Gazprom Wins in Hungary, Again

What communism couldn't do good old-fashioned American-style capitalism is accomplishing quite nicely.

My favorite natural gas company is taking new steps to conquer Europe, and it's meeting very little resistance.

Gazprom (OGZPY.PK), the right hook of Russian diplomacy, has begun work on its South Stream gas pipeline, which will get Greece, Italy and Austria addicted to the same stuff it currently supplies to Eastern and Northern Europe.

Gazprom Chairman and future Russian Prime Minister Dmitry Medvedev (oh, why even kid ourselves that someone else could win?) visited Hungarian Prime Minister Ferenc Gyurcsany this week to discuss an agreement, which will be signed in Moscow tomorrow, for his country's portion of the pipeline.

But Hungary's junior coalition party, which includes the country's economy minister, has thrown up a red flag against Gyurcsany's Gazprom play. The opposition party, with support from Economy Minister Csaba Kakosy's Free Democrats' Alliance, called for a special meeting of parliament about the plan, but was denied its request due to the time constraint.

In other words, the opposition parties think the prime minister has overstepped the parameters of his office. And they want a little say in the matter. But they aren't going to get one because the ruling party is strong enough to muzzle them.

The opposition raised security concerns. And can you blame them for being a little concerned that Russia is planning to run a highly explosive material through their backyards?

A state-owned company will build Hungary's section of the pipeline, which proponents say will actually increase the country's energy security. Right now, Gazprom's only shipments into Hungary are through its Ukrainian pipeline. And if you've been paying attention to international news in the last year, you know that Gazprom's relationship with the Ukraine has been stop and go, literally. A second line through Hungary will ensure the country's dependence on Gazprom gas will never be tested by cranky Ukrainian prime ministers, only cranky Hungarian ones.

But Hungary also has to consider the plans for a European Union-designed gas pipeline through its hinterlands. The country already agreed to back Nabucco, a pipeline that will circumvent Russia and Gazprom to supply Western Europe with Caspian Sea-basin gas. If it goes through with that plan as well, Hungary will have both the Gazprom and anti-Gazprom pipelines traveling through its borders.

Perhaps the workers can wave to one another and swap stories over a round of Unicum ("real man's Jagermeister") on cold winter nights… or maybe they'll just glower at each other across the Hungarian plains.

We'll see tomorrow whether the opposition can create enough of a stink to postpone the signing in Moscow. But Gazprom will probably do what it does best: Ignore anyone who doesn't agree and bully its way through. Like I've said before, don't bet against Gazprom.

Disclosure: None

Comments

[Patient]

Calling Prsident candidated future Prime minister makes me wonder about the quality of the overall analysis

Devil in details?