Hungary’s energy export ban may not be justified under EU rules

LONDON (ICIS)–Hungary’s decision to ban gas exports from 1 August after declaring an energy emergency was taken without notifying the European Commission and may not be justified on grounds outlined under EU rules, European Commissioner for Energy, Kadri Simson, said in a statement on Thursday.

Restrictions on exports to neighbouring markets can only be taken to protect public order or health but not on economic grounds, according to the statement.

The Hungarian government said on Wednesday it had adopted a seven-point plan in response to a Europe-wide gas supply crunch, including banning energy exports, lifting a cap on electricity and gas prices, resuming coal-fired electricity production and increasing domestic gas production from 1.5 billion cubic meters to 2bcm/year.

It is unclear whether the ban would also extend to the transit of natural gas or the export of electricity.

Any restrictions would create regional imbalances because the Hungarian power market is coupled with those of central and eastern Europe, including Germany.

On natural gas it has also been an important exporter to Ukraine and Romania.

The comission said in response to the announcement: “While member states have the responsibility to ensure security of supply, a declaration of a state of emergency and its resulting measures must be taken in the presence of a clear threat of supply interruptions and notified to the commission under the security of supply regulation, to allow for proper information and coordination with neighbouring countries.

“Individual national restrictions affecting gas cross-border flows are unwarranted and can only exacerbate problems in the current gas market situation.”

A source active in the region said Hungary was not dealing with an energy emergency but more with a fiscal and budgetary crisis after keeping electricity and gas tariffs at levels that are 20% of current market prices.

The commission is preparing a set of proposals designed to cope with the supply crunch this winter, which will be published 20 July.