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Azerbaijan, Hungary Expand Cooperation in Energy

By Nigar Bayramli January 31, 2023

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President Ilham Aliyev and Prime Minister Viktor Orban at a joint press conference in Budapest, Hungary, January 30, 2023 / President.Az

President Ilham Aliyev’s recent visit to Hungary highlighted the growing role of Azerbaijan in ensuring European energy security.

The two-day visit of the Azerbaijani president on January 29-30 outlined the countries' joint strategy to position Hungary among the energy importers from the South Caucasus country.

Hungarian Prime Minister Viktor Orban said in a joint press conference on Monday that Europe is again facing a scenario of the energy transportation from Azerbaijan following the failure of the implementation of the NABUCCO project 10 years ago, a postponed 3,900-kilometer (2,400 mi) natural gas pipeline designed to carry Caspian Sea gas to the Central European market.

“Looking at the map, you will see that these volumes of energy coming from Azerbaijan in terms of both natural gas and electricity will pass through Hungary. Therefore, Hungary also wishes to be in a win-win situation in this matter. Also, since we are located on the transport route, the role of Hungary will increase,” Orban said.

Azerbaijan has been supplying natural gas to Europe on the Southern Gas Corridor (SGC) since December 31, 2020, when commercial supplies began on the Trans Adriatic Pipeline (TAP) – the latest portion of the 3,500-kilometer three-segmented mega energy route. Ten billion cubic meters (bcm) per year out of 16 bcm total annual volume on SGC, which stretches from Azerbaijan’s Caspian Sea shores to Italy by traversing Georgia, Türkiye, Greece and Albania, are destined for European customers.

In 2021, Azerbaijan's natural gas exports to the European Union market through the Southern Gas Corridor mega pipeline stood at 8.2 billion cubic meters (bcm), and this figure has risen to 11.3 bcm in 2022. Next year, it is expected to hit 11.6 bcm. The total natural gas export from Azerbaijan is projected to reach nearly 24 bcm or 5 bcm more in 2023 than in 2021.

President Aliyev said in a joint press conference with Hungarian PM Orban on Monday the supplies on the SGC have revived the postponed NABUCCO project by pioneering the gas supplies directly from the Caspian Sea to Europe. According to him, the list of European importers of Azerbaijani gas will further expand.

“Through interconnectors, Azerbaijani gas will be delivered to Bulgaria, then to Romania, then to Hungary, and after Hungary to other European countries. We have also discussed this. Hungary is not only a consumer of Azerbaijani gas but will also act as a transit country for Azerbaijani gas to other European countries,” President Aliyev said, according to his press service.

He added that Azerbaijan's ample oil and gas resources allow it to be a reliable partner for Europe for many years to come – at least for a hundred years from now in terms of natural gas.

With 2.6 trillion cubic meters of confirmed minimum natural gas reserves, Azerbaijan's offshore fields in the Caspian Sea will be able to supply gas to international markets for at least another 100 years.

Successful implementation of certain projects will allow Azerbaijani fossil fuel to reach new markets in the Balkans and Western Europe. The European Commission and Azerbaijan signed a Memorandum of Understanding in June 2022 to double the supply of Azerbaijani natural gas to Europe by 2027. In October last year, President Aliyev attended the inauguration of the Greece-Bulgaria Interconnector (IGB), which will enable the first-ever direct supply of Azerbaijani natural gas to the Bulgarian markets.

Hungary has been in talks with Azerbaijan for purchasing gas since early last year. The country’s state-owned energy group MVM has been negotiating with Azerbaijan’s state energy company SOCAR on starting gas imports via Southern Europe from the end of 2023, Foreign Minister Peter Szijjarto said in February 2022.

In a meeting with Azerbaijani Economy Minister Mikayil Jabbarov in January 2023, Szijjarto reaffirmed Budapest’s plans to purchase gas from Azerbaijan. He said Hungary aimed to count on Azerbaijani supplies as soon as possible, however, substantial infrastructural developments in Southeastern and Central Europe should be in place to make it possible.

“We need new interconnectors and transport capacities must be increased, which requires EU subsidies and funds,” he said, adding that Hungary has teamed up with Bulgaria, Romania and Slovakia to ask European Commission to prioritize the issue and provide support for the developments necessary to guarantee the energy security of the region.

Hungary has secured 4.5 billion cubic meters of natural gas supplies per year from Russia under a 15-year agreement signed with Russia in 2021. There is an agreement between Budapest and Moscow for modifying purchased quantities after 10 years.