A Lesson for Brussels: This Is How to Protect the Utility Cost Cuts

A framework agreement has been reached to purchase 800 million cubic meters of natural gas from Azerbaijan over the next two years, marking another very important step in diversifying Hungary’s energy supply, Foreign Minister Peter Szijjarto announced in Budapest on Thursday.

Hungary has already profited greatly from cooperation with Azerbaijan (Photo: FM Szijjarto, Facebook)

Foreign Minister Peter Szijjarto shared a new post on his social media account with good news: another agreement has been reached to enhance the security of Hungary’s energy supply. According to the ministry’s statement, the minister reported at a joint press conference with his Azerbaijani counterpart, Ceyhun Bayramov, that Hungary’s MVM and Azerbaijan’s SOCAR had signed another major natural gas purchase framework agreement, under which Hungary will have the opportunity to purchase 1.1 million cubic meters of gas per day from Azerbaijan over the next two years.

Hungarian FM Peter Szijjarto and Ceyhun Bayramov (Source: Facebook)

This means that MVM and SOCAR have agreed on the possibility of purchasing 800 million cubic meters of gas over two years. This contract has been fully clarified and finalized. It represents another very important step in diversifying Hungary’s energy supply,

– FM Szijjarto declared. “This is a framework agreement that allows for deliveries of 800 million cubic meters. How much will actually be realized over the next two years will depend on market conditions at the time. Hungary has always aimed for diversification. But what does diversification mean? It must be clarified, because in Brussels the definition is different. Diversification means purchasing energy from as many sources and via as many routes as possible. Brussels’ approach is to allow energy purchases from fewer routes, fewer sources, and at higher costs. Our strategy is the opposite,” he warned.

Our strategy, which focuses on purchasing from multiple sources via multiple routes at lower costs, is suitable to protect the results of our utility cost reduction schme,

– he added. Peter Szijjarto then explained that while Brussels currently poses a threat to Hungary’s energy security, cooperation with Baku actually mitigates this risk.

Brussels wants to block our well-established, cheap, reliable energy sources on an ideological basis, and this weakens Hungary's energy security. Azerbaijan, on the other hand, has provided the opportunity for Hungary’s largest energy companies to become owners of the largest Azerbaijani oil and gas fields. Unlike Brussels, Azerbaijan strengthens Hungary’s position in the international energy market,

– he emphasized. He noted that as a result, Hungarian energy companies now operate not only as buyers, but also as sellers on the international energy market, putting Hungary in a completely different dimension.

In recent months, MVM has appeared on the international energy market as an owner and seller of 800 million cubic meters of gas, and Mol as an owner and seller of five million barrels of oil, since MVM holds ownership in one of Azerbaijan’s largest gas fields and Mol in a major oil field.

– Mr. Szijjarto recalled. He also confirmed that the parties have agreed that these two major Hungarian energy companies can acquire further ownership stakes in Azerbaijani oil and gas production. The minister noted that Mol is very close to finalizing an agreement to participate in a new large onshore oil and gas field, while MVM is also days away from a deal in a major renewable energy project.

The expansion of Mol’s and MVM’s ownership in Azerbaijan will further strengthen Hungary’s position in the international energy market, which is important because Brussels continues to weaken Hungary in this area, 

– he noted. Finally, the foreign minister highlighted that Azerbaijan “is the best example of the saying that Hungarians are not right, but will be right.” “I personally remember organizing the prime minister’s first visit to Baku fifteen years ago, when almost all Western Europeans treated us like fools, mocked us condescendingly, and, of course, criticized us, saying that a "meeting of dictators" was coming, and that PM Orban would feel comfortable in the Caucasus region,” he recalled. Today, by contrast, Western European leaders are lining up to visit Azerbaijan and its immediate region, he added. 

Interestingly, as news keeps arriving about gas and oil discoveries, Western European leaders increasingly want photos with President Aliyev,

– FM Szijjarto stated. "But unlike them, our friendship is not based on oil or gas booms, but on a relationship founded on mutual respect, which has brought mutual benefits to both Azerbaijan and Hungary over the past years,” he concluded.

Cover photo: Hungary has already profited greatly from cooperation with Azerbaijan (Photo: Facebook)