Although Hungary made serious efforts to pevent future energy supply interruption, they still could face serious shortages this coming winter. The 1.2 billion cubic meters Strategic Gas Reserve will not be complit until 2010. Hungary needs an alternative long-term secure energy source. The Nabucco gas pipeline project still in doubt. Therefore, the development of the Falcon-Exxon-Mol Mako trough project could become an integral part of Hungary's energy security.

Here's a reminder of what Hungary faced in the past years.

Gas troubles spark debate

Diversification of supply makes splash on public agenda

by Theodore Fisher

As a percentage of primary energy consumption, Hungary is more dependent on natural gas than any other country in the European Union, according to data of the Hungarian Energy Office. That dependence bit back in January, when severe cold combined with delivery shortfalls from Russia to stretch the gas supply system to its limits. Now a regional effort is underway to secure EU funds for new pipeline projects.

The situation got very tight on January 23-24, when Hungary's natural gas consumption reached 90 million m3 per day. This is not all that far from the nominal delivery capacity of 96.2 million m3 - but considering that deliveries at the Ukrainian border were some 5.5 million m3 short of normal levels, consumption was actually at the limits of feasibility. Both MOL Földgázszáll&... the operator of the gas pipeline network, and the ministry of economy and transport went on a communications blitz to ensure the public that Hungary was successfully dealing with the "crisis."

Truth be told, there was more smoke than fire in the furor. Yes, large industrial consumers were affected - 34 such comp­anies, particularly power plants, were forced to switch from gas to fuel oil or distillate to fire their installations for a few days. But this is as specified in their contracts - they are able to buy gas on more favorable terms because they agreed up front that when necessary, they will switch to liquid fuel. While this clause is not called into force every year, the switch was far from unprecedented. It was unusual, however, that three additional power p­lants that did not agree up front to such a switch (Budapest, Csepel and Dunamenti) were cajoled into accepting it, in order to prevent more widespread restrictions on gas consumption.

János Zsuga, CEO of MOL Földgázszáll&... said the comp­any is committed to ensuring the security of the gas supp­ly at average daily temp­eratures as low as -8° Celsius. However, on January 23 the actual average temp­erature was -13°, and the system dealt with this shock with relative aplomb, esp­ecially given the reduced level of gas arriving from Russia at the time.

http://www.amcham.hu/BUSINESSHUNGARY...

Strategic reserve by 2010

Hungary had also sought to build a strategic gas reserve together with neighboring countries, but Kóka acknowledged in early January that these efforts had hit a dead end. Hungary will therefore go it alone, building its own strategic reserve with some 1.2 billion m3 capacity, for about Ft 150 billion ($73 million). Hungary's current total storage capacity is approximately 3.4 billion m3.

Draft legislation on the project, already before parliament, would require that the reserve be able to supply at least 20 million m3 per day for 45 consecutive days, helping p­rotect Hungary in the event of a substantial drop in deliveries or extreme weather. However, the bill is already outdated - following the events of January, Kóka said the timetable in the bill needs to be brought forward by two years, to 2010.