As I mentioned yesterday, Ferenc Gyurcsány agreed to write five articles for a new column launched by the editor-in-chief of Galamus, an internet news and opinion website. Most newspapers immediately picked up on the fact that Gyurcsány was commenting on the political news of the week and normally summarized what he had to say. The biggest splash was his last note. He decided to defend Viktor Orbán's trip to Baku and his signing an agreement with Georgia, Azerbaijan, and Romania to build a new pipeline from Azerbaijan and Georgia to Europe via Romania and Hungary. I wrote about the project in detail a few days ago.
Since then most commentators have viewed the project as unrealistic for several reasons, including the lack of a sufficient amount of available natural gas in Azerbaijan and the expense of liquedation and regasification. People also pointed out the diplomatic complications such a project will most likely create in Hungary's relationship with the European Union and Russia. I personally share these worries as should be clear from my earlier writing on the topic.
Ferenc Gyurcsány thinks differently. He began his article by quoting Gábor Horváth in Népszabadság, who argued that "Viktor Orbán administered a huge kick in the teeth of the Nabucco pipeline" when he signed a letter of intent to build the AGRI pipeline. According to Gyurcsány, this is "an exaggeration."
First he renumerated Europe's natural gas needs, which used to be 500 billion m3 a year. Today it is, due to conservation and the growth of green energy sources, approximately 450 billion m3. One third of these needs is produced locally, one third comes from Russia, and the rest from elsewhere. Hungarian consumption is 13-14 billion m3 per year of which 80% comes from Russia. Such dependency on one source is worrisome, and decreasing this dependency is of paramount importance.
The current risk is twofold. One is the route of the pipeline. There is only one pipeline coming from Russia and it goes through Ukraine. If there is any problem between Russia and Ukraine concerning the gas supply, no gas can reach Hungary. Disputes between these two countries have been numerous and there were weeks when Hungary received no natural gas whatsoever. During Gyurcsány's tenure as prime minister Hungary signed an agreement with Russia concerning the building of another Russian pipeline called the Southern Stream about which one can read in this blog. At that time Viktor Orbán attacked Gyurcsány for dealing with the Russians, and I understand that the United States was also unhappy about this agreement. Some people accused Gyurcsány of being too friendly with Russia and turning his back on the Nabucco pipeline, a European Union project. However, Gyurcsány kept repeating that Hungary is also supporting the Nabucco pipeline because he considered that drawing on three sources of natural gas was better than relying on one or two.
The other problem with the current situation is that all the gas comes from one source, meaning Russia. Outside of Russia there might be two potential sources. One is the area between the Caspian Sea and the Caucasus, especially Azerbaijan and Turkmenistan, and other the Gulf region, for example Qatar. AGRI and Nabucco would carry natural gas from the former region while liquefied gas (LNG) could come from the latter to Croatia and from there to Hungary.
The Southern Stream and Nabucco could each carry between 10 and 30 billion m3. Half of this amount according to European Union regulations must be given to countries that are not directly involved with the project. The rest is to be shared by the countries who are signatories to the agreement. In Hungary's case that would mean between 2 billion m3 at maximum capacity or at minimum only 700-800 million m3. AGRI according to news that reached the public would produce 2-8 billion m3 which means that Hungary would receive only a few million m3 of natural gas a year through AGRI. Thus, concludes Gyurcsány, neither of these projects solves Hungary's dependence on Russian natural gas by itself. Therefore, it is a good idea to work on several projects at the same time.
Gyurcsány admits that we know relatively little about the AGRI project. We have been told that it will be able to carry between 2 and 8 billion m3 of gas a year and that the cost of building the pipeline would be between 1.5 and 4.5 billion euros. The two most important considerations here are the availability of gas and the financing. As for financing Georgia, with its very large debt, is in the worst situation. Of course, Hungary's debt is also far too high, and Romania's situation is not rosy either.
An even bigger problem is the Azeri natural gas supply. Azerbaijan contracted to supply the Turks (6 billion), the Russians (2 billion), the Georgians (1-1.5 billion) and even the Iranians (a few million m3 ). That amounts to about 9-10 billion m3 per year. In addition, Azerbaijan itself needs about 10 billion cubic meters. That is altogether about 20 billion m3. Azerbaijan also promised to supply Syria (1 billion), Jordan (1 billion), and Nabucco (10-12 billion) in addition to AGRI (2-8 billion). But in 2009 Azerbaijan produced only 16.9 billion m3 and this year's production is estimated to be 17.2-17.9 billion m3. Azerbaijan's hope lies with the Sah-Deniz fields that are supposed to be further developed by BP, but the work is being postponed for obvious reasons–BP's oil spill in the Gulf of Mexico.
Yet, with all these obstacles, according to Gyurcsány, Orbán did the right thing when he went to Baku. The opposition should not criticize him and accuse him of spending too much money on a private plane. This is petty and not worthy of a "responsible" opposition. Well, I don't think that he will find a similarly generous gesture on the other side.