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Ukraine Says Russia Halts Gas Flows To Hungary, Adding To Jitters In European Gas Markets

Under the deal that takes effect October 1, Gazprom will ship 4.5 billion cubic meters of gas to Hungary annually. (file photo)
Under the deal that takes effect October 1, Gazprom will ship 4.5 billion cubic meters of gas to Hungary annually. (file photo)

Ukraine said that Gazprom had suspended the transit of natural gas to Hungary, days after the Russian state-controlled gas giant signed a long-term contract with Budapest.

The move, announced October 1 by Ukraine’s gas pipeline operator, was expected to add to jitters about Russian gas supplies in Europe, which is already grappling with record high prices for gas.

Gazprom did not immediately respond to requests for comment.

The suspension of flows to Hungary via Ukraine does not affect other gas transiting Ukraine to European customers. And Hungary will receive Russian gas via other routes, including TurkStream, a pipeline crossing under the Black Sea.

But it cuts into the revenues Ukraine receives from transit fees, and it complicates Ukraine’s ability to reimport gas from Hungary, which just days earlier signed a long-term supply deal with Gazprom.

"The monopolization of gas routes by Gazprom, which we are now observing, raises the question of the fundamental principles of the functioning of the EU gas markets -- competition and transparency," Serhiy Makogon, the head of the Ukrainian Gas Transmission System operator, said in a statement.

Ukraine’s pipeline network has long been the dominant route for Russia to export its gas to Europe. But that has shifted in recent years as new undersea pipelines have come online.

The Nord Stream 2 pipeline will add to Russia’s ability to ship gas directly to Germany when it comes online sometime next year. But Ukraine, along with the United States and some other countries, have warned that Nord Stream 2 will only tighten the grip that Gazprom has on European gas markets.

Compounding those fears are record high gas prices, which are being registered in Europe and elsewhere just as the continent gears up for the winter heating season. Some European lawmakers have accused Gazprom of using its dominant market power to push prices higher.

Under the deal with Hungary that takes effect October 1, Gazprom will ship 4.5 billion cubic meters of gas to Hungary annually, via Serbia and via Austria.

Kyiv’s criticism of the Hungary gas deal adds to ill-will between the two countries; the two have been at odds in recent years over the use of the Hungarian language in Ukrainian schools.

Hungarian Prime Minister Viktor Orban dismissed Ukraine's criticism of the gas agreement.

"We need gas. This is the reality. You need to agree with the Russians," Orban told public radio.

With reporting by Reuters, TASS
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