Crisis after crisis: now it is gas

There is a Hungarian slang expression: "there is gas" (gáz van). It means there is big trouble. The big trouble now is that there is no gas. That is, there is no gas coming from Russia via Ukraine. Of course, the trouble would be greater if Hungary didn't have enough reserves to survive for at least two more months. Other countries–Bulgaria, Slovakia, and Serbia, for example–are in much bigger trouble because they have practically no reserves. Serbia already turned to Hungary yesterday for help. The initial Hungarian answer was negative, but by today the Hungarian government decided that after all it could spare a couple of billion m³ of gas because yesterday Hungarian consumption was lower than expected. Also Hungary has some natural gas of its own and a smaller amount reaches the country from Austria as well. Thus while Bulgaria and Slovakia are entirely dependent on Russian gas, Hungary relies on Russian gas for somewhere between 50% and 75% of its needs. Today, for example, 4 billion m³ gas arrived from Austria. The problem is that countries in Eastern Europe that depend on Russian gas can't really help each other because there are no pipelines between Romania and Bulgaria, or Hungary and Slovakia, or Romania and Hungary.

No one knows what the real situation is between the warring business partners, Russia and Ukraine. If one can believe the Russian ambassador to Hungary, there are four "faucets" that can be turned on or off. Three of these were shut off by Ukraine yesterday morning and only then did Russia move to shut off the one remaining "faucet." The Ukrainians' version of events, not surprisingly, is different. They claim that they would be most willing to send on any natural gas that arrives in their pipelines. But there is none. The Russians have shut off the flow of gas.

Then there are the two entirely different interpretations of the Russian-Ukrainian feud. There are those who claim that it is simply a business quarrel while others think that it is fundamentally a political issue. Russia is putting economic pressure on Ukraine to keep it within the fold. Ukraine, on the other hand, is looking westward; it wants to belong to NATO and eventually to the European Union. A Hungarian political scientist currently in Kiev views the crisis solely in political terms, a manifestation of Russia's imperial aspirations. Even the Russian ambassador to Hungary admitted that Russia is unhappy with Ukrainian political ambitions. I'm inclined to think that Russia's dispute with Ukraine is not solely economic. Russia's loss of Ukraine must still be hard to swallow. After all, with the exception of a very brief period after World War I when Ukraine became independent, it was an integral part of Russia for over three centuries. Also there is a huge Russian population within Ukraine's borders.

This morning Vladimir Putin gave a press conference in which he denied that Russia was using natural gas as either a political or an economic weapon. It is business, pure and simple. According to Putin the international price of 1,000 m³ of natural gas currently is $470. The transit cost of 1,000 m³ of gas per 100 km is $3-$4. Since the natural gas that goes to the Ukrainian pipelines comes from Central Siberia the transit cost is high–$375 per 1,000 m³. Ukraine simply refuses to pay a decent price for the gas. According to Putin, since the fall of the Soviet Union and with it Ukraine's independence, Russia has supported Ukraine by selling it gas below the international price. He estimated that Russia has lost $43 billion through this "subsidy".

Ukraine cannot emerge from this mess a winner. Russia has already started to build new pipelines. Putin emphasized that the Northern Stream under the Baltic Sea is of great importance to Russia and Germany. The Southern Stream is also under construction. But analysts claim that Russia is also shortsighted because Russia's economy is overly dependent on its natural resources. The two recent disruptions in the natural gas supply to Europe will surely prompt the European Union to rethink its reliance on Russian natural gas. Building, for example, the Nabucco pipeline. Or promoting alternative sources of energy. And coming up with a unified energy policy as opposed to the current situation where there is no cooperation among the countries of the European Union.

In 2006 there was a similar crisis. At that time there was a proposal that the European Union should act as an intermediary between the two countries. Nothing came of it; Russia and Ukraine resolved their differences in relatively short order. Two years later the crisis is repeated, with no quick end in sight. This time it seems that the European Union is ready to assume an active role in resolving the crisis. Hungary and perhaps some of the other countries affected approached the EU and asked for diplomatic help. The representatives of Gazprom and Naftogaz arrived in Brussels, and apparently they agreed to accept EU observers on the spot who could help resolve the dispute between the two countries. The head of Gazprom, Aleksei Miller, announced that if the observers could travel to the Russian-Ukrainian frontier immediately the "faucets" could be open tomorrow. Ah, but the European Union can't move that fast. All members must agree. Who knows when Russian natural gas will flow again to Bulgaria, Romania, Slovakia, and Hungary.

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Op
Guest

Hungary has about two week’s worth of supplies (not two months). Many factories and other businesses had to either close down or switch to limited production and alternative fuel. Just because Hungary is a little better off than Bulgaria it doesn’t mean we’re not in deep trouble. The last thing we needed was another avoidable crisis. Will we ever learn?

