 — Source: tradingview.com on the price of the earliest futures contact on the Dutch TTF gas exchange (EUR/MWh)

Hungary has asked the United States to exempt Russia's Gazprombank from sanctions when it comes to payments for natural gas as those sanctions could negatively affect some U.S. allies, Hungary's Foreign Minister said on Wednesday, Reuters reported.

The United States imposed new sanctions on Russia's Gazprombank on 21 November as President Joe Biden steps up measures to punish Moscow for its invasion of Ukraine before he leaves office in January.

The sanctions prevent the state-controlled lender from handling any new energy-related transactions that involve the U.S. financial system.

Yesterday we filed our request with the relevant American authorities that calls for Gazprombank being granted an exception from sanctions when it comes to payments for natural gas,

Foreign Minister Péter Szijjártó told a briefing broadcast on his Facebook page.

Cover image (for illustration purposes only): Getty Images