Hungary decree allows government to supervise energy firms if needed

General view of Zsana Storage Site in Zsana

By Krisztina Than

BUDAPEST (Reuters) -Hungary has passed a decree empowering the government to take over the supervision of vital energy firms and the gas pipeline network operator FGSZ in an emergency that would require it to ensure continuous supply.

Tuesday's decree, signed by Prime Minister Viktor Orban, covers key firms in the power, gas and oil industries, as well as district heating firms and mining, along with FGSZ and the Hungarian fuel and gas stockpiling association.

The decree -- which fits in with interventionist policies of Orban's government which has capped fuel prices and households' energy bills -- was passed just as Europe readies for any potential cuts in Russian gas supplies.

The European Union's energy chief on Monday urged countries to update their contingency plans for supply shocks.

Oil and gas group MOL, which controls FGSZ, said in an emailed reply to Reuters that it "refuses to comment on government strategy aimed at addressing war-related eventualities".

"Such measures are not uncommon in EU countries," it said.

Hungary is about 85% reliant on Russian gas imports and 65% reliant on crude oil imports from Russia, and also imports a smaller part of the electricity it needs, so its exposure in case of an energy crisis in Europe is high, analysts say.

"In terms of the essence of this Hungarian measure, I don't see a big difference compared with other contingency plans in Europe," Erste Bank oil and gas sector analyst Tamas Pletser said.

Fitch Ratings said on Wednesday that Slovakia, Hungary and the Czech Republic were the most exposed among Central and Eastern European states to any sudden cessation of Russian gas supplies to EU countries.

"Slovakia, Hungary and Czech Republic combine high reliance on Russian gas with a lack of viable short-term alternative energy supplies," the rating agency said.

"In contrast, Poland, Lithuania and Romania have largely secured alternative supplies or have significant domestic production."

Hungarian Foreign Minister Peter Szijjarto said this month that Gazprom chief executive and Russia's deputy prime minister, Alexander Novak, had both assured him the company would fulfil obligations to Hungary set out in its long-term gas supply contract.

Under a deal with Gazprom signed last year, Hungary receives 3.5 billion cubic metres (bcm) of gas per year via Bulgaria and Serbia and a further 1 bcm via a pipeline from Austria. The deal runs for 15 years.

EU countries' combined gas storage is nearly 57% full, according to data from Gas Infrastructure Europe earlier this week. Filling levels vary between countries, however, with storage in Germany 57% full versus 97% in Poland and 39% in Hungary.

(Reporting by Krisztina Than; Editing by Clarence Fernandez and Michael Perry)