HUNGARY KEEPS ITS ENEMY CLOSE

While Russia has most EU countries on the defensive, Hungary is using a Don Corleone strategy.

Largest energy company in Hungary takes practical approach to Russia
Judy Dempsey, March 28, 2007 (International Herald Tribune)

WHO
Zoltan Hernadi, chairman of MOL, the largest oil and gas company in Hungary

WHAT
MOL and the Hungarian government took two steps to prevent future shortages. One: Increase storage capacity in cooperation with Gazprom. Two: Use the new storage facilities to become Central European hub.

MOL and Gazprom have also agreed that Russia should build a storage facility holding 10 billion cubic meters of gas.

WHEN
In the past few years, MOL investments in becoming a supply hub have been between $2 billion and $3 billion. It first bought the Slovak Slovnat gas company, then a stake in INA, Croatia's petroleum and natural gas company. It acquired the Bosnia and Herzegovina retail network of Energopetrol. Eastwards, MOL got in on gas exploration in Kazakhstan, bought the Russian oil company BaiTex and its oil field in the Urals.
The investments seem to be paying off. After a very difficult 2000 and 2001, net profit more than doubled in the third quarter of 2006.

WHERE
To strengthen its ties with Gazprom, MOL agreed last June to cooperate with the Russian company on the construction of an extension of the Blue Stream transnational pipeline from Turkey up through Bulgaria, Romania, Serbia and into Hungary, as well as on an underground gas storage facility in Hungary.

WHY
Hungary relies on Russia for over 85 percent of its gas supplies; 90 percent of households depend on gas. During the very cold winter of 2006, Russia’s Gazprom cut off gas supplies to Ukraine over a price dispute.

QUOTES
Zoltan Hernadi : "Russia wants to diversify its transit routs and Hungary wants to diversify too," he said. "Look, Russia is supplying Europe. But it is running into problems with the transit countries. Russia has taken the initiative to extend the Blue Stream. And we are ready to cooperate with them. Why not?"