Hungary halts gas exports to Ukraine on domestic market needs: ministry

Budapest (Platts)--26Sep2014/953 am EDT/1353 GMT

Hungarian gas pipeline operator FGSZ has suspended gas shipments to Ukraine as of Thursday, citing a need to serve domestic consumers' demand and fill up storage ahead of winter, according to late Thursday statements by FGSZ and the National Development Ministry.

Ukraine's national energy company Naftogaz Ukrayiny, however, said the move was "unexpected" and "incomprehensible."

It has called on the European Union to get involved to "take a collective decision to ensure the energy security of Europe and the implementation of the internal rules of the EU."

The Hungarian ministry in its statement said: "Starting September 26, the government is raising the amount of gas imported to Hungary, in order to accelerate preparations for the winter. Filling up Hungarian gas storage units is the number one priority above all else."

"On the afternoon of September 25 [1600 GMT], FGSZ indefinitely suspended gas transmission in the direction of Ukraine," the company said. "Import requests increased significantly as of September 26, as a result of which the [Ukraine interconnector] has to be switched so that all pipelines are geared to import shipments into Hungary."

The move weakens Ukraine's position hours before important gas talks with Russia in Brussels, aimed at resumption of Russian gas supplies that have been suspended in June.

Ukraine started importing European gas via Hungary, Poland and Slovakia earlier this year as Russia, its main supplier, had cut supplies completely on June 16 citing price disagreements.

Hungary imports most of its gas from Russia, which has repeatedly warned central European countries against re-exporting gas to Ukraine.

Hungary supplied a peak of 214 million cu m of gas to Ukraine in June, and shipped an estimated 3-5 million cu m per day for most of July and August, according to local press reports.

Hungary's main import pipeline from Ukraine was upgraded in early 2013 to allow reverse flows of up to 16.8 million cu m of gas per day.

The ministry said Hungary's gas storage facilities -- all controlled by the state -- are currently filled to 56.6% of capacity.

This is relatively low in a western European comparison, and would translate to 3.5-3.6 Bcm of gas.

Hungary typically consumes 5-6 Bcm of gas during the colder months of the year from November through March.

--Balazs Szladek, newsdesk@platts.com
--Alexander Bor, newsdesk@platts.com
--Edited by Geetha Narayanasamy, geetha.narayanasamy@platts.com

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