Russian energy giant Gazprom PJSC OGZPY will reportedly allow Hungary to delay payments for natural gas if necessary, as rising imports threaten to derail the country’s strained budget.
The move comes days after the company suspended natural gas supplies to Italy in an apparent dispute over regulation in Austria.
What happened: Hungary won a three-year delay on gas bills due in the next six months, reported Bloomberg citing the Ministry of Economic Development.
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At 300 euros per megawatt hour, that would be 3.5 to 4.5 billion euros, the report said, citing the ministry. The agreement is between Gazprom and the state-owned Hungarian energy company MVM Zrt.
Natural gas prices in Europe fell, with benchmark futures down 10% after signs the continent will cope this winter with adequate inventories, an influx of LNG and European Union measures to contain the crisis.
Due to the war in Ukraine and supply problems, natural gas prices have seen volatility this year, peaking in August before prices fell.
Price promotion: That United States Natural Gas Fund, LP UNG has gained over 75% this year while the First Trust Natural Gas ETF FCG increased by over 35% in 2022. Gazprom shares in Russia ended down 0.86%.
Why it matters: The development is a much-needed relief for Hungary as billions of euros in EU funds are frozen over corruption concerns under the prime minister Viktor Orban, according to the report. International reserves are insufficient to cover imports for at least three months and Hungary’s currency, the forint, is trading at an all-time low despite the EU’s highest policy rate, partly due to Hungary’s reliance on imported Russian gas, sources said.
The cost of oil and gas imports rose to an estimated $19 billion this year from $4 billion in 2019, the report said, citing government data.
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