Hungary to protect households from impact of Russian-Ukrainian gas dispute (2)

http://www.portfolio.hu/en/cikkek.td...

Monday, 29, December 2008 09:02:00 AM

Last Friday, Russian oil and gas group Gazprom warned once again that in January gas delivery disputes between Russia and Ukraine are likely to affect consumers in Europe as well. In Hungary, households will not be impacted even if Russia turns off exports altogether.

To date, Ukraine has accumulated USD 1.7 billion in debts to Gazprom plus a USD 450 million penalty. Gazprom persists in plans to cut off supplies unless Ukraine redeems the debt in full and signs price agreements for 2009. Ukraine is not planning to exceed the USD 800 million debt redemption it has carried out so far this year. As a result of the dispute, Russia cannot guarantee supplies to Europe.

While negotiations between Russia and Ukraine are underway, the latter has made sure to have a record 30 billion cubic meters of natural gas available in storage facilities, half of which will be used to grant supplies to Europe.

Impact on Hungary

According to national daily Népszabadság, Hungary has stored away 3.5 billion cubic meters of gas as a winter reserve. However daily supply capacity is limited at 51 million cubic meters per day, which is complemented by Hungary's 9 million cubic meter domestic production. In contrast, the country's daily peak consumption may reach 90 million cubic meters. In early January, if temperatures remain in the -2 to -4 centigrade range as predicted, daily consumption is likely to average around 66 million cubic meters. If supplies from Ukraine are cut off entirely, Hungary may be forced to sever certain consumers from the supply network.

Should consumption permanently exceed available natural gas supply, and no alternative means are available to ensure the balanced operation of the system, the network operator may enforce supply restrictions. The distributor is responsible for including paragraphs in each consumer's supply contract specifying the restriction category in which the consumer belongs, supply restriction limits, and policies for implementing capacity limitations. Restriction priority lists differ in summer and in winter.