EC welcomes Hungary-Ukraine reverse gas flow

War-wracked Ukraine has been given another energy lifeline, as its gas network operator signed an interconnection deal with energy partner in Hungary, enabling gas to flow both ways across the border. This follows a deal with Slovakia in April that also enabled gas flows to and from Ukraine, reports Keith Nuthall.

The latest deal was struck between gas transmission operators FGSZ (Földgázszállító Zrt) of Hungary, and Ukraine’s Ukrtransgaz. It involves using a pipeline running parallel with the main line between Ukraine and Hungary, which has usually delivered gas to the European Union (EU) member state. In March 2013 FGSZ reactivated an idle interconnector line (DN800), which under the agreement can supply gas the other way.

The capacity of the interconnector from Ukraine towards Hungary is 26bn cm/y and the reverse flow 6.1bn cm/y.

The agreement defines industry standard procedures for interconnection operations under standard commercial conditions and supply crises. However, an FGSZ note said more investment was needed to ‘achieve the ultimate aim of enabling firm, uninterruptible capacity from Hungary towards Ukraine…’ But the ‘conditions’ for securing such funding had yet to be ‘created by the respective companies and regulators,’ it added.

The European Commission welcomed the agreement ‘as an important step to connecting Energy Community countries such as Ukraine to the EU’s internal energy market and to boost energy security for the EU’s eastern neighbour.’ It could spark similar agreement between Ukraine, Poland and Romania, Brussels suggested.

This development has come as Hungarian oil and gas major MOL won a European Court of Justice (ECJ) case, blocking a European Commission demand that MOL repay €96.6mn in alleged illegal subsidies.

Brussels wanted the subsidies repaid to the Hungarian government after alleging that MOL received special treatment in the levying of fees paid by extractive industries under the country’s Mining Act.

However, the ECJ’s General Court ruled MOL had been treated fairly. Following an appeal by the Commission, the senior ECJ has ruled MOL’s payment of these levies ‘did not, therefore, favour MOL over its competitors.’