Hungary ceases transporting gas to Ukraine, Naftogaz reports

Ukraine’s leading natural gas producer and monopoly gas transporter Naftogaz (NAFTO) reported that the Hungarian operator of its gas transit system FGSZ stopped providing services to Ukraine as of 7 p.m. on Sept. 25. Naftogaz has concluded gas purchase agreements with some Western Europe-based traders, and it’s using the FGSZ pipeline to transport this gas to Ukraine. Neither Naftogaz nor its Western European partners have been informed of the reasons and timing of the stoppage, according to the company’s press release. At the same time, the volume of gas transported from Russia to Hungary (through Ukraine) remains unchanged, Naftogaz said.

In the Sept. 25 press release, Naftogaz blamed pressure from the Russian government for the Hungarian operator’s move, recalling that on Monday, Gazprom CEO Alexey Miller had a meeting with the Hungarian prime minister. Another fact that suggests Russia’s role, the press release said, is the stoppage occurred on the eve of a new round of gas talks between Ukraine and Russia, with the EU as an intermediary. The talks were scheduled for Sept. 26 in Berlin.

Alexander Paraschiy: It’s hard to find something to add to Naftogaz’s analysis of the reasons for the Hungarian gas stoppage. We have no doubt that this is the latest attempt by the Russian side to gain some bargaining power in the gas talks. Hungary is one of the three routes of natural gas supply from EU to Ukraine, and despite its capacity being much smaller than the Slovakian route, its importance for Ukraine’s gas balance is high this season, when Ukraine is struggling to get by without direct supplies of Russian gas.

Certainly, it’s strange to observe EU-based operators doing what the EU leadership urges Ukraine not to do (just imagine what would be the EU’s reaction if Ukraine unilaterally stops transmission of Russian gas to the West). We hope that official EU bodies will help Ukraine to solve this latest problem.

This event, as well as the attempts by Gazprom to limit supplies of natural gas to Ukraine from the other two routes in early September, illustrates just how risky the Ukrainian government’s goal is of trying to live without Russian gas this winter. Clearly, without the help of the EU and possibly the U.S., it will be hard for Ukraine to withstand Russia’s energy blackmailing. We also hope that the Ukrainian side will be able to find good arguments to persuade EU-based gas traders to start buying Russian gas at the Russia/Ukraine border.