Europe needs long-term contracts with gas suppliers, says Hungarian Foreign Minister

NEW YORK, January 20. /TASS/. Signing long-term agreements with gas suppliers would be the key to resolving the energy crisis in Europe, Hungarian Foreign Minister Peter Szijjarto said in an interview with TASS.

“I think that the key how Europe can resolve gas crisis is filling up the storage capacities and sign long-term agreements with suppliers,” Szijjarto said.

He reiterated that Russia has proved to be a reliable partner in this area.

“When it comes to the energy issues, I have to tell you that we are very satisfied with our cooperation with Russia. I have a very clear experience that whatever we have agreed with the Russians, it has been kept always in time, always as we agreed. So, we respect that a lot. It’s a very good experience,” he said.

As for those who criticize energy cooperation with Russia, the Hungarian top diplomat reminded them that political statements will not heat the households in Europe.

“So, what I tell my colleagues who are criticizing us for the long-term cooperation with Russia is that houses and flats cannot be heated by political statements. The only way you can heat them is when you have natural gas,” he said.

Europe’s gas market crisis

The European gas crisis exploded last autumn, after spot gas prices began to skyrocket past $1,000 per 1,000 cubic meters, nearly hitting $2,000 per 1,000 cubic meters amid low occupancy levels at gas storage facilities.

According to observers, the crisis was triggered by a number of factors. One of them was the explosive growth in gas demand from Asia, which sparked an upsurge in prices on the Asian market, as well as an outflow of supplies from European routes. The situation was aggravated by the fact that the share of wind generation in Europe plunged.

However, the main reason for the gas market’s high volatility was the low capacity rate of gas storage facilities. As of mid-October, European underground gas storage facilities were filled by 71% of the volume of gas that was taken from them last season.

In October 2021, Russian President Vladimir Putin stressed that gas supplied by Gazprom to Europe under long-term contracts costs the EU countries four times less than gas purchased on the spot market. According to him, Russia is interested in long term contracts while the latest policy the EU countries pursued in the sphere of gas market regulation implied abandoning long-term contracts in favor of spot contracts.