Moscow uses the gas supply as a weapon, paying only in rubles. Since then, he has already signed contracts. Many rubles cannot be exchanged without the Russian central bank, but Western sanctions must be eased, for which the United States and the European Union are not ready. If Moscow does not back down, gas trade will fall back to one area. In Hungary, the state MVM is primarily affected.

Russia demands that Countries that describe themselves as “unfriendly” have to pay in rubles for natural gas President Vladimir Putin said on Wednesday. As a result of this announcement, European gas prices in Amsterdam have risen 21 percent amid fears that Russian demand could deepen the continent’s energy supply crisis. However, the Russian president’s statement was good for the ruble, which began to strengthen. The reason for this is simple: the buyer countries, after which they want to execute the agreement, have to buy the ruble, which strengthens the Russian currency. Putin ordered the Russian central bank to set up a system for receiving money within a week.

Whether it is considered a breach of contract will be decided later

Under current practice, export contracts of Russian energy companies are referred to in dollars or euros. Tamás Pletser, an oil and gas analyst at Erstay, told that if these companies actually demanded the value of deliveries in rubles, they would breach the contract or at least unilaterally change the contract. Henceforth, Western partners, who are discussing how to slowly withdraw from long-term contracts, may cancel them.

Gas pressure test at FGSZ Vecsés gas plant


Russian Presidential Spokesman Dmitry Peskov told reporters on Thursday that the conditions for payment for the supply of gas in rubles will be clarified to Russian gas buyers. “By contacting customers and explaining to them the terms of payment in rubles, they can develop their position,” Peskov said.

However, he patiently responded to the question of whether European consumers see the conversion of ruble payments as a breach of contract.

However, Germany already believes that asking the price of Russian natural gas in rubles would violate the agreement. In Berlin on Wednesday, German Federal Economy and Climate Defense Minister Robert Hebeck said that Moscow’s decision was “small” because the country’s natural gas supply was guaranteed until the end of spring. The Minister also spoke about Germany consulting with its European partners on appropriate response.

Not enough rubles without the Russian Central Bank

The big question is, how are deliveries calculated in rubles? Hungary, for example, has high denominations of euros, euros and dollars.

Commercial banks cannot exchange as much currency as Russia’s Western energy exports

– Says Tamás Pletser.

Only the Russian central bank can do that – but the Russian central bank is subject to Western sanctions. The essence of Western sanctions is that Moscow cannot use its possession or the amount of dollars in the country. For the Russian Central Bank to exchange rubles for such amounts, sanctions must be lifted or at least relaxed. This will definitely not happen to the US and the EU.

Russia’s energy exports will plummet if Moscow insists on paying in rubles and Western nations impose sanctions.

Trade has been reduced to a fraction of the previous blocks, Blitzer says. This would be bad not only for the Union, but also for Russia, because the Russian economy and state budget are highly dependent on energy exports.

Of course, Moscow may still be somewhat relieved of the declared threat because it has allowed a week-long transition period, Tamás Pletser says. “Let’s see what happens when the deadline expires,” says the expert, who said it was unreasonable to retrieve the threat, but that President Putin was increasingly cornered.

Building of the National Bank of Russia in Moscow


Slapped in the face by the Hungarian government

In Hungary, the move will primarily affect state-owned energy company MVM and, more precisely, its energy trading subsidiary MVM CEEnergy (former Hungarian natural gas trader). From the Hungarian side MVM to buy gas from Casprom under a long-term agreement that will take effect in the fall of 2021. This is not a market transaction, the MVM, a Hungarian state-owned company, Roszatom, a Russian state-owned company, the gas deal was negotiated by Foreign Minister Peter Sijardo, and he told the Hungarian people about the matter.

On the one hand, it means that all the damage and hardship resulting from this operation directly affects the Hungarian state. And it is

The Hungarian government (Ministry of Foreign Affairs) should continue to take action and contact.

On the other hand, no mention was made of the matter on the ministry’s website, nor was it heard that a protest list had been published or that the Russian ambassador had been summoned. By the way, asked by the Ukrainian ambassador Peter Czardo, After complaining in Brussels against Ukraine signing a long-term gas deal. Ukraine has protested that Gasprom is supplying gas to the Serbian-Austrian border, that is, bypassing Ukraine, as part of the Hungarian agreement. Gas transport is very important to Ukraine, on the one hand its revenue comes from transportation tariffs, and on the other it strengthens its geopolitical position – however, this does not prevent Moscow from invading Ukraine.

Since acknowledging the war in Ukraine and Russia’s occupation, the government has not been in an easy position, as it has been gradually saying that Hungary should stay out of the conflict and stay there. There are no restrictions on the energy sector. As for the first point, it is obviously meaningless

Hungary has so far voted and implemented all sanctions against Russia.

– Thanks Along with all the other EU countries on the list of countries classified as “friendly” in Moscow. Hungary did not take part in the armed conflict – but no one is asking anyone to do so and no one else wants to take part.

Gazprom Vice President Jelena Burmistrova and Peter Zardo conclude agreement in 2021


The Hungarian government has encrypted the gas deal

The government rejected sanctions on the energy sector, but did not say a word about how Moscow would impose sanctions on the energy sector. However, it is worth ruble gas contracts – and something worse than a permit, if the Russians actually enter, it is a breach of contract. So far, the government has not harshly condemned Russia, and the public media often spreads Russian propaganda without criticism. After so many years, it is difficult to change from the government and personally to Prime Minister Victor Orban – to build better relations with Moscow and to accept this with his constituency, especially weeks / days before the parliamentary elections. However, it is difficult to go without words if sanctions in Moscow cause direct damage to the Hungarian state. Of course, this is not impossible, we were able to communicate as if Moscow was almost innocently affected by the whole situation.

The terms and details of the gas contract are confidential, so you never know what the price formula is in Hungary and what the schedule will be. Russia pays for gas. You can be sure that the pricing formula is somehow coded with the prices of the Dutch gas exchange. In other words, the contract price may be slightly lower than the market, and market price changes may be delayed, but it can be ruled out that Hungary will receive gas significantly cheaper. In other words, beyond the fact that it is not yet clear how to replace Russian gas in Hungary and throughout, it is not true that “overhead reduction” (i.e., depreciated, officially priced retailing) is dependent on Russian gas. Europe.


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