September 26, 2014 / 8:27 AM / 5 years ago

UPDATE 1-Hungary to import more gas from Gazprom, says PM Orban

* Hungary to speed filling of gas storage facilities -Orban

* Gazprom to ship increased volumes in coming weeks-Orban

* Hungary stops shipping gas to Ukraine, cites higher imports

* Naftogaz calls on Hungary to respect contractual obligations

By Krisztina Than

BUDAPEST, Sept 26 (Reuters) - Hungary has secured agreement for increased gas imports from Russia’s Gazprom, Prime Minister Viktor Orban said on Friday, a day after Hungary’s pipeline operator FGSZ stopped shipping gas to Ukraine.

Orban told public radio that he held talks with Gazprom CEO Alexei Miller and that the company had agreed to ship increased volumes of gas to boost levels at Hungary’s storage facilities in the coming weeks.

Orban’s announcement about Hungary’s efforts to avoid any supply problems resulting from a potential halt in shipments because of the Ukraine crisis follows FGSZ stopping gas shipments to Ukraine because its pipeline is needed for higher imports.

The move triggered a protest from Ukraine’s Naftogaz, which urged its “Hungarian partners to respect their contractual obligations and EU legislation”.

“Naftogaz calls on the EU to ensure a collective solution to the energy security of Europe and the respect of EU internal rules. Neither EU countries nor Ukraine should be put under political pressure through energy blackmail,” Naftogaz said in the statement on its website.

The shipments to Ukraine have been suspended indefinitely, FGSZ said on Thursday.

Later on Friday the EU aims to propose an interim solution to the gas row between Russia and Ukraine at talks it is brokering in Berlin to avert a winter gas supply crisis.

Timothy Ash, an analyst at Standard Bank, suggested that the Gazprom deal could be part of Moscow’s strategy on Ukraine.

“Hungary also suspended reverse gas supplies to Ukraine last night. This comes after Gazprom’s CEO, Alexei Miller, met Orban on September 22, and reflects perhaps on Hungary’s own 10 billion euro deal for an upgrading of its nuclear power facilities, significantly funded by Russia,” Ash said in a note.

RELIANT ON RUSSIA

Hungary is heavily reliant on Russian gas. Annual consumption is about 9 billion cubic metres, with most of the gas imported by pipeline from Ukraine. Hungary also has domestic annual production of about 1.5 billion cubic metres.

The central eastern European country has large storage capacity of about 6 billion cubic metres. Its storage tanks are currently a little more than 61 percent full, the lowest percentage in the European Union, according to data from Gas Infrasctrure Europe.

Apart from Portugal, where tanks are 75 percent fall, the rest of European Union countries have storage tanks more than 80 percent full, with most near capacity.

Orban said Hungary’s storage would be boosted in the coming weeks and that, regardless of the severity of the Ukraine crisis, Hungary cannot get into a situation in which its people do not get the energy they need.

“I had talks with the Russians, the leader of Gazprom, about this, that we will need a large amount of gas in the coming period to increase the stored volumes,” he said. “And we will get this large amount.”

Orban did not indicate how much additional gas Hungary, which also exports gas to Ukraine, would receive from Gazprom.

Erste Bank oil and gas sector analyst Tamas Pletser said that Hungary’s gas storage facilities are the fourth-largest in Europe and could ensure the country would avoid serious supply disruptions even if gas flows from Ukraine stop in the winter.

Hungary can also import gas via a pipeline coming from Austria. (Reporting by Krisztina Than; Editing by David Goodman)

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