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Hungary Again Slams Bulgaria Gas Transit Levy, Says ‘Clear Breach’ of EU Rules

Hungary has again slammed the move by Bulgaria to impose a new levy on the transit of Russian gas, with government spokesperson Zoltan Kovacs saying Oct. 20 that the tax was a “clear breach” of EU regulations.

Hungary — which retains close ties with Moscow — is one of only a few EU countries that still takes significant volumes of Russian pipeline gas, mostly via TurkStream and onshore infrastructure in Turkey, Bulgaria and Serbia.

Kovacs said Bulgaria’s sudden hike in gas transit fees was a “hostile move” that ran contrary to EU laws, jeopardizing Hungary’s energy security and violating the principle of energy solidarity enshrined in EU treaties.

The new Bulgarian law, which is already in effect, imposes a new duty of Lev20/MWh (Eur10.27/MWh) on the transit of Russian gas.

Kovacs said MEPs of the ruling Fidesz party in Hungary had asked the European Commission to look into the issue.

“This act not only endangers the energy supply of Hungary and Serbia but also undermines the nations’ right to determine their energy mix, a clear breach of EU regulations,” Kovacs said.

He added that energy supply security and protection against high energy prices were “sovereignty issues”.

“The representatives vowed to defend Hungary’s sovereignty with or against the assistance of the European Commission, in response to Bulgaria’s adversarial action,” he said.

EU energy commissioner Kadri Simson said Oct. 17 that her Hungarian colleague had raised the issue of the new levy at a meeting of EU energy ministers in Luxembourg.

“From the EC perspective, my colleagues in trade will look into the details,” Simson said. “This is a trade measure and they will analyze the decision imposed by the Bulgarian side.”

The stand-off comes as European gas prices remain high. Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price on Oct. 19 at Eur50.17/MWh.

Russian assurance

Russian President Vladimir Putin on Oct. 17 assured Hungary that its Russian gas supply obligations would be met despite the new law in Bulgaria.

Putin and Gazprom CEO Alexei Miller met with Hungarian foreign minister Peter Szijjarto in Beijing on Oct. 17 with discussions centering on gas supply security.

“Putin and Gazprom’s CEO confirmed that contractual gas supply obligations to Hungary will be met despite the increase in transit fees in Bulgaria,” Kovacs said.

He added that Szijjarto also underlined that Hungary-Russia energy cooperation was a “prerequisite” for Hungary’s energy security and that so far this year Russia had supplied 4.8 Bcm of gas to Hungary, mainly via the TurkStream link.

Hungary can also receive Russian gas via Ukraine.

Putin also met with Hungarian Prime Minister Viktor Orban in Beijing in a rare face-to-face meeting between the Russian president and the head of an EU country and NATO member.

Hungary agreed a 15-year deal in September 2021 with Gazprom for the supply of 4.5 Bcm/year of gas but has been importing additional volumes on a short-term basis over the past two years.

Supplies via TurkStream into Southeast Europe remained strong in September, totaling 1.35 Bcm, having hit a new record monthly high of 1.43 Bcm in August, S&P Global data showed.

Flows via TurkStream at the Strandzha 2 entry point on the Turkey-Bulgaria border averaged 45 million cu m/d in September and hit a peak of more than 51 million cu m/d at the end of the month.

Flows in September were above the pipeline’s technical capacity of 15.75 Bcm/year as demand for TurkStream gas in Europe remained robust.

As well as Hungary and Serbia, Russian gas via TurkStream can also be delivered to Romania, Greece, North Macedonia and Bosnia-Herzegovina. The pipeline began flowing gas in January 2020.

Source : Spglobal