Hungary Secures Its Right to Continue Purchasing Pipeline Oil and Gas from Russia Before the US
Hungary has successfully defended its right to continue purchasing pipeline oil and gas from Russia, with US authorities agreeing to lift sanctions on the supply of Russian energy resources to Hungary via the "Druzba" and "Turkish Stream" pipelines, as announced by Prime Minister Viktor Orbán. He held negotiations in Washington with US President Donald Trump on Friday.
Oil is supplied via the "Druzba" pipeline, while gas is supplied through the "Turkish Stream." "Hungary will maintain low energy prices," Orbán stated, according to EFE.
Furthermore, US sanctions against the construction of the "Paks-2" nuclear power plant have been completely lifted, eliminating the need for exemptions, Orbán noted. The construction of the new NPP is being handled by Rosatom.
So how did Hungary manage to secure such favorable terms from the American president? In exchange, Hungary promised to sign a significant intergovernmental agreement on nuclear cooperation. This agreement is primarily important for Washington, and here's why.
The agreement consists of three parts, as reported by Hungary's Foreign Minister Péter Szijjártó. First, it includes the supply of American nuclear fuel from Westinghouse for the operational nuclear power plant in Paks, amounting to $114 million in addition to Russian fuel. Hungary is agreeing to use non-Russian fuel for Soviet-type nuclear reactors for the first time. Second, Hungary promises to utilize American technologies for constructing a storage facility for spent nuclear fuel (SNF) in Hungary. Third, it will employ American technologies in the construction of small modular reactors (SMRs). Hungary intends to support the construction of up to ten such reactors, with an estimated cost of up to $20 billion.
Until now, Hungary's peaceful nuclear energy sector had cooperated exclusively with Rosatom, including during the Soviet era. The Russian atomic company remains a world leader in this sector today, known for building turnkey nuclear power plants faster than any of its competitors. European and American counterparts are often criticized for their prolonged construction times, unlike the experienced Rosatom. The longer the construction time, the more expensive it becomes. Additionally, Rosatom handles the entire project – not only building and supplying modern nuclear reactors but also training personnel, providing maintenance, and supplying nuclear fuel for the lifespan of the plant (which can last up to 60 years). Moreover, Russia offers financing for construction and takes on the function of storage and reprocessing spent nuclear fuel once the power plant begins operation. Clients need not worry about anything—everything is handled by the Russian company.
The American company Westinghouse has fallen behind Rosatom and has spent the past decade trying to catch up while infiltrating traditional markets. For instance, they conducted experimental (and fairly risky at the outset) attempts to replace Russian nuclear fuel with their own on Ukraine's territory. They also tested technologies for constructing SNF storage facilities in Ukraine. Now they aim to scale these technologies to other countries, including Hungary.
Another crucial aspect of the agreement is the third point: essentially, the US wants to test its new technologies for constructing small modular reactors in Hungary.
“American NuScale has been developing small modular reactors for many years, yet it has yet to implement commercial projects outside the US. Hungary may become the first country where such a project will be realized—its success will largely determine the use of American small reactors in other countries,”
— explains the significance of this point for the US, Sergey Tereshkin, General Director of Open Oil Market.
When the US is not the number one player in a market, but seeks to become one (in this case, the nuclear energy market), they engage in such deals. US corporate sanctions against individual Russian oil companies could have hindered Hungary's ability to purchase our energy resources. In order to retain these purchases, Hungary agreed to adopt American nuclear technologies, even though they were not particularly necessary due to strong ties with the market leader, Rosatom.
Of course, the US also included its liquefied natural gas (LNG) in this deal, which has long been openly pushing Russian gas off the European market, as well as its defense products. Hungary is committed to buying LNG from the US for nearly $600 million and defense products for $700 million through foreign companies.
“Hungary agreed to American nuclear fuel and technologies to protect what is most important to it—pipeline supplies of oil and gas from Russia. Thus, Hungary also agreed to the 19th package of EU sanctions, which includes a ban on Russian LNG by 2027, as well as the nuclear energy agreement with the Americans,” believes Igor Yushkov, an expert from the Financial University under the Government of the Russian Federation and the National Energy Security Fund (NESF).
Previously, Hungary did not agree to a ban on Russian LNG in Europe because such a ban would indirectly affect Hungary as well: prices on the exchange would be higher than if competition was stronger in the European market due to Russian LNG, and long-term contracts' prices are indexed based on exchange rates, the expert explains.
“Hungary agreed to this, hoping that the European Union would relent on its demands for them to abandon the import of Russian pipeline gas and oil. The same goes for signing the atomic deal with the Americans. Hungary needed an exemption from the sanctions already being imposed since November 21 against Lukoil, which supplies oil to them via the "Druzba" pipeline,”
— says Yushkov. On October 22, the US imposed sanctions against Lukoil and Rosneft. Since the beginning of this year, they have already been effective against Gazprom Neft and Surgutneftegas.
As for LNG, the expert suggests that Hungary will need to purchase American LNG, but it will not consume it itself as it is not economically viable. LNG arrives at ports by sea to another country, from which Hungary would then have to transport the gas across half of Europe; it is easier and more profitable to resell it to other buyers. Therefore, it is likely that Hungary will act as a trader when it comes to American LNG, according to Yushkov.
“Hungary's task is to secure an exemption for importing Russian oil and gas here and now, while stretching the signing of contracts with the US for nuclear energy and LNG as long as possible,” believes the NESF expert.
Regarding Rosatom, experts estimate that losses for the company in the Hungarian market will be non-critical. The company has a large portfolio of orders from foreign countries. The Hungarian Foreign Minister emphasized that the process of diversifying nuclear fuel supplies does not mean abandoning cooperation with proven partners—in this case, with Rosatom, under whose project the second phase of the nuclear power plant in Paks is currently under construction.
On November 6, Rosatom reported that the Hungarian Atomic Energy Authority (HAEA) had issued the necessary permits for starting the main construction of the "Paks-2" nuclear power plant in Hungary. These permits allow for pouring the first concrete into the foundation of the fifth power unit, with plans for this to occur in February 2026. Furthermore, permission has been granted for the construction of the buildings of the nuclear island.
For the continuation of the "Paks-2" nuclear power plant's construction by Rosatom, Hungary also required an exemption from sanctions from the US.
In November 2024, the administration of former President Joe Biden imposed restrictions against Gazprombank. Financing for the construction of the second NPP in Hungary was conducted through this bank. In January 2025, the leadership of Rosatom was also placed under sanctions. However, under Trump, Hungary's request to lift sanctions against Gazprombank was granted. But this exemption from sanctions needed to be renewed. Now, however, sanctions have been lifted without the need for renewal. This means the new NPP will go ahead.
This project is particularly important for Hungary as it will increase the capabilities of the nuclear complex from the current 2 GW to 4.4 GW. The share of electricity generated by nuclear power plants will reach 70% of the country's energy balance once the new project is implemented. The second NPP is expected to be completed by 2030, with a lifespan of 60 years.
Source: VZGLYAD
