Hungary purchased Russian gas at around six times what resindential consumers paid Hungarian state energy company MVM in February, according to the estimates of G7. Additionally, the trend is likely to continue in the summer, when Hungarian reserves will need to be refilled for the next heating season, the economic news site reports.
Russian President Vladimir Putin said in early February that Hungary buys Russian gas at a fifth of the world market price. Many have refuted his claim. According to news site Népszava’s calculations, Hungary at the time was actually paying almost exactly the world market price.
Since then, however, Russian gas has become much more expensive. So much so that in February, the average price of Russian natural gas entering Hungary was 394 forints per cubic meter. Since energy prices have long been state-regulated in Hungary, this is six times the price at which the Hungarian energy company MVM sells it to the general population, G7 calculated based on data from Eurostat.
Although in the past the Hungarian government has made several comments that implied that Hungary buys Russian gas at a fixed, predetermined price, this is not the case. Instead, the price of the energy source is linked to the stock exchange quotation, although the amount to be paid does not follow the market price immediately, but with a delay of one or two months.
MVM is not the only, but undoubtedly the most significant buyer of Russian gas on the Hungarian market. According to the agreement between Russia and Hungary, MVM buys an average of 375 million cubic meters of gas monthly from Russia’s Gazprom, and in February a total of 430 million cubic meters of Russian gas arrived in Hungary.
If we accept that MVM is the biggest buyer, it is possible that Russian gas arrived in March and April at a lower price than in February. But even then this would mean the price has not fallen below four or five times the residential price since then, according to G7.
Consequently, imports do not seem to have picked up much, with the level of reserves continuing to fall, even faster than usual.
If Gazprom’s price does follow the stock market quotations with a two-month delay, then we can expect a similar price in May-June to that in February, which is traditionally the time of the year when imports surge because prices are typically lower, so it is worth making gas reserves for the period of higher consumption in winter.
Now, however, there is a good chance that this will only be possible at very high prices, which could cause MVM serious difficulties in the second half of the year at the latest.
Prime Minister Viktor Orbán also spoke about gas prices recently. At his international press conference after the parliamentry elections, the Prime Minister said that the most important goal is not to have Russian gas at a better price, but to ensure that there is always a long-term supply.
Featured photo by Tibor Rosta /MTI