Shocking: Hungary lost hundreds of EUR millions on the Russian gas business
The Orbán cabinet decided to buy Russian gas instead of purchasing it on the energy markets because they said it would be safer to deal with a reliable partner. However, as Népszava, a Hungarian left-leaning daily, calculated, the country lost tremendous money on the Russian gas business.
According to Népszava, the financial damage Hungary suffered thanks to the Russian gas business reached HUF 564 billion (EUR 1.43 billion) in only one year. That is because the currently valid Hungary-Russia gas purchase contract was signed in 2021, at the beginning of the European energy price crisis. The media outlet calculated that loss following the December 2023 data, shared by the Hungarian Central Statistical Office yesterday.
The Hungarian government signed a gas purchase contract with Putin in October 2021. Officially, two state-owned companies took part in the deal: the Russian Gazprom and the Hungarian MVM. However, everybody knows the conditions were hammered out on the highest levels of politics.
In April 2022, general elections were held in Hungary, so the Orbán government kept repeating how favourably they could conclude the talks. They highlighted that the new contract is considerably better than the one signed in 1995. FM Péter Szijjártó said the new Russian gas contract secures the Hungarian government’s main political product, the utility price reduction scheme. Of course, they did not publish the contract referring to business secrets.
Russian President Putin said in February 2022, before the invasion of Ukraine, that Hungary gets Russian gas for 1/5th of the global market price. Later, Népszava discovered that the opposite was true. The Kremlin even added 30% to the market price in their calculations. However, that did not stop the government from using Putin’s sentence in their election campaign.
Hungary’s loss on the Russian gas business was colossal in 2023
Népszava and several other Hungarian media outlets wrote that the Hungarian-Russian gas deal is based on the Dutch energy stock market’s (TTF) gas price. In October 2021, we even won EUR 210 million on the business and the price differences. But in 2023, the deal collapsed because of the decreasing global market price.
The 2021-2022 gas year brought a colossal EUR 810 million plus income, but the 2022-2023 gas year resulted in a EUR 1.43 billion loss. The balance stands at negative EUR 586 million. Thus, nobody can explain why the new contract is better than the previous one.
The Orbán cabinet still says that Russian gas is the cheapest available on the market but never supported that claim with numbers.
In 2023, Hungary bought 6.6 billion cubic metres of gas. That is a 51% surge. The last time our purchase level was this high was in 2018, with 8.4 billion cubic metres. However, Népszava suspects that Hungary sells large amounts of Russian gas even though neither the government nor the buyers mention it.
László Miklós, an energy market expert and former director of corporate relations at MOL, said that Russian gas does not support the utility price decrease scheme, which is one of the greatest weapons of the Orbán government. Its essence is that the government keeps energy prices at a 2014 level, so people pay much less than the market price. Of course, the state fills the financial gaps with taxpayers’ money. However, since the Hungarian government already signed the long-term contract with the Russians, it would not be worth leaving the framework, Mr Miklós added.
Read also:
- This is why Orbán always wins: we explain Hungary’s unique utility price protection scheme – Read more HERE
- FM Szijjártó happily laughing with Russian FM Lavrov on the day of Navalny’s burial – Details and VIDEO in THIS article
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