Thursday 25 September 2014, Hungary has stopped transporting gas to Ukraine. At 17:55 Kyiv time Ukrainian TSO Ukrtransgaz received an email from the Hungarian TSO FGSZ notifying of a halt of supply at 19:00 for technical reasons “until further notice”.

The halt comes a few days after Gazprom visit and hours before the next round of trilateral Ukraine-Russia-EC negotiations

This decision by the Hungarian authorities follows a meeting between Gazprom CEO Alexei Miller and Hungarian Prime Minister Viktor Orban that took place on Monday 22 September 2014. It comes only hours before the next trilateral meeting between Ukraine, Russia and the EC which is due to start on Friday morning in Berlin.

Transit capacity supply halt unexpected and unexplained

Ukrtransgaz has a contract with FGSZ which regulates the flow of gas between Ukraine and Hungary in both directions. The two operators do not have a standard interconnection agreement, although Ukrtransgaz has repeatedly requested to sign one, in accordance with requirements of the Energy Community regulations.

Naftogaz has a supply contract with Western European private companies to supply gas to Ukraine via Hungary. Thursday afternoon, FGSZ stopped supplying these private companies with transit capacity and subsequently, the flow of gas from Hungary to Ukraine ceased. The flow of gas from Ukraine to Hungary has not been affected at present.

FGSZ was not available to provide any additional information about the reasons and the duration of the interruption to either Ukrtransgaz or Naftogaz. According to Naftogaz information, the Western European gas suppliers have not received any plausible explanation of the current situation from FGSZ either.

Naftogaz hopes the unexpected halt will not affect the system stability and commits to being a reliable partner

Naftogaz deeply regrets this decision of FGSZ and calls on its Hungarian partners to respect their contractual obligations and EU legislation. Such a decision goes against the core principles of the European Union single energy market.
Naftogaz calls on the EU to ensure a collective solution to the energy security of Europe and the respect of EU internal rules.

Neither EU countries nor Ukraine should be put under political pressure through energy blackmail.

Naftogaz hopes such a sudden halt will not have any unexpected effects on the Ukrainian transit system stability. This remains to be seen within the next hours. Naftogaz is committed to being a reliable partner and vital transit hub for Russian gas to the EU. In return, Naftogaz expects its European partners and neighbors to respect their contractual obligations, as well as EU legislation.

About Gazprom

Gazprom is a global energy company. Its major business lines are geological exploration, production, transportation, storage, processing and sales of gas, gas condensate and oil, sales of gas as a vehicle fuel as well as generation and marketing of heat and electric power.

Gazprom views its mission in reliable, efficient and balanced supply of natural gas, other energy resources and their derivatives to consumers.

Gazprom holds the world’s largest natural gas reserves. The Company’s share in the global and Russian gas reserves makes up 18 and 72 per cent respectively. Gazprom accounts for 14 and 74 per cent of the global and Russian gas output accordingly. At present, the Company actively implements large-scale projects aimed at exploiting gas resources of the Yamal Peninsula, Arctic Shelf, Eastern Siberia and the Far East, as well as hydrocarbons exploration and production projects abroad.

Gazprom is a reliable supplier of gas to Russian and foreign consumers. The Company owns the world’s largest gas transmission network – the Unified Gas Supply System of Russia with the total length of over 168 thousand kilometers. Gazprom sells more than half of overall produced gas to Russian consumers and exports gas to more than 30 countries within and beyond the former Soviet Union.

About FGSZ

In accordance with its transmission system operation licence FGSZ Ltd carries out the activity of natural gas transmission and system operation in a legally regulated market environment. Our company owns and operates the high pressure natural gas transmission system of Hungary. Apart from the domestic natural gas transmission FGSZ exercises transit activity for Serbia and Bosnia and Herzegovina as well. We transfer gas for Romania and Croatia, and we established the possibility of gas transmission towards Ukraine. The technical standard of our system is at the cutting edge of technology on an international level. FGSZ is among the companies playing a strategic role in the region. Its dynamism and efficiency make it one of the prominent natural gas transmission companies in Europe.

About Naftogaz

The National Joint Stock Company Naftogaz of Ukraine is the leading enterprise in Ukraine’s fuel and energy complex, one of the biggest Ukrainian companies.
Naftogaz of Ukraine is a vertically integrated oil and gas company engaged in full cycle of operations in gas and oil field exploration and development, production and exploratory drilling, gas and oil transport and storage, supply of natural gas and LPG to consumers. Over 90% of the oil and gas in Ukraine is produced by the enterprises of the Company.