Europe needs long-term contracts with gas suppliers, says Hungarian Foreign Minister – Business & Economy

NEW YORK, January 20. /TASS/. Signing long-term agreements with gas suppliers would be key to solving Europe’s energy crisis, Hungarian Foreign Minister Peter Szijjarto said in an interview with TASS.

“I think the key for Europe to solve the gas crisis is to fill storage capacities and sign long-term agreements with suppliers,” Szijjarto said.

He reiterated that Russia has proven to be a reliable partner in this area.

“As far as energy issues are concerned, I must tell you that we are very satisfied with our cooperation with Russia. I have very clear experience that everything we have agreed with the Russians, it has always been respected, always also we accepted. So, we respect that a lot. It’s a very good experience,” he said.

As for those who criticize energy cooperation with Russia, the head of Hungarian diplomacy reminded them that political declarations will not warm hearths in Europe.

“So what I say to my colleagues who criticize us for long-term cooperation with Russia is that houses and apartments cannot be heated by political statements. The only way to heat them is by ‘have natural gas,’ he said.

The gas market crisis in Europe

Europe’s gas crisis exploded last fall, after spot gas prices began to soar above $1,000 per 1,000 cubic meters, reaching almost $2,000 per 1,000 meters. cubes in a context of low occupancy rates of gas storage facilities.

According to observers, the crisis was triggered by a number of factors. One has been the explosive growth in demand for gas from Asia, which has caused prices to spike in the Asian market, as well as an exodus of supplies from European routes. The situation has been aggravated by the fact that the share of wind generation in Europe has plunged.

However, the main reason for the high volatility in the gas market was the low capacity rate of gas storage facilities. In mid-October, European underground gas storage facilities were filled to 71% of the volume of gas taken from them last season.

In October 2021, Russian President Vladimir Putin pointed out that gas supplied by Gazprom to Europe under long-term contracts costs EU countries four times less than gas purchased on the spot market. According to him, Russia is interested in long-term contracts whereas the last policy carried out by EU countries in terms of regulating the gas market consisted of abandoning long-term contracts in favor of spot contracts.

Laura T. Thrasher