The population cannot be made to pay the price of the war and to this end, sanctions must not be extended to natural gas and oil, the V4 country's prime minister emphasized following the meeting between the Visegrad Group and the United Kingdom.

Leaders of the Visegrad Group countries (Poland, Czech Republic, Slovakia, Hungary) held talks with UK Prime Minister Boris Johnson on the Russia-Ukraine conflict in London on 8 March. Following the meeting, Hungarian Prime Minister Viktor Orban shared a video on social media, in which he reiterated that his government will not allow Hungarian families to be made to pay the price of war.

The effects of the sanctions imposed in the wake of the Russia-Ukraine conflict will be felt by all of Europe including Hungary, PM Oban said in the video posted on Facebook. Extending the sanctions to the energy sector including the oil and gas sectors would put a disproportionately heavy burden on Hungary, the prime minister said.

„I have made it clear that we condemn Russia’s military attack and the war but we will not allow Hungarian families to be made to pay the price of the war. Therefore, the sanctions must not cover oil and gas imports,”

Viktor Orban emphasized.

One Hungarian economic portal published an article on the losses that sanctions extended to the energy sector could cause to the country.

Citing data from Hungary’s national energy strategy, the portal Vilaggazdasag (Vg.hu) highlights that roughly 90 per cent of the crude oil and 80 per cent of the natural gas consumption of the country come from hydrocarbon fields in Russia, and that heating elements used at the Paks nuclear power plant (Hungary’s only nuclear power plant – ed.) are exclusively supplied by Russia.

With 59 per cent of the oil and oil products used in the country fueling vehicles, a possible ban on oil imports from Russia would hit domestic road haulage, passenger transport and travel by car hard, Vg.hu writes, adding that a steep hike in haulage costs would lead to price increases on nearly every product. The portal points out that a boycott would be damaging to Hungary’s chemical and agricultural industries, as well as to other non-energy sectors, which account for 24 per cent of Hungary’s oil consumption based on the national energy strategy numbers.

The portal also points out that Hungary has taken steps to reduce its strong dependency on Russian oil as the country can also procure crude oil from the global market via the Adria pipeline or in extreme cases by road in tank trucks. However, the operation of MOL’s oil refinery in Szazhalombatta has been optimised specifically for the processing of raw material from Russia, and it is unlikely that the required amount of oil can reach the country by road. (MOL is short for Hungarian Oil and Gas Public Limited Company, a Hungarian multinational oil and gas company – ed.) The portal notes in the article that it is impossible to increase domestic oil production to levels meeting demand.

Regarding the possible boycott on purchasing Russian gas, Vg.hu writes that one-third of the electricity produced in Hungary is generated by gas-fired power plants, and a significant proportion of residential heating is also gas-based. 33 per cent of total residential end-user energy consumption is natural gas, the portal writes, noting that using renewable sources for electricity production is unreliable, and electricity storage is not yet possible in large quantities.

Vg.hu emphasizes that in addition to the Ukrainian pipeline, Hungary can also import gas through five other neighbouring countries (Hungary has gas pipeline connections with six of the seven neighbouring states, and high-voltage power line connections are soon to be established to all of them. The country’s government has also contributed to the establishment of an LNG terminal in Croatia and is in advanced negotiations with Azerbaijan to secure additional sources, with similar talks under way with Egypt and Israel). Without sufficient amounts of gas, however, this will not solve the situation.

The portal points out that if Hungary had to give up the gas secured in a long-term contract (the country signed a long-term 10 + 5 year gas contract with Gazprom last September – ed.), it would have to provide residential gas and electricity from the open market similar to most EU countries, which would mean a dramatic increase in utility costs and an end to the utility cost reduction scheme. (In Hungary, the law on the reduction of utility costs has been in force since 1 January 2013. Under the act, gas and electricity are provided to residents at a price fixed by the authorities – ed.)

The article also writes that the value of underground natural gas storage capacities in Hungary may increase in the future if customers currently storing gas in Ukraine seek to move their reserves to the west, for example to Hungary, to avoid the risks associated with the war. Business circles have informed the portal that there is a high likelihood of such steps in the near future.

Vg.hu also emphasizes that many European countries depend on the import of Russian national gas, and to a lesser extent, oil. About forty percent of the European Union’s natural gas reserves are controlled by Russia. Russia also supplies about 27 per cent of the bloc’s oil imports and 46 per cent of its coal imports. The country most exposed regarding Russian gas supplies is Germany, which buys the largest amount of gas from Russia. It is Europe’s largest economy and depends on Russian gas for the winter heating of homes and the operation of factories.