February 1, 2013 / 9:56 AM / in 5 years

Hungary to pay about 800 mln euros for E.ON gas units

BUDAPEST, Feb 1 (Reuters) - Hungary is to pay about 800 million euros ($1.1 billion) for the local gas units of German utility E.ON as the import-dependent central European country tries to boost energy security and wrestle better prices from key supplier Russia.

Hungary gets over 80 percent of its annual gas needs of 11-12 billion cubic metres through imports, mostly from Russia, the former Communist overlord of the European Union member state.

Hungary signed a “declaration of intent” on the deal with E.ON in November and on Friday Prime Minister Viktor Orban said the final agreement, under which state energy firm MVM would buy E.ON’s gas trade and storage units, needed only rubber-stamping.

“Yesterday MVM ... held a general meeting and made a decision about this. All decisions have been made and only wording tasks remain,” Orban told public radio a day after a meeting with Russian President Vladimir Putin in Moscow.

Without specifying how much Hungary would pay for the assets, Orban said media reports about a 800-million-euro price tag were “not unrealistic”.

E.ON, however, did not confirm there was an agreement. A spokeswoman declined to comment on Orban’s remarks.

Orban said a key plank of the transaction was a contract governing gas imports from key Russian supplier Gazprom in which Budapest has had no say thus far. Orban said that situation had been unacceptable.

“Therefore, now when we reached a deal with E.ON, then we also purchased the contract, so in the future it will be Hungary negotiating with the Russians how much gas it wants to import and at what pace and at what price,” Orban said.

E.ON’s gas wholesale unit E.ON Foldgaz Trade Zrt is Hungary’s biggest gas trader. Its storage unit E.ON Foldgaz Storage Zrt operates four gas storage facilities, with a total capacity of 4.2 billion cubic metres, according to its website.

The price of natural gas has long been a hot political issue in Hungary, whose import deal with Gazprom expires in 2015.

Facing an election in just over a year, Orban’s government imposed a 10 percent cut in electricity and gas prices for households and is exploring further ways to reduce utility bills in the recession-hit country of 10 million people.

$1 = 0.7367 euros Reporting by Gergely Szakacs; Additional reporting by Tom Kaeckenhoff in Duesseldorf; Editing by Mark Potter

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below