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Hungary capitalizes on geopolitical shift as Russian gas transit via Ukraine suspended

With the suspension of Russian gas deliveries to Europe through Ukraine, Hungary is positioned to take advantage of a significant geopolitical opportunity. According to Hungarian media, these developments have tripled the value of the country’s gas system.

On January 1, Russian gas company Gazprom announced it could no longer transport gas through Ukraine, leading to the closure of the pipeline. However, Hungary stands to benefit as Russian gas continues to flow through the TurkStream pipeline.

The shutdown of the Ukrainian route has exposed previously hidden financial aspects of Russian gas trading. Ukraine claims it is losing $800 million annually due to the failure to renew its transit contract, while Russia faces losses of $6 billion. Slovakia and Austria are also heavily impacted, while Hungary has been able to reduce its losses by shifting its reliance to TurkStream. As a result, three potential scenarios are being explored: replacing Russian gas in Central and Eastern Europe with LNG, using Azeri gas through Ukrainian pipelines, or negotiating a new gas agreement between the EU, Ukraine, and Russia.

In recent years, Hungary’s position in the regional gas market has strengthened. The country now has interconnectors that allow gas to flow in both directions with nearly all neighboring countries, with Slovenia being the only exception—a gap that is set to close with the Hungarian-Slovenian agreement signed in October 2023.

As other major pipelines, including Nord Stream 1 and 2, have gradually been decommissioned since 2022, Hungary’s strategic importance has increased. TurkStream is now the only active pipeline transporting Russian gas into the EU, entering through the Hungarian-Serbian border.

Hungary’s gas system has become a regional leader, with its value tripling following the shutdown of the Russian-Ukrainian-Slovak transit. However, to fully capitalize on this opportunity, a more stable and predictable regulatory framework is required.

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