FM: Hungary and Azerbaijan sign historic gas field agreement

Azerbaijan, Georgia, Romania and Hungary will also set up a joint venture to import green energy produced in the Caspian region to central Europe.

Péter Szijjártó, Minister of Foreign Affairs and Trade, said Hungary and Azerbaijan have signed a “historic agreement” under which Hungary “will buy a stake in one of the world’s largest natural gas fields."

At a press conference held with Ceyhun Bayramov, his Azeri counterpart, in Baku, Minister Szijjártó said the agreement would open “a new dimension in Hungary’s energy security … helping the country to a much higher level at the global energy market.” Azerbaijan’s Shah Deniz gas fields yield nearly 30 billion cubic metres of gas annually, Szijjártó said, adding that a large part of that amount was exported to Europe through the Southern Gas Corridor. “Practically speaking, we will own the resource to cover a large part of our gas demand,” the minister said, adding that the country would be “much more protected against large fluctuations and uncertainties on the energy markets.” Szijjártó highlighted the strategic partnership between Hungary and Azerbaijan and said Azerbaijan’s being “an extremely important player in Hungary’s energy supply” ensured “a significant level of security” for Hungary. The minister also noted that Hungary had purchased gas from Azerbaijan earlier this year for the first time, a total of 50 million cubic metres, and added that both sides were ready to continue the cooperation. In July, he added, Azerbaijan, Georgia, Romania and Hungary will set up a joint venture to import green energy produced in the Caspian region to central Europe. Hungarian oil and gas company MOL has so far invested some 2 billion US dollars in Azerbaijan, “making MOL the third largest owner in Azerbaijan submarine gas fields,” Szijjártó added. He added that MOL had extracted 5 million barrels of oil from those fields last year, 15% of the total MOL Group production. MOL and SOCAR have started talks aimed at a liquefied natural gas purchasing blanket agreement, Szijjártó said.

On another topic, Minister Szijjártó praised Hungarian-Azeri relations, saying it was an example of the benefits and security provided by ties based on mutual respect. Both countries are of the opinion that the coming years should be determined by connectivity rather than conflict, he said. Hungary had received “much uncouth criticism and many accusations from European partners” when it started a strategic partnership with Azerbaijan in 2010, Szijjártó said. “Those are the same partners who have been considering Azerbaijan as an important country only since it started producing gas in large quantities.” Without Azerbaijan, Europe’s energy demand cannot be satisfied in the long run and in a sustainable manner, he said. During its European Union presidency starting on July 1, Hungary will support all efforts to promote stability in the region, Szijjártó said. “We will ensure that the European Union takes balanced steps. We would like to avoid the EU fanning flames that would otherwise go out,” he said, adding that Hungary had called on the EU to provide the same 10 million US dollar support for Azerbaijan that it had earmarked for de-mining in Armenia. “Azeri and Armenian people both deserve to live in peace again,” he said. 

Energy Minister Csaba Lantos told MTI by phone that state-owned energy group MVM has signed an agreement with Azerbaijan’s Southern Gas Corridor CJSC on acquiring a 5% stake in the Shah Deniz gas field. Shah Deniz is one of the world’s largest deep-water gas fields operated by BP, Lantos said, adding that the MVM Group’s stake in it would give Hungary access to large volumes of natural gas. The agreement establishes the volume each party can extract from the Caspian Sea until 2050, he said, adding that there were extraction opportunities in other potential new fields as well. Lantos said the agreement was MVM’s biggest-ever investment, adding that the transaction did not result in any additional burdens on the state budget, as the company had used its own resources to purchase the stake. The transaction is expected to be concluded in a few months, he said.