Russian gas to Hungary will be send through Turkish Stream

The redirection of Russian gas volumes intended for Hungary through Ukraine is being considered due to Ukraine’s decision not to renew its transit agreement with Gazprom. Hungarian Foreign Minister Peter Szijjarto has suggested the potential for these volumes to flow through the Turk Stream gas pipeline. Reports from indicate possible benefits for Romania’s major gas producers, Romgaz and OMV Petrom, along with Transgaz, the transportation system operator, in light of Ukraine’s possible choice not to extend the gas transit agreement with Russia to the EU beyond 2024.

This potential shift is based on the option of sending gas via the Turk Stream pipeline, which could reach Hungary through Bulgaria and Serbia or by entering Romania via the trans-Balkan corridor with reversed flow before reaching Hungary. Minister Szijjarto highlighted the strategic importance of the Turk Stream pipeline’s substantial 8.5 billion cubic meters capacity to Hungary, which could fulfill the entire gas volume previously supplied by Russia under an expiring long-term contract with Gazprom. He emphasized Hungary’s proactive approach to diversifying both gas sources and delivery routes, with the Turk Stream pipeline playing a pivotal role.

At the existing Csanadpalota interconnection point between Romania and Hungary, capacity is set to increase from 73 GWh/day to 78.8 GWh/day starting from October 1, with over 77 GWh already reserved. With reduced Russian gas supplies via Ukraine, which recently stood at 430 GWh/day, the Turk Stream pipeline might take on the complete transit of Russian gas to Europe, having transported 200-250 GWh/day this summer. The pipeline’s total transport capacity to Europe is 576 GWh/day, suggesting significant unused capacity compared to current utilization via Ukraine. It’s noteworthy that winter usage through both Ukraine and Turk Stream is expected to be higher, potentially aiding domestic gas producers in offsetting decreased deliveries from Russia to Ukraine. Romania’s position as a net gas exporter this summer could be bolstered if the Neptun Deep project begins production. Transgaz could also benefit from rerouting Russian gas transit and alternative routes through Romania, potentially leading to increased capacity reservations and transport tariffs. The agreement in December 2019 between Moscow and Kyiv to extend Russian gas transit through Ukrainian territory until 2024, with a potential 10-year renewal, has been overshadowed by ongoing Ukraine-related conflicts. This agreement covered the transit of 65 billion cubic meters in 2020 and 40 billion cubic meters annually from 2021 to 2024. In September 2021, Hungary and Gazprom signed a 15-year contract for the annual supply of 4.5 billion cubic meters of gas, with 3.5 billion cubic meters transported via Serbia and 1 billion cubic meters via Austria, bypassing Ukraine. This equates to roughly 12.3 million cubic meters of gas per day. By August 2022, Hungary secured an additional 5.8 million cubic meters of daily gas supply via the Turkish Stream pipeline and Serbia.

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