Hungary PM's gas ties slated ahead of Moscow deal

By Gergely Szakacs

BUDAPEST, Feb 27 (Reuters) - Hungary's government sought on Wednesday to defend its decision to join Gazprom's South Stream gas pipeline which some observers fear will scupper plans for an EU-backed project to cut dependency on Russian energy supplies.

Hungarian Prime Minister Ferenc Gyurcsany will go to Moscow on Thursday to sign up for South Stream, the rival to the EU's Nabucco project, handing Russia a victory in the battle to supply gas to Europe after Serbia and Bulgaria signed up too.

Zsolt Nemeth, chairman of parliament's Foreign Affairs Committee and the opposition Fidesz party's foreign affairs spokesman told a committee hearing on Wednesday that Gyurcsany should not be allowed to sign up without a parliamentary vote.

"The fundamental problem of Fidesz with the South Stream pipeline is that it increases the unilateral dependence of Hungary on Russia (for gas supplies)," said Nemeth, head of foreign policy for the main opposition Fidesz party.

Gyurcsany has frequently been criticised for his closeness to Russia and the Hungarian government has flip-flopped on the issue of Nabucco as it is dependent on Russia for 80 percent of its gas needs, one of the highest levels in Europe.

Hungary is a key transit point for Russian gas piped from Ukraine and Gyurcsany agreed to join the 10 billion euro ($14.82 billion) South Stream project during a visit by Dmitry Medvedev, President Vladimir Putin's protege earlier this week.

The U.S. has been pushing the European Union to ensure that Nabucco, a 3,300 km (2,051 mile) $6 billion pipeline across Turkey to central Europe, gets built and warned last week that South Stream could end up costing $20 billion-$30 billion.

The Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) and ENI SpA (ENI.MI: Quote, Profile, Research, Stock Buzz) project would pipe gas through the Balkans to Italy and a spur would come to Hungary under the deal to be signed on Thursday.