Hungary Should Free Up Storage, says IEA
The International Energy Agency (IEA) has said that the Hungarian government should facilitate use of its “abundantly available natural gas storage capacity by companies and agencies from other countries in the region.”
In a report on the country’s energy sector released June 15, the Paris-based agency also said that Budapest needs to formulate “a clear vision on the natural gas sector” ranging from power generation and district heating, down to the retail level where it calls “implementation of full retail market liberalisation” for gas.
In 2015-16, a number of suppliers including subsidiaries of E.On, Eni and Engie withdrew from the retail market, returning their licences as the obligation to offer retail tariffs at administered prices exposed them to major losses. Such prices are decreed by a minister, following advice from the regulator.
The IEA argues that government powers over gas in storage are too onerous – which means that relatively little of its working storage capacity of 5.13bn m3, run by commercial operators, is filled each winter. Greater use would improve the country's and region's security of gas supply, it argued.
Hungary consumed 9bn m3 in 2015, equivalent to 31% of total primary energy supply; that was 39% less gas than in 2005.
Gas for homes can't be stored commercially
"The gas storage service is made available on a regulated third-party access basis. Storage operators are allowed to offer capacity but the price is capped at the regulated level," said the IEA report. It notes a decision to raise the level of strategic (state) gas storage to 1.2bn m3 by end-October 2017, from 0.921bn m3. Rules that strategic stocks specified under a 2006 Act should serve exclusively the security of supply both of household and customers who cannot switch to other energy sources are not, the report suggests, encouraging full use of commercial storage assets.
In contrast, the agency commended Hungary’s role in enabling new interconnection pipes with neighbouring states to be built, not least with Romania (open since 2010), Croatia (2011), Ukraine (in reverse flow since 2013) and Slovakia (since 2015) – in part as a response to the cut-off of Russian gas exports via Ukraine in 2009.
The IEA said Hungary's indigenous production of 1.8bn m3 (2015) had declined by 41% over the preceding decade. It noted that Hungarian imported 6.8bn m3 (primarily from Russia) and exported 0.5bn m3 in 2015, and gas accounted for just one-sixth of power generation.
In a bilateral meeting with Prime Minister Viktor Orban prior to the report’s launch, IEA executive director Fatih Birol discussed global energy security and IEA modernisation, but underscored the importance of greater energy-supply diversification among its key recommendations.
Gazprom chief Alexey Miller said last week that Russian gas sales to Hungary in 2016 increased significantly to 5.7bn m3.
Mark Smedley