Important Energy hub
The privileged geoeconomic placement of Hungary in the midst of the energy corridors between the Eurasian energy producers and the Western European consumers has lifted the importance of the country as an energy hub.
Despite the current issues associated with the economic crisis that have inflicted the country, it has numerous advantages in terms of energy politics that will play a great role over the coming years.
Energy export business
Since early May 2008 the Hungarian electricity company named Emfesz that controls around 80% of the domestic natural gas market, announced the creation of the largest electricity production plant in Eastern Europe using natural gas. It will have a capacity of 2,400 Mw and it will be built in the Nyirtass town right beside the borders with Ukraine in the Northeastern region of Hungary. The total cost is estimated at 1.5 billion Euros and the station will be operational from 2011 commencing its activities with a 400 Mw power unit, reaching full capacity on 2013.
The company believes that this plant will 'Stabilize electricity prices, and will be able to export electricity to countries such as Serbia, Ukraine and Romania'. Moreover its business plan provides for the creation of 3,000 jobs in one of the most underdeveloped areas of the country.
It has to be noted that Hungary has proceeded in joining the Nabucco pipeline project as well as the South Stream one, thus managing to become a vital energy corridor with either plan. Also a pipeline from Russia via Ukraine operates currently, plus links to the Algerian gas fields via Italy and Austria. Hungary is also eager to establish in its territory a set of gas deposits and get involved in energy trade as well, seeking to forge closer ties with the economies of Austria, Germany and Italy.
Hungary operates four nuclear units equipped with generators WER-440/213 second generation in the Paks region that are being supplied by the Russian Atomstroyexport. Over the past give years a modernization scheme has been applied and there are immediate plans by Hungary to increase the output of produced electricity by the units by 10%.
Moreover since 2005, the government passed a bill by which nuclear waste (low-and intermediate-level waste) are safely deposited in a repository in the Bataapati region and a special national fund has been created that will deal with the issue of decommissioning the Paks units in 20 years or so.
Domestic gas demand is expected to increase at least dramatically over the next decade as the country is transforming its infrastructure from coal and oil consumption to gas and renewable energy one. The domestic gas consumption increases presently by 4-5% per annum and consumption is over 15 billion cubic meters a year.
These numbers will increase further as recent predictions by international authorities such as the IEA point out towards the transformation of the domestic market from coal and oil consumption to gas and renewable energy one.
The main elements of the energy strategy of Budapest is to acquire sufficient amounts of gas that will meet its demands and in parallel make the country an exporter of electricity to neighboring states. The increasing demands of Southeastern Europe a region that is being reconstructed after the war period of the late '90's, assures for a viable future for the Hungarian plans.
- Opportunities in the Hungarian market in supplies relating to the construction of natural gas facilities
- Opportunities in the real estate sector in the underdeveloped regions where projects are going to be constructed
- Opportunities for electricity trading corporations that will deal with the energy flow from Hungary to the Ex-Yugoslav states
- Opportunities for energy consulting in Hungary relating to natural gas infrastructure projects
- Lastly Hungary operates a nuclear facility since the mid-80's using Russian (Soviet) technology. It seems probable that in the coming years opportunities could arise regarding the construction of a new factory. It is predicted that in 20 years time the existing facilities will cease operating.
Ioannis Michaletos is Editor South East Europe of the World Security Network Foundation.