Bad news on gas transit: the pirates of the Turk Stream pipeline

HUNGARY - In Brief 14 Oct 2023 by Istvan Racz

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Sorting out the gas supply problem for the landlocked members of the EU (Austria, Czechia, Hungary and Slovakia) seemed to be relatively easy in theory last year: the solution would be cutting consumption, extending pipelines, importing more LNG to Europe and setting up new re-gasification units in big numbers. Quite simple on paper, and much of it has been indeed accomplished, within a commendably short period of time. Yes, but no one talked about the possibility of pipeline owner countries raising the transit fees they charge sharply, just using the opportunity of the importing countries' being in a highly exposed situation. This is exactly what is about to happen just now in Bulgaria, whose parliament has approved in first reading an extraordinary tax of €10.2 per MWh on the transit of Russian gas to Serbia and Hungary. The current TTF price of natural gas is €54 per MWh, already sharply up in recent days because of Israel/Gaza, some renewed labor action in Australia (LNG, Chevron), and a leak on the Baltic pipeline, etc., and so the tax would be really massive. The new tax would be formally imposed, if voted into law in second reading and signed by the president of Bulgaria, on Bulgartransgaz, the company operating the Bulgarian section of Turk Stream, through which Hungary currently imports all of its Russian gas under a 3.5 bcm (about 37 million MWh) annual shipment contract, a considerable part of Hungary's 9 bcm annual gas consumption. For sure, the pipeline operator can charge this cost on to Gazprom, the supplier, which may then decide to pass it on to the Hungarian importer, which is MVM CEEnergy. The intended measure also includes the threat that in case th...