Gazprom stores some of its natural gas in Hungarian facilities

I guess it is high time to talk about Vladimir Putin and natural gas.

First, Putin’s trip to Serbia. Serbia and Russia have had close ties for more than a century. The only exception I can think of is the 1948-1954 period when Tito was considered to be the “chained dog of the imperialists.” But otherwise in all conflicts Russia stood by Serbia. Serbia’s financial situation is pretty grim at the moment, and I understand that without Russian help Belgrade would be in even greater economic and financial trouble than it is. The closeness of the two countries is demonstrated by the fact that the date of the celebration of the 70th anniversary of the liberation of Belgrade by the Red Army was moved forward to accommodate Vladimir Putin’s schedule. The military pomp on display to impress the Russian president was noteworthy, especially in view of Serbia’s insistence that she wants to become part of the European Union.

Putin decided to use this opportunity to deliver a stern message to Europe. He warned Brussels that as long as the Ukrainian crisis is not settled, naturally in favor of Russia, gas supplies to Europe might be disrupted just as happened in 2006 and 2009. He said that he himself will do everything to avoid such an eventuality, but if it does happen it will be the fault of the European leaders.

Almost at the same time news reached the West that Hungary will store Gazprom gas. You may recall that Hungary purchased the German-owned E.ON gas storage facilities in 2013 for an incredibly high price. The story of that purchase is well summarized in an article in the Budapest Beacon, according to which the Hungarian state-owned company, MVM, may have lost $2.6 billion as a result of the deal. Given the pervasive corruption in Hungary, analysts were certain that the purchase of E.ON’s business units was “a success story for certain business circles but a huge loss for the national economy as a whole.” This assessment might not be on target. It is more likely that Viktor Orbán’s eagerness to purchase E.ON at whatever price stemmed from a deal with Gazprom to use Hungarian storage facilities. Aleksey Miller, CEO of Gazprom, visited Budapest in October 2012. At that time Miller agreed to such a deal, but only if the storage facilities were in the hands of the Hungarian state. A year later Orbán obliged.

gaztarolok

So, what kinds of storage facilities are we talking about? E.ON Földgáz Storage Zrt. has five underground facilities in which it can store 3,740 million cubic meters of natural gas. According to Hungarian sources, these underground storage facilities are the best and the largest in the region and  fourth in size in Europe. As a result, in 2009 Hungarians were more or less unaffected by the gas shortage when Russia stopped the flow of gas through Ukraine to Europe.

I was pretty sure by the end of September that something was afoot concerning Russia’s use of Hungary’s storage facilities, but it was only on October 10 that I read an AFP report which noted that although Hungary is steadily buying gas from Russia, it is also storing Russian-owned gas. The article noted that “it is unusual for the company to store gas still owned by Gazprom, which is locked in a dispute with Kiev that some fear could see transit through Ukraine halted for the third time in a decade.” According to the spokesman of MVM, the owner of the facilities, “with this agreement Gazprom will be able to comply with its long-term contract obligations, should there be problems on the transport routes.”

Kyiv Post tersely noted the Russian-Hungarian deal without adding any editorial comment. But Kiev must see the deal as an antagonistic move because, with it, Russia can supply gas to Europe at the same time that it squeezes Ukraine.

As for the amount of stored gas owned by Hungary, this number is difficult to estimate. Throughout September the Hungarian media was full of complaints about Hungarian tardiness in filling the country’s storage facilities. In mid-September HVG claimed that they were only 58 percent full. Moreover, if one can believe MTI, a month later, on October 16, the situation was exactly the same. Opposition politicians naturally blame the Orbán government for its tardiness and predict terrible consequences come winter. But I suspect that something else might be behind the procrastination of the Hungarians. The Russian-Hungarian deal to store Russian gas in Hungary was signed only at the end of September, and it is very possible that in return for its “generosity” Hungary managed to get a lower price on Russian gas. I can’t think of any other rational explanation for not filling the storage facilities as quickly as possible. Especially since other European facilities are 80-90% full. Perhaps we will eventually learn the real story, although I’m sure that the Hungarian government will do its best to conceal it.

