UPDATE 1-Hungary receives no gas via Ukraine, industry suffers

Wed Jan 7, 2009 3:12pm GMT

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By Krisztina Than and Balazs Koranyi

BUDAPEST Jan 7 (Reuters) - Hungarian imports of Russian natural gas via Ukraine are still halted and restrictions on some industrial gas users have forced several companies to stop production, officials said on Wednesday.

Janos Zsuga, Chief Executive of oil and gas group MOL's MOLB.BU gas transmission arm Foldgazszallito Zrt said Hungary received 3 million cubic metres of gas from Austria on Tuesday when shipments via Ukraine came to a halt, but this dropped to half on Wednesday.

He said the country's daily consumption was estimated at 64 million cubic metres on Wednesday which due to restrictions could be covered from reserves and domestic output of about 8 million cubic metres.

But he added that consumption could rise if temperatures drop further.

Zsuga said Hungary may need to take further measures and free up strategic gas reserves if consumption rises.

"Today's situation is even more serious (than yesterday)," Zsuga told a parliamentary committee.

Gas is pumped at full capacity into the Hungarian system from commercial reserves, which means some 51.5 million cubic metres daily, but MOL's Executive Chairman Zsolt Hernadi said this could be maintained only for 2 to 3 weeks.

"This is how long these (pipeline, storage and production) can be operated at 100 percent (operational capacity) ... Time is passing, and due to the amount of gas taken out from storage, pressure could start declining," Hernadi told the committee.

Hernadi said the European Union should act to resolve the gas dispute between Russia and Ukraine as soon as possible.

"It is very important that Brussels should take an active role in this. I think Brussels made a mistake in communication ... Brussels thought that similarly to 2006, this will get resolved as well," Hernadi said.

INDUSTRIAL USERS HIT

Energy Minister Csaba Molnar said E.ON Ruhrgas agreed to supply Hungary with 2.5 million cubic metres of gas from Germany per day via the pipeline from Austria for at least 10 days.

He also said Serbia had asked Hungary to supply gas from its reserves but Hungary declined due to the gas shortage.

The unit of Japanese car maker Suzuki, one of Hungary's biggest exporters, halted production and other companies including a unit of U.S. carbon fibre producer Zoltek ZOLT.O have also cut output sharply due to the gas shortage.

Several power plants switched to oil from gas, including the 900-MW Tisza II power plant of AES-Tisza Eromu Kft, local news agency MTI reported. The main international airport in Budapest also switched to oil from gas heating.

Hungary has about 3.8 billion cubic metres of gas in storage of which 500 million are strategic safety reserves.

Hungary's annual gas consumption is around 13-14 billion cubic metres. Around 80 percent of this is supplied from Russia on pipelines that run through Ukraine and the rest is supplied from domestic production.

Weather is expected to turn colder towards the weekend with temperatures dropping below minus 15 degrees Celsius at night.

(Additional reporting by Sandor Peto)

(Reporting by Krisztina Than and Balazs Koranyi;Editing by Peter Blackburn)

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