Hungary Without Russian Gas by 2027: A Major Opportunity Opens for Croatia

Hungary could secure enough natural gas from non-Russian sources by October 2027 and thus, if necessary, replace Russian volumes, stated Hungarian Minister of Economy and Energy István Kapitány last week. Budapest is simultaneously considering alternatives to Russian oil, and among the routes it is counting on for both energy sources is Croatia.

Seeking More Alternatives

Kapitány confirmed that discussions with the Croatian side have already begun regarding the full-capacity use of the Adria pipeline, while LNG via the terminal on Krk is mentioned among possible supply routes for replacing Russian gas. Budapest is not only relying on Croatia.

For the replacement of Russian gas, it is also counting on other supply routes, and Hungarian MVM has already contracted new non-Russian volumes: from October 2027, Chevron will supply it with about 400 million cubic meters of LNG annually for five years. Part of that gas will likely go through Croatia, but that will only be one of the alternative routes. Therefore, Lider has requested data from JANAF, Plinacro, and LNG Croatia on how much Croatia can actually participate in a possible Hungarian shift away from Russian energy sources.

What is clear from the responses of the three Croatian energy companies is that the infrastructure for increasing volumes to Hungary exists or is currently being expanded.

Plinacro can double its gas transport capacity to Hungary to approximately 3.5 billion cubic meters per year, JANAF claims it can already fully meet the needs of MOL’s refineries in Hungary and Slovakia and transport up to 15 million tons of crude oil annually to them, while all currently available capacities of the LNG terminal on Krk are reserved until 2037, with part of those capacities intended for Hungary. However, these are mostly possibilities, at least regarding Plinacro and JANAF, and not agreed contracts.

Reservations Until 2027

Plinacro is increasing its capacity to Hungary, but there are still no contracts or reservations for additional volumes after 2027. This means that the commercial part of the story is yet to come – leasing capacity and contracting specific volumes. The situation is similar with oil: JANAF claims it can take over the entire supply of MOL’s refineries, but their contract with MOL expires at the end of this year. Whether Hungary’s shift away from Russian energy sources will indeed bring more business to Croatian companies will be decided by contracts that have yet to be concluded.

By increasing the technical capacity of the interconnection Donji Miholjac – Drávaszerdahely in the direction from Croatia to Hungary from 200,000 to 400,000 Sm3/h, transport of approximately 3.5 billion cubic meters of gas annually will be enabled, assuming continuous use of full capacity, they state in their response, emphasizing that actual volumes will depend on gas availability, capacity leasing, and nominations from system users as well as other market and operational circumstances.

Statement Is Not a Contract

– It is not possible to precisely determine in advance what portion of Hungary’s future needs could be met by the Croatian route, as this will also depend on Hungarian consumption, supplier contracts, and their decisions regarding the use of other supply routes, as well as the leasing of capacity at the LNG terminal on Krk – states Plinacro’s response.

They remind that there is a joint statement with the Hungarian side signed on July 30 of this year regarding ‘the amounts of capacity that the two operators will be able to offer to users of transport systems after the commissioning of the Bosiljevo – Sisak – Kozarac pipeline system and meeting the necessary technical conditions’, but this is not a leasing contract, a letter of intent from commercial users, nor a reservation of capacity for the period after 2027.

– Future capacities will be offered to the market transparently and non-discriminatorily, in accordance with Croatian and European gas market rules, and specific contracted volumes will depend on expressed market interest and the results of contracting procedures. Therefore, at this moment, it is not possible to specify the volumes that individual Hungarian companies would lease – responded Plinacro.

Reservations Until 2037

An important part of the Croatian gas route is, logically, the LNG terminal on Krk, all of whose currently available capacities are already reserved until 2037, confirmed LNG Croatia to Lider. However, the company warns that this does not mean that this gas is pre-allocated to specific countries.

LNG Croatia manages the terminal but does not have data on where the gas goes after it is dispatched into the transport system, and due to business confidentiality, they do not disclose the obligations of individual terminal users.

It is known, however, that among the users of the LNG terminal on Krk is MVM CEEnergy Croatia, a company of the Hungarian state energy group MVM. LNG Croatia did not want to disclose how much capacity MVM has contracted and for what period, citing the confidentiality of the business relationship.

As for JANAF, they state that ‘continuous discussions are held with all existing users of the oil pipeline-storage system, as well as with potential users, all in order to ensure the best possible service and uninterrupted and stable operations for their business partners’.

Can Meet MOL’s Needs

– JANAF can fully meet the crude oil needs of Central European MOL Group refineries. Technically and organizationally, we are completely ready to take over the supply of refineries in Százhalombatta and Bratislava at their full annual capacity. It has been confirmed multiple times through testing that JANAF can deliver up to 15 million tons of crude oil to Hungary and Slovakia annually, while their actual needs are around 11 million tons – stated the company, adding that the pipeline capacity was additionally confirmed during the period when the Druzhba pipeline was not operational, when JANAF fully met the MOL Group’s crude oil needs.

– If the MOL Group decides to use JANAF exclusively as a supply route, we are ready to start delivering oil in the requested quantities immediately – they note at JANAF, adding that the MOL Group is a long-time partner of JANAF with whom they have a valid transport contract lasting until the end of this year.

Not an Easy Task

As for neighboring Hungary, it must replace decades of dependence on Russian energy sources, which is not an easy task. The Hungarian energy system has been built around the supply of Russian energy sources for decades. Russian gas primarily arrives via the Turkish Stream and Serbia, while the Druzhba pipeline is crucial for supplying MOL’s refineries with Russian oil.

It is therefore clear that Budapest is not putting all its cards on just one route to replace Russia, but rather several parallel ones. For gas, it is also counting on Romania and future production from the Black Sea, as well as LNG that can reach the Hungarian market through European terminals and existing interconnections with neighboring countries. Croatia is just one part of this puzzle, but a part whose capacity is currently significantly increasing.

However, this is still a good business opportunity for Croatia. If part of today’s Russian flows indeed shifts to the Adriatic, billions of cubic meters of gas and millions of tons of oil could flow through Croatian infrastructure more than today, and it all depends on contracts that have yet to be concluded.