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tappanch
Guest

“MFGT has four underground storage facilities in Hungary with a total annual working gas storage capacity of 4.43 billion cubic meters”

Zsana 2.17
Hajdúszoboszló 1.64
Pusztaederics 0.34
Kardoskút 0.28

comment image

http://www.magyarfoldgaztarolo.hu/en/BusinessOperation/StorageSites/Lapok/default.aspx

tappanch
Guest

2014.10.09
“Hungarian Gas Storage Ltd storage capacity announcement”

http://www.magyarfoldgaztarolo.hu/en/news/SitePages/newsDetails.aspx?NewsID=164

2014.10.13
“MFGT Daily Peak Plus Natural Gas Storage Service Offer”

http://www.magyarfoldgaztarolo.hu/en/news/SitePages/newsDetails.aspx?NewsID=165

Istvan
Guest
Putin told the Serbian daily “Politika” yesterday that isolating Russia was an “absurd, illusory goal” and attempts to do so would hurt Europe’s economy. Putin went on to say: “We hope our partners will realize the futility of attempts to blackmail Russia and remember what consequences discord between major nuclear powers could bring for strategic stability.” Let’s be clear here who is rattling the nuclear sword, it isn’t the USA or NATO, its Russia. But let’s also be clear some of us in the United States who pay attention to these things also hear the nuclear sword rattling and unfortunately many Americans will listen to the calls for significant increases in our strategic forces inclusive of a voiding of the START treaty. I was raised in the middle of the nuclear arms race and it had significant consequences for both the United States and Russia. Clearly it’s Putin who is trying to polarize things not President Obama and my government. Hungary can help things by making it clear that sanctions over the Russian occupation of significant parts of Ukraine are not “blackmail,” but a consequence for bad international behavior. But Orban’s repeated comments mirroring the political line of the Russians… Read more »
tappanch
Guest

Here is the fifth Hungarian-owned facility:

Szőreg-1: 1.9 billion m^3, including 1.2 designated “strategic”

http://www.mmbf.hu/en/web/guest/clients/actual/capacities

“The injection cycle in the 2014-2015 storage year starts on April 16, 2014 and will be closed on October 15, 2014, whereas the withdrawal cycle starts on October 31, 2014 and will be closed on March 31, 2015.”

tappanch
Guest

comment image/ea1ac2be-9148-41e8-996e-f326a650ea9c

carrot
Guest

“E.ON Földgáz Storage Zrt. has five underground facilities in which it can store 3,740 million cubic meters of natural gas.”

If the storage is 60% full already then the Russian gas couldn’t be more than 10-20% assuming it is impossible to sell the full remaining capacity. Meaning say 700 mcm gas. How much is that counting in European consumption? 10 days worth? 5 days worth? Or even less? Does anyone know?

tappanch
Guest

According to the two state-owned storage companies themselves, MVM and MFB [bank], the total Hungarian storage capacity is 6.33 billion m^3 + at least 4.17 billion m^3 of cushion gas.

Of course, just a portion of the cushion gas can be used up without destroying the storage facility.

tappanch
Guest

Compare the Hungarian capacity of 6.33 in 5 facilities with the Austrian 5.69 billion m^3 in 6 facilities.

tappanch
Guest

# of gas storage facilities:

0: Slovenia, Estonia, Lithuania, Finland, Belgium, Greece, Norway, 3 Caucasian republics
1: Croatia, Slovakia, Serbia, Latvia, Sweden, Ireland, Portugal, Bulgaria, Turkey
2: Belarus, Denmark

5: Hungary, Netherlands, UK
6: Austria, Czech Republic (of which 5 in Moravia)
7: Poland
8: Romania
9: Italy
10: Spain
12: Ukraine
15: France
18+: Russia in Europe
30+: Germany

tappanch
Guest

Sources of daily supply of gas to the European Union, 2012:

Internal production: 20.5% to 31.6%
Underground storage: -34.2% (injection) to 30.7%
Russia: 21.1% to 26.9%
Norway: 13.2% to 24.6%

Liquid natural gas: 9.3% to 11.7%
Algeria: 3.8% to 4.6%
Libya: 0.7% to 1.4%

tappanch
Guest
Hungary was #4 in Europe in the amount of gas it can store underground or #5 in the overall storage capacity in 2012: Storage capacity / yearly internal demand: 1. Serbia [?] 1. Latvia: 1.68 2. Slovakia: 0.56 3. Hungary: 0.51 4. Austria: 0.44 4. Czech Republic: 0.33 5. Denmark: 0.29 6. France: 0.29 7. Germany: 0.25 etc. Here are my calculations: Working gas volume (WGV) of (underground storage facilities + LNG storage facilities) / internal demand in 2012, in TWh Germany: 225.1 / 909.1 = 0.25 Italy: (173.5 + 2.2) / 792.8 = 0.22 France: (137.0 + 5.6) / 494.8 = 0.29 Hungary: 53.5 / 105.7 = 0.51 UK: (52.3 + 13.9) / 841.5 = 0.08 Austria 39.9 / 91.2 = 0.44 Slovakia: 31.9 / 57.0 = 0.56 Romania: 29.6 / 132.6 = 0.22 Spain: (29.0 + 22.2) / 362.6 = 0.14 Czech Republic: 28.6 / 86.2 = 0.33 Latvia: 25.5 / 15.2 = 1.68 Netherlands: (21.4 + 3.6) / 396.5 = 0.06 Poland: 17.7 / 155.7 = 0.11 Denmark: 11.2 / 38.6 = 0.29 Belgium (7.5 + 2.4) / 185.7 = 0.05 Croatia: 7.1 / 29.7 = 0.24 Bulgaria 5.0 / 28.7 = 0.17 Serbia: 3.3 / 0… Read more »
tappanch
Guest

Obviously, the smaller the ratio is, the bigger the exposure of the country is to external disruptions of supply.

donlaszlo
Guest

“when Russia stopped the flow of gas through Ukraine to Europe”.
Well, the Russians reduced the flow and then the Ukranians reversed it (as far as I remember).