Eva Balogh
Guest

Op: “Hungary has about two week’s worth of supplies (not two months).”
Fortunately, you’re mistaken.

Op
Guest

“Fortunately, you’re mistaken”
Prove it.

Eva Balogh
Guest

Op: “Fortunately, you’re mistaken” Prove it.”
That is whether two weeks worth of reserve is available in Hungary or two months. There are two kinds of reserves: strategic and commercial (stratégiai and kereskedelmi). Until today they haven’t even touched the strategic reserves which are enough for eight days. But together with the commercial reserves the supply should last until the end of the heating season. Look it up! Every newspaper is full of the details.

Op
Guest

Why would Gyurcsany tell us two weeks when it’s two months? He’s our last remaining optimist, and the champion of truth. I believe him, do you?

Eva Balogh
Guest

Op:”Why would Gyurcsany tell us two weeks when it’s two months?”
Most likely he was talking about the strategic reserves. You either didn’t pay enough attention or didn’t even know that there are two kinds of reserves. Even Zsolt Németh was confused.

Odin's lost eye
Guest

Hungary needs to find new sources of energy. There is a huge energy source going begging in Europe. In the UK I did some experiments to get at it and got told off plus the threat of a £20,000 fine if I continued.

Op
Guest

“You either didn’t pay enough attention or didn’t even know that there are two kinds of reserves.”
The so-called “strategic reserves” can only pump a little over 3 million cubic meters of gas into the system. The average need is about 65 million a day, at least when it’s not very cold out there.
The other “non-strategic” reserve can supply around 50 million cubic meters a day, but only for a limited time. They do have the gas but not the pressure required to actually deliver the gas. So if we get a cold January, we may run out of gas in weeks, not months.
Many companies are not getting any of the gas, in order to keep the population from freezing we had to give up doing business. Companies are not reimbursed for the loss.
Thank you former Soviet Union!

Eva Balogh
Guest

Op: “The so-called “strategic reserves” can only pump a little over 3 million cubic meters of gas into the system. The average need is about 65 million a day, at least when it’s not very cold out there.”
Your problem is that you assume that Hungary 100% depends on Russian gas. That’s not so. There is domestic gas and imported gas from the West. Believe they are telling the truth.

Op
Guest

“Your problem is that you assume that Hungary 100% depends on Russian gas.”
If Hungary only depends on Russia for 90 or 80% of its gas supply, is it any better?
Right now we are at the mercy of a single supplier to function. Once we have the Nabucco line, we will be able to switch from one supplier to another. That’s much closer to independence than what we have now. Of course we also need to increase our strategic reserves and eventually make the expensive but unavoidable transition to sustainable energy.

Eva Balogh
Guest

Op: “If Hungary only depends on Russia for 90 or 80% of its gas supply, is it any better?”
OK, I will repeat. Not 90 or 80% but less than 75%. There is home produced gas and there is gas coming from the West. Hungary is the best off of all Eastern European countries as far as supply is concerned. Why aren’t you happy? I would be.

Ricsi
Guest

“Why aren’t you happy ? I would be ”
Probably because he his in Hungary and can see the reality,unlike you in NY !

Eva Balogh
Guest

Ricsi: “”Why aren’t you happy ? I would be ” Probably because he his in Hungary and can see the reality,unlike you in NY !”
Of course, you could live in Bulgaria, in Slovakia or Serbia. Then you could be really unhappy. Then you would have reason to complain. For the time being you don’t have reason but you must attack the government even if it handles the crisis quite well. Just keep on complaining.

Jared Bunch
Guest

I thought the British found this HUGE gas pocket in Hungary that could supply all of the EU for 100 years. It’s not the Hungarians anymore they pretty much have sold off there country in the last 10 years anyway. Im sure they’ll sell off all the water in the worlds largest underground lake to Nestle or something as well.

Ricsi
Guest

Jared Bunch
Well said, just wait until the 2011 land act.when Hungarian land will be freely sold off to outsiders ,then you will see what remains pass into other hands with no long term interest for Hungary.
Hungarians should buy land now (its cheap) and protect it.

mls gta
Guest

Good article. I have some friends living in Central Europe, so I am a bit informed. It seems the solution is still nowhere. But as I heard, some countries are able to bypass this pipe, using Jamal (or Yamal?), or Norwegian sources…We are so lucky here to have good resources…
Best wishes and warm houses during the whole winter!
Julie

oil stocks
Guest

Hi,
There is home produced gas and there is gas coming from the West. Hungary is the best off of all Eastern European countries as far as supply is concerned. Why aren’t you happy? I would be.

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Guest

The crisis attacks every single spot of our lives

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