The controversy centers on the Hungarian government’s mid-March announcement that it had agreed to a Russian proposal to extend the Blue Stream pipeline, which crosses the Black Sea carrying natural gas from Russia into Turkey. Under the announced arrangement, Russian natural gas would reach Hungary from Turkey through Bulgaria and Romania. But some media are saying Hungary is positioning itself to gain preferential access to Russian gas and become a hub for Russian gas giant OAO Gazprom’s operations in Central Europe.

Furthermore, the argument goes, in agreeing to the deal the Hungarians became party to Russia’s efforts to tighten their grip on energy deliveries to Europe. The Blue Stream pipeline was built by Blue Stream Pipeline B.V., a Netherlands-based joint-venture of Gazprom and Italian oil and gas firm ENI, and has been operating since November 2005. Another concern, the media say, is that Hungary’s decision sabotages the EU’s pet project – the 3,300 kilometer Nabucco pipeline, which is intended to circumvent Russian routes in bringing Caspian and Middle East gas to Europe, by way of Austria, via Bulgaria, Romania and Hungary. Construction is expected to begin in 2008 and finished in 2011 or 2012. The €4.6 billion project was trumpeted last June, when it was announced that it would be online by 2011, but already it has been hit by delays. Construction of the pipeline will require about 2.5 million tonnes of steel.

 
The Hungarian government has defended its actions by claiming that Nabucco is still a „distant dream” and that the country had to face reality. Hungary’s gas consumption, it claims, is increasing and the country can’t wait for Nabucco to be completed. „If Hungary could win the contract to store 10 billion cubic meters of Gazprom’s gas, if the Blue Stream pipeline’s distribution point would be here in Hungary, and if we could bring Nabucco here as well, and if we could also get hold of liquefied natural gas, then there would be practically no energy risk,” said János Kóka, Hungary’s minister of economy and transport, during a July 2006 news conference. „The state would also earn money from the transit fees,” he added.

Kóka went on to say that as a state minister, his job is to ensure that energy supplies are secure. And his views on Russian policy weren’t in the least bit rosy. „More than 80% of Hungary’s natural gas comes from Russia,” he said. „We are overly dependent on Russian gas, and Russia clearly wants to strengthen its monopoly.” In January 2006, during the dispute between Ukraine and Russia over gas prices, Hungary temporarily experienced a 40% reduction in Russian gas deliveries.

 
Despite the criticism of Hungary, the Nabucco consortium hasn’t exhibited much concern and in March began talks with Gaz de France for its possible inclusion in the international project. The hope is that adding the French to the consortium–which currently is made up of five gas companies, Austria’s OMV AG, Hungary’s MOL Nyrt, Romania’s Transgaz, Bulgaria’s Bulgargaz and Turkey’s Botas International – will boost the project’s credibility.

Meanwhile, the Hungarians have a possible ace up their sleeve. Falcon Oil & Gas, a Canadian-owned company, announced in January that Hungary could become a net exporter of gas within five years if a large gas field located near the southern Hungarian town of Makó meets expectations. The Makó field is estimated to hold some 617 billion cubic meters of gas. Test production is to begin in April. If it proves successful, the Makó field couldn’t only meet Hungary’s needs, but supply gas to Romania, Serbia, Ukraine and Western Europe. (cbw.cz, Radio Liberty;bptimes)