Guest

For those who think that Mrs Merkel is Putin’s friendor whatever:

They met for a long session in Milano:

http://www.spiegel.de/politik/ausland/angela-merkel-und-wladimir-putin-beim-krisengipfel-in-mailand-a-997664.html

PS:

Compare the reporting on this to the meeting of Mrs Merkel with Orbán in Milano which was hyped by the Hungarian media and not reported at all in Germany …

tappanch
Guest

Daily international transmission of gas in 2012, in TWh

from Ukraine: 0.60
from Austria: 0.13
from Croatia, Serbia, Romania: 0

to Serbia: 0.14
to Croatia: 0.08
to Romania: 0.05
to Austria: 0

Maximum possible daily change of gas in the 5 underground storage facilities:

out, “deliverability”: 0.55
in, “injection”: 0.37

maximum daily domestic gas production: 0.08

tappanch
Guest

@Eva

tappanch
October 16, 2014 at 3:18 pm

Fideszniks are upset that the US has started to enforce the anti-kleptokracy clause against them:

“Inadmissibility of Foreign Officials and Family Members Involved in Kleptocracy”

http://www.gpo.gov/fdsys/pkg/USCODE-2010-title8/html/USCODE-2010-title8-chap12-subchapII-partII-sec1182.htm

http://www.napigazdasag.hu/cikk/25771/

tappanch
Guest

Related info: sources of electric power of Hungary a short while ago:

% of domestic consumption:

Input:
Domestic: 65.1%
Ukraine: 17.0%
Slovakia: 14.3%
Austria: 6.4%
Romania: 4.8%

Output:
Croatia: 7.0%
Serbia: 0.6%

tappanch
Guest

The new Hungarian foreign minister, P. Szijjártó has demanded that Mr A. Goodfriend, the Chargé d’Affaires of the US embassy appear at his ministry.

He must be angry that his suspected “kleptokratic” friends cannot enter the US.

http://www.hvg.hu/itthon/20141017_Kitiltott_fideszes_uzletemberek_Szijjarto

D7 Democrat
Guest

Well done US (and also Norway) for standing up to the Orbanist Thuggocracy.

Pity the UK’s new ambassador is apparently made of less sterner material- his nickname of “Neville Chamberlain” is well-deserved

tappanch
Guest

The leaders of the state television have appointed a known anti-Semite and fan of Horthy to be the chief editor of religious an ethnic programs.

http://444.hu/2014/10/17/siklosi-beatrix-lett-a-kozteveben-a-vallasi-es-nemzetisegi-musorok-foszerkesztoje/

tappanch
Guest

Oops, here is a partial list of the kleptokrats banned from the US.

Arpad Habony, Orban’s eminence grise

Peter Heim, chairman of Orban’s think tank Századvég

Ildiko Vida, chairwoman of the Hungarian IRS

http://444.hu/2014/10/17/habony-arpadot-es-a-nav-elnoket-is-kitiltottak-amerikabol/

HiBoM
Guest

@D7, as a member of the EU (for now), the UK can’t ban the free movement of EU citizens in the way the USA can.

tappanch
Guest

to be more precise:

the banned fideszniks are not proven kleptocrats, but they or their family members are strongly suspected in involvement in kleptocracy.

HiBoM
Guest

When is Orbán next due in America???

tappanch
Guest

% of storage capacity filled with gas on October 16, 2014:

Ukraine: 52.4%
Hungary: 67.1%
Romania: n/a
Portugal: 84.5%
Bulgaria: 87.5%

Croatia: 90.9%
France: 91.3%
Slovakia: 92.3%

other European countries, including Germany, Italy, UK, Spain, Poland > 95%

The Rupert
Guest

Peter Heim is an interesting guy. He was responsible for the closure (effective bankruptcy) of Hypobroker Hungary (then owned by the German Hypobank which ended being part of Hypovereinsbank and later Unicredit) back in the day. He apparently operated a mini hedge fund within the firm and bet on the wrong horse when the Russian and Asian crises hit in the late 90’s. Despite the colossal loss (in Hungarian terms) he amassed, he became quite an influential finance background man.

tappanch
Guest

It takes about 25 to 30 days to fill the 1/3 empty storage in Hungary.

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