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hungary signs breakthrough energy deals with caspian leaders

Hungary Signs Breakthrough Energy Deals with Caspian Leaders

Author: Toghrul Ali

Aug 29, 2023

Image source: Twitter

As a part of Hungary’s National Day celebrations on August 20, several leaders from around the world visited Budapest to engage in bilateral discussions with Hungarian Prime Minister Viktor Orban. Orban received the leaders of Türkiye, Serbia, Qatar, and several Caspian Sea region’s states, including Azerbaijan, Kyrgyzstan, Turkmenistan, and Uzbekistan. As an observer state of the Organization of Turkic States (OTS), Hungary has been leading European engagement with the Caspian Sea Region, and the recent developments are a testament to further bilateral and multilateral cooperation between the sides. 

In part, Hungary’s increased engagement with the Caspian region has been spearheaded by Türkiye’s initiative to welcome the country into the OTS in 2018. Following this, as a part of its “Eastern Opening” policy, Orban has pursued closer bilateral trade and economic partnerships with the Caspian region countries. Moreover, Hungary’s shared Turkic heritage with Central Asian states such as Kazakhstan, Kyrgyzstan, Turkmenistan, and Uzbekistan, as well as Türkiye and Azerbaijan, has made it easier to build upon the already-established relationship, especially in light of the war in Ukraine. 

On August 20, bilateral talks between Viktor Orban and Turkish President Recep Tayyip Erdoğan were centered around energy cooperation between the two countries and the ratification of Sweden’s accession to NATO. According to the Hungarian Ministry of Foreign Affairs, energy security was the primary focus of talks between leaders. In this line, the finalization of an agreement between the Hungarian energy company, MVM, and Turkish state-owned oil and gas company, BOTAŞ, on the purchase of up to 300 million cubic meters of gas for 2024 was announced following the meetings. BOTAŞ described this as a "groundbreaking agreement," marking the first time Ankara has agreed to transport natural gas via pipeline to a non-neighboring country. Foreign Minister Péter Szijjártó emphasized that this agreement will further contribute to Türkiye’s important role as an energy transit hub, which would facilitate more energy to Europe from Azerbaijan and Turkmenistan. 

The presence of Turkmenistan’s President Serdar Berdimuhamedov in the meetings was of special significance. Turkmenistan’s historic policy of neutrality has previously prevented unlocking the country’s full economic potential, especially to export its vast hydrocarbon resources to the European markets. However, since the outbreak of the war in Ukraine, Ashgabat has begun to seek new partners in the West, namely in the European Union. In that respect, Hungary has been among the frontrunners in Europe seeking to import Turkmen gas: “We need energy to come to Europe from Central Asia, and for this, we need new sources, new routes, and new infrastructure,” said Orban during his official visit to Turkmenistan in June. Following the bilateral meeting between Orban and Berdimuhamedov on August 20, Turkmenistan signed its first-ever deal to supply natural gas to Hungary. While the details of the agreement remain to be made public, Turkmen gas is expected to be transported to Hungary with the use of Turkish and Azerbaijani infrastructure, further accentuating the importance of the Trans-Caspian energy route. 

Orban’s discussions with Azerbaijan’s President Ilham Aliyev also centered around energy supply and European energy security amidst the war in Ukraine. On June 2, Hungarian Foreign Minister Peter Szijjarto announced that Hungary’s state-owned energy group MVM has agreed to buy 100 million cubic meters of natural gas from Azerbaijan’s state energy firm SOCAR. Szijjarto said that SOCAR is planning to transport the gas by the end of this year.  During the meeting, the two sides also emphasized the importance of strategic partnership in the renewables field among the governments of Azerbaijan, Georgia, Romania, and Hungary. In the field of economy, Orban and Aliyev discussed Hungary's investment in Azerbaijan in the food industry and the positive dynamics achieved in cooperation in the areas of the pharmaceutical industry. Aliyev also described the start of Hungarian companies' activities in the ongoing restoration and construction works carried out in the liberated territories of Azerbaijan as a positive step. Lastly, the sides noted cooperation in science and education, namely the grants and education scholarships offered to Azerbaijani students in Hungary, and emphasized cooperation in vocational education in the future. 

Additionally, President Sadyr Japarov of Kyrgyzstan and President Shavkat Mirziyoyev of Uzbekistan each conducted individual one-on-one discussions with Prime Minister Orban. Orban and Mirziyoyev discussed the ways to advance the Uzbek-Hungarian strategic partnership and build up multifaceted cooperation. Specifically, the recent entry of the Hungarian OTP bank into Uzbekistan’s banking and financial sector was recognized as an important development, sending a significant message to European business interests. Japarov and Orban noted the growth in two-way trade and stressed the need to open a direct flight between the capitals of the two states.

Hungary’s diplomatic efforts to engage with the Caspian region should not come as a surprise, given the dynamics of its growing relations with the South Caucasus and Central Asia as a part of its “Eastern Opening” policy. Specifically, the country’s observer status at OTS has allowed it to deepen its relations with the Turkic countries, which has provided vast opportunities for growth in trade, energy, and connectivity. These developments have bolstered the importance of the Trans-Caspian International Trade Route, also known as the Middle Corridor. The Middle Corridor has been among the priority areas on the agenda of the OTS, and Hungary’s active role in the organization has helped to raise the necessary awareness among the European Union (EU) states of the long-term potential of the Caspian region in terms of providing a viable alternative for connecting East with West. In terms of energy security, Hungary’s cooperation with Türkiye and Azerbaijan has proven to be essential in diversifying Europe’s energy supplies away from Russia. Moreover, Azerbaijan’s efforts in establishing infrastructural basis via the Southern Gas Corridor have allowed not only Hungary but also other Balkan countries to discover the opportunity of importing non-Russian natural gas. Looking ahead, potential cooperation in this line with Turkmenistan can only further strengthen these energy diversification initiatives.

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