Hungary will never become a gas hub for the region; gas flows will be decided by traders, not by politicians (FGSZ)

Sorin Melenciuc 27/06/2018 | 13:04

Hungary will not become a natural gas hub for the region, because it will never be transited by large quantities of gas, and the gas flows through the country will be decided by the traders, not by politicians, Hungarian gas transmission monopoly’s CEO Kristof Terhes told Romanian journalists in Bucharest.

FGSZ, a company owned by the Hungarian energy group MOL, operates the natural gas transmission network in Hungary and could play a key role in the region following the development of gas transmission network.

The company aims also to play a key role in the export of the Romanian offshore natural gas within the next decade.

“Romania is not really capable of consuming all its potential gas production. For comparison, only around 30 percent of Romanian households are currently connected to the gas distribution network, compared with 95 percent in Hungary,” Terhes said in a meeting with Romanian energy journalists.

FGSZ managers point out that Romania needs to export its gas from the Black Sea, and the only reasonable option is Hungary, highlighting the geographical position of Hungary.

“If you want to go to Germany by car, which way would you choose from Romania?” one manager asked reporters.

Hungary’s gas transmission network is key for investment decision to develop gas fields at the Black Sea, because it reduces the total cost, FGSZ says.

However, despite this strong position in the future gas supply of the region, Hungary lacks the potential to become a real gas hub.

“Hungary will never become a gas hub. You need gas flows of at least 40-50 billion cubic meters per year to be a gas hub,” Terhes indicates.

FGSZ estimate Austria will maintain its strong position within the next decades in the region, through its gas hub located in Baumgarten, and Romania has few chances to obtain such a role.

“”In order to become a gas hub, Romania needs an open market and two or three different sources” of gas supply, and it needs a predictable legislation, FGSZ managers point out.

Hungarian managers also denied allegations on politically oriented strategy of energy infrastructure in Hungary.

“It’s not the politicians who decide where the gas goes, but the traders. (…) The gas will go to the highest price,” Terhes said.

Investments in the Romania’s Black Sea oil and gas sector will generate revenues of over USD 26 billion to the public budget and an additional USD 40 billion to the country’s GDP until 2040, as a result of total investments of USD 22.2 billion, according to a recent Deloitte report.

Deloitte estimates a total production of close to 170 billion cubic meters of natural gas in Romania’s offshore fields, based on a prudent scenario.

The cumulated value of the future expenditures on Romania’s offshore exploration, development and production is estimated at USD 22.2 billion, out of which USD 15.7 billion capital expenditure (CAPEX) and USD 6.5 billion operating expenses (OPEX).

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