Russian energy giant Gazprom PJSC OGZPY will allow Hungary to delay payments for natural gas if necessary, as surging imports threaten to derail the country s strained budget.
The move comes days after the company suspended natural gas deliveries to Italy in an apparent tussle over regulation in Austria.
The Economic Development Ministry said that Hungary has won a three-year delay on gas bills due in the next six months.
The ministry said that the ministry's revenue rose from 5 billion to 4.5 billion. The agreement is between Gazprom and Hungary's state-owned energy company MVM Zrt.
In the wake of signs that the continent will be able to navigate this winter with sufficient inventories, an influx of LNG and measures taken by the European Union to combat the crisis, natural gas prices in Europe fell, with the benchmark futures declining 10%.
Natural gas prices have seen a peak in August after prices fell due to the war in Ukraine and supply issues.
Price Action: The United States Natural Gas Fund, LP UNG, gained over 75% this year, while the First Trust Natural Gas ETF FCG gained over 35% in 2022. Gazprom shares were down 0.86% in Russia.
The report says that the development comes as a relief for Hungary as billions of euro in EU funding are locked in a dispute over corruption under Prime Minister Viktor Orban. International reserves aren't enough to cover at least three months of imports, and the Hungarian currency forint is trading at a new all-time low despite the EU's highest key interest rate, due to Hungary s dependence on imported Russian gas, it said.
The cost of oil and gas imports increased to $19 billion this year from $4 billion in 2019, according to the report.
Finance Minister Mihaly Varga said additional purchases of natural gas from Gazprom, on top of Hungary's long-term contract, will lead to an extra cost of 740 billion forints $1.7 billion this year and will widen the budget deficit to 6.1% of gross domestic product from a targeted 4.9%.
According to a Bloomberg report, Turkish officials have asked Russia to delay a portion of the country's payments due to natural gas.