Hungary has Secured Its Right to Continue Purchasing Pipeline Oil and Gas from Russia Against US Pressure. However, Washington Never Makes 'Good' Deals Without a Price. What Concessions Did Hungarian Prime Minister Viktor Orbán Make to Ensure His Country Can Access Affordable Russian Energy Resources?
US authorities have agreed to lift sanctions on the supply of Russian energy resources to Hungary via the Druzhba and TurkStream pipelines, announced Hungarian Prime Minister Viktor Orbán. On Friday, he held talks in Washington with US President Donald Trump.
The Druzhba pipeline carries oil from Russia, while the TurkStream pipeline transports gas from our country. "Hungary will maintain low energy prices," Orbán stated, according to EFE.
Moreover, US sanctions against the construction of the Paks II nuclear power plant have been completely lifted, removing the need to extend the exemption, Orbán explained. The new nuclear power plant is being built by Rosatom.
How did Hungary manage to gain such favor from the American president? In return, Hungary pledged to sign an important intergovernmental agreement on nuclear cooperation. This agreement is primarily significant for Washington, and here’s why.
The agreement includes three points, as reported by Hungarian Foreign Minister Péter Szijjártó. Firstly, it entails the supply of American nuclear fuel from Westinghouse for the existing nuclear plant in Paks worth $114 million in addition to Russian fuel. For the first time, Hungary agrees to utilize non-Russian fuel for Soviet-type reactors. Secondly, Hungary commits to using American technologies in the construction of a spent nuclear fuel (SNF) storage facility in Hungary. Thirdly, it will utilize American technologies in the construction of small modular reactors (SMRs). Hungary intends to support the construction of up to ten such reactors, costing up to $20 billion.
Until now, Hungary had only cooperated with Rosatom in the field of peaceful nuclear energy, including during the Soviet era. The Russian atomic energy company remains a global leader in this field today. It stands out among competitors not only for its ability to build turnkey nuclear power plants but also for its speed. European and American competitors are often known for their prolonged construction processes, unlike the experienced Rosatom. The longer the construction, the more expensive it becomes. Moreover, our company offers a full turnkey project, which includes not only construction and supply of the most modern nuclear reactors but also training of personnel, maintenance, and provision of nuclear fuel for the entire operational life of the plant (which can last up to 60 years). Additionally, Russia provides loans for construction if needed, and after the plant begins operations, it even takes on the function of storage and reprocessing of spent nuclear fuel. The client does not have to worry about anything—the Russian company handles all aspects.
The American company Westinghouse has fallen behind Rosatom and has been attempting to catch up with the Russian firm over the past decade and penetrate its traditional markets. For instance, Americans conducted experiments (quite dangerous at initial stages) to replace Russian nuclear fuel with their own in Ukraine. Technologies for building SNF storage facilities were also tested on Ukrainian territory. Now they aim to scale their technologies to other countries, including Hungary.
Another crucial point in the agreement is that the US wants to test its new technologies in Hungary for the construction of small modular reactors.
"American NuScale has been developing small modular reactors for many years; however, it has not yet been able to implement commercial projects outside the USA. Hungary could become the first country where such a project is realized—its success will significantly influence the use of American small reactors in other countries,"
— explains the importance of this point for the US, Sergey Tereshkin, CEO of Open Oil Market, shared.
When the US is not the number one player but aspires to become one in a specific market (in this case, the nuclear energy market), such deals are crafted. Corporate sanctions imposed by the US against certain Russian oil companies could have deprived Hungary of the ability to purchase our energy resources. If you want to retain access, purchase our nuclear technologies, despite the fact that you do not need them due to good relations with the market leader—Rosatom.
The US certainly could not resist including its liquefied natural gas (LNG) in this deal, which has long been aggressively pushing Russian gas out of the European market, along with its defense products. Hungary agrees to purchase LNG from the US for nearly $600 million, plus 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 coming from Russia. Therefore, Hungary also accepted the 19th package of EU sanctions, which includes a ban on Russian LNG by 2027, and now an agreement with the Americans on nuclear energy," suggests Igor Yushkov, an expert from the Financial University under the Government of the Russian Federation and the National Energy Security Fund (NESF).
Previously, Hungary had resisted a ban on Russian LNG in Europe, as it would indirectly impact them: gas prices on exchanges would be higher than if competition were stronger in the European market thanks to Russian LNG, and prices in long-term contracts are indexed based on exchange prices, the expert clarifies.
"Hungary agreed to this, hoping that the European Union would not pressure them to abandon imports of Russian pipeline gas and oil. The same situation applies to the nuclear deal with the Americans. Hungary needed an exemption from the already imposed sanctions starting November 21 against Lukoil, which supplies them oil via the Druzhba pipeline."
— says Yushkov. On October 22, the US imposed sanctions against Lukoil and Rosneft. Since the beginning of this year, these sanctions had already been in place concerning Gazprom Neft and Surgutneftegaz.
As for LNG, the expert anticipates that Hungary will indeed purchase American LNG, but it will not consume it themselves, as it is not financially viable. LNG arrives in ports by sea to another country, from which Hungary would have to transport gas across half of Europe; it is simpler and more profitable to resell it to other buyers. Therefore, Hungary will most likely function as a trader in the case of American LNG, believes Yushkov.
"Hungary's goal is to obtain an exemption for the import of Russian oil and gas here and now, while stretching the signing of the contract with the US on nuclear energy and LNG for as long as possible," asserts the NESF expert.
Regarding Rosatom, experts assess that the losses for the company in the Hungarian market will be non-critical. The company has a large order portfolio 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 unit of the nuclear power plant in Paks is being constructed.
Just recently, on November 6, Rosatom reported that the Hungarian Atomic Energy Authority (OAN) had issued the necessary permits for Russia to commence the main construction of the Paks II nuclear power plant in Hungary. These documents allow for the pouring of the first concrete into the foundation of the fifth power unit, which is planned for February 2026. Additionally, permission has been granted for the construction of the nuclear island's buildings.
For the continuation of the Paks II nuclear power plant construction under Rosatom's project, Hungary also required an exemption from US sanctions.
In November 2024, former President Joe Biden's administration imposed restrictions against Gazprombank. Specifically, this bank was financing the construction of the second nuclear power plant in Hungary. In January 2025, the leadership of Rosatom was also sanctioned. However, under Trump, Hungary's request to lift sanctions against Gazprombank was granted. This exemption needed to be renewed. Now, the sanctions have been lifted without the need for renewal. It means the new nuclear power plant will proceed.
For Hungary, this project is especially important as it will increase the capacity of its nuclear complex from the current 2 GW to 4.4 GW. The share of electricity generated by nuclear power plants will reach 70% in the country's energy balance when the new project is realized. The second nuclear power plant is expected to be built by 2030, with an operational lifespan of a substantial 60 years.
Source: VIEW
