Despite the ongoing war, Russian gas had continued to flow through Ukraine as part of a deal from 2019. However, that agreement only ran to the end of 2024. As expiration approached last year, Ukraine declined to renew the arrangement (it had signaled this would be the case a year earlier), saying it would no longer continue to finance Russia’s aggression against it.
Although supplies officially halted on Jan. 1, Szijjártó said that since the decision was finalized in mid-December, the price of natural gas on the European market had increased by 20%.
“While Ukraine is trying to join the EU as a candidate country, it has once again put the European economy in a more difficult position with its latest decision,” Szijjártó said.
He argued that Hungary’s neighbor should honor the “Association Agreement between the EU and Ukraine, which also provides for the maintenance of energy transport routes.” Instead, Ukrainian President Volodymyr Zelensky celebrated the pipeline closure on Jan. 1, framing it as a significant blow to Russia’s energy dominance.
“When Putin was given power in Russia more than 25 years ago, the annual gas pumping through the territory of Ukraine to Europe amounted to 130+ billion cubic meters,” Zelensky said. “Today, the transit of Russian gas is zero. This is one of Moscow’s biggest defeats.” He described it as a step toward ending the Kremlin’s energy blackmail while advocating for alternative energy partnerships, particularly with the United States.
Zelensky noted that many European countries had already divested from Russian resources, but those still dependent have been left scrambling to make up the shortfall. While Szijjártó acknowledged that Hungary would be affected by the price changes, he maintained that efforts to diversify its natural gas supply meant the country’s energy supply was secure.
Slovakia, on the other hand, has become one of the most affected nations, as it also grapples with a significant loss of revenue; prior to the shutdown, Slovakia had benefited from transit fees from Russian gas traveling through its territory to Austria and the Czech Republic. Now, with flows redirected, Slovakia has not only lost this revenue but has also become more dependent on Hungary for its gas needs.
Gas deliveries from Gazprom intended for Slovakia’s domestic use, under a long-term contract with the country’s primary supplier SPP, which supplies roughly two-thirds of the Slovak market, also ceased following the termination of the Ukraine transit route.
Data from Slovak gas transmission operator Eustream showed daily gas flows from Hungary to Slovakia reached 87 gigawatt hours (GWh) on Jan. 6, the highest level since the beginning of the year. While still below the late 2024 peak of around 100 GWh, the absence of exports to Austria and the Czech Republic indicated that the total remained within Slovakia.
SPP stated that the Hungarian route, which transports gas from Russia via the TurkStream pipeline, has become a crucial alternative following the halt of flows through Ukraine. According to one active gas trader, Hungary may actually benefit from the situation.
“Russian natural gas supplies to Europe via Ukraine have stopped, which has tripled the value of the Hungarian gas system,” a market source told Index. Szijjártó did not hesitate to highlight the establishment of this safeguard.
“I remember well the discussions years ago about whether to build the Turkish Stream gas pipeline,” Szijjártó recalled. “And I also remember well the threats that came from our allies, just as I remember well how they tried to ‘friendly’ dissuade us from this investment. If we had not been able to resist the ‘friendly’ pressure then, we would now be in a very, very difficult situation as a landlocked country,” he added.
This article was first published in the Budapest Business Journal print issue of January 10, 2025.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
