Frack It to Me Baby!

State Secretary Szijjártó (center) with his new friends.

State Secretary Szijjártó (center) with his new friends.

On March 17, Prime Ministry State Secretary for Foreign Affairs and External Economy Péter Szijjártó declared during a ceremony marking the start of an expansion of the truck-wheel plant that U.S. aluminum company Alcoa operates in the city of Székesfehérvár: “Essentially we are also together here today in order to write another chapter in the success story of Hungarian-American economic cooperation” (source in Hungarian at 11:14).

This statement, though referring specifically only to economic cooperation, nevertheless signified the first time that, beyond protocol and formalities, anybody in the second Orbán government had referred to U.S.–Hungarian relations in genuinely positive terms as a “success story” since coming to power in 2010.

The reason for this turnabout is that Hungary is interested in the possibility of importing gas from the United States as a means of reducing its dependence on the import of gas from Russia via Ukraine.

On March 11, State Secretary Szijjártó met with United States Deputy Assistant Secretary of State for Economic and Eurasian Affairs Hoyt Brian Yee and Deputy Assistant Secretary for Energy Diplomacy Amos Hochstein in order to transmit the government’s request that the U.S. Congress act as soon as possible to expedite the process of authorizing U.S. gas exports to Europe (source in English).

Szijjártó’s meeting with the U.S. officials took place three days after the United States ambassadors of the Visegrád Group alliance of Poland, Czech Republic, Slovakia and Hungary, all of which are heavily dependent on the import of gas from Russia (source in English), sent a letter to U.S. House of Representatives Speaker John Boehner asking Congress to pass a legislative bill that would eliminate current impediments to the export of gas to states with which the United States has not concluded free-trade agreements, which includes all countries of Europe (source in English).

Fracking shale gas in North Dakota.

Fracking shale gas in North Dakota.

The United States has among the largest reserves of shale gas in the world (source in English). Production of shale gas, which is extracted through a process called hydraulic fracturing, or “fracking,” has risen dramatically in the United States over the past few years and will continue to increase in the future, making it possible for the country to export gas (source in English).

The U.S. Congress is considering legislation called the Domestic Prosperity and Global Freedom Act that would expedite the process of issuing Department of Energy permits for the export of gas to countries in Europe and elsewhere that do not have free-trade agreements with the United States, such as the North American Free Trade Agreement that facilitates U.S. gas exports to Canada and Mexico (source in English).

However, even if Congress approves the bill, gas-liquefaction and regasification terminals still need to be built in the United States and Europe in order for U.S. gas to be exported to European countries via tanker ship in the form of Liquefied Natural Gas (LNG). State-owned Croatian companies expect to complete an LNG regasification terminal on the island of Krk off the coast of Croatia in the northern Adriatic Sea in 2016 (source in English), while the first gas-liquefaction plant in the contiguous United States is expected to begin full-scale operation in 2017 (source in English).

Once regasified, the imported U.S. shale gas would be transported to Hungary via a new pipeline running across the country between Croatia and Ukraine (source in Hungarian).

According to a 2013 European Commission report, gas accounts for an uncommonly high 38 percent of the energy consumed in Hungary (source in English). Hungary imports just over 70 percent of the gas consumed in the country from Russia via a pipeline running through Ukraine (source in English).

Route of the South Stream Pipeline.

Proposed route of the South Stream Pipeline.

The Orbán government previously hoped to reduce the dependence of Hungary on gas imported from the Russian state-owned energy company Gazprom through the import of gas from Azerbaijan via the planned Nabucco-West pipeline running to the country from Turkey, Bulgaria and Romania. However, the European Union- and United States-backed pipeline project may have suffered a fatal blow when the consortium of companies that operates the Shah Deniz gas field in the Caspian Sea off the coast of Azerbaijan decided in June 2013 to transport gas extracted at the field to Europe via the Trans Adriatic Pipeline rather than the Nabucco-West pipeline (source in English).

Gazprom was expected to begin delivering gas to Hungary through the South Stream pipeline via the Black Sea, Bulgaria and Serbia beginning in early 2017: this pipeline would reduce Hungary’s dependence on gas exported via Ukraine, but not on gas exported from Russia (source in English). However, European Union sanctions stemming from Russia’s annexation of the Autonomous Republic of Crimea in March 2014 have raised doubts regarding the eventual construction of this pipeline in EU member states (source in English).  

State Secretary Szijjartó prefaced his March 17 praise for the “success story” of U.S.-Hungarian economic relations with a reference to Russia’s annexation of the Autonomous Republic of Crimea (source in Hungarian):

Permit me since we are celebrating an event which takes place within an international economic sphere—namely that an American company has decided to expand its capacity in Hungary, more specifically Székesfehérvár—that we say a few words about the world around us and the impact it exercises upon us as well. You, just as I, are certainly paying attention to the important changes that have been taking place in the world. Over recent days, world economic and political power-relations have been undergoing a significant transformation. We can state without exaggeration that a new situation has arisen. And it is totally clear that if there is a new situation in the world, all the players in the world economy—not only companies, but countries as well—must react to it with a new strategy.    

Does this “new situation” signal the beginning of long-term improvement in relations between the Orbán government and the United States, a country with which the prime minister said Hungary had “problems of coexistence” during a 2013 speech to Hungarian diplomats (source in Hungarian)? Or do the recent friendly gestures of the Orbán government toward the United States represent a passing fancy that will give way to its previous cool contempt for the diminishing super-power once the Crimean crisis has passed? Orange Files suspects the latter scenario to be more likely, especially if construction proceeds on the South Stream pipeline carrying Russian gas to Hungary.  

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