Strategic gas storage – private or public founds?

The nearly three-week long gas crisis in January indicates the reason for the expansion of gas storage in Hungary, but it also raises the question whether establishing the strategic gas storage is a public task – the question was raised at the secure gas supply conference organized by Energiainfo.hu

I don’t understand it – and fundamentally, it is in breach of EU rules – why Hungary is using public founding to develop its strategic gas storage – this should not be a public task. The government’s task should be to create conditions for such storage facility, obtain supplies, and recognize inventory and other costs for the end-user price – emphasized at the conference György Szabó CEO of TXM Kft the company with interest in the Mako gas field. From the energy security point of view, in the usage of domestic resources, including natural gas production, the government would be more helpful if they would abide by the relevant laws that govern research (concession) rights among other things. For example, here is the long-term calculation, just last year the government raised the mining royalties from 12% to 38%, and yet even the 12 % was too high when you compare it internationally. Speaking of the future –emphasized György Szabó - the Hungarian energy policy cannot afford the mistake of not to expand its nuclear energy production.

Peter Kiss, partner at KPMG energy and utility consultancy says, the big question is, when are we be able to double the present daily 6-8 million cubic meters domestic gas production. Although, with the 4 - 4.5 billion cubic meters gas storage capacity we are quite well off in the EU, but if it was up to me – said Peter Kiss – I would double the storage capacity. Even if it would require the government’s involvement, in light of our dependence on gas from Russia that is transits through a pipeline through Ukraine before it gets to Hungary. At the same time, it is also important to diversify to obtain supply from many sources, by having more pipelines passing through the country, whether it is the South Stream or Nabucco we have to support the one that will have gas. We should not forget about the liquid gas supply.

Already, from the beginning in July of last year, the decline of demand could be felt on electricity. There was a 1.6% decline on consumption, and by December, due to the economic crisis, consumption fell by 8% - said György Drucker senior analyst for Energiainfo.hu. These results completely turned around the long held prognosis of yearly 1-2% growth in demand on electricity. In addition, there was a reduced demand on gas energy, in January we registered a daily consumption of 70 million cubic meters, compared to other years when, in the coldest days the consumption would reach 90 million cubic meters. There was no problem with the quantity of the gas supply over all in the year, but seasonally, especially in the January crisis there were some serious supply problems.