(Bloomberg) -- Hungary said the US decision to sanction Gazprombank jeopardizes the energy security of some central European countries, elevating the risks of an early cutoff of Russian natural gas to the continent.
The move is an “attack on our sovereignty,” Foreign Minister Peter Szijjarto said in a statement Friday. The minister is “reviewing the situation with the energy ministers of Turkey, Azerbaijan, Bulgaria and Serbia” in Istanbul.
The country — alongside Slovakia and Austria — is one of few still relying on piped gas from Russia for its energy needs. European nations use Gazprombank to pay for those deliveries, and the sanctions increase the risk that they might be halted at a time when prices are near their highest in a year.
“Hungary is grateful to Turkey, Bulgaria and Serbia for ensuring a very safe, very reliable and very stable transit,” Szijjarto said at the Istanbul meeting. Together “we will find a solution to ensure the safety of our energy supplies.”
Although Europe has reduced reliance on Russia, losing its remaining flows would increase competition for global supplies and boost prices just as storage depletes at a fast clip. Traders are jittery as year-end approaches, since a key gas route to Europe via Ukraine is set to halt with the expiry of a transit deal between Kyiv and Moscow. Alternative arrangements haven’t yet been agreed.
Gazprombank Curbs
It’s not yet clear what the impact of the latest US sanctions will be.
Hungarian state energy company MVM Group is investigating to what extent and in what ways the restrictions may affect its business, according to an emailed statement. “At present, there are no pending or outstanding unpaid invoices or debts that our company intends to settle using Gazprombank,” it said.
Slovakia’s economy ministry said it’s analyzing the new sanctions to assess their potential impact. Russia said it will find ways to continue accepting payments from foreign gas buyers, Interfax reported, citing Kremlin spokesman Dmitry Peskov. Gazprom PJSC didn’t respond to a request for comment.
“Buyers of Russian gas who use Gazprombank will likely use workarounds to switch to another Russian bank to continue payments,” analysts at Energy Aspects Ltd. said in a note dated Thursday. “A flow disruption is highly unlikely, but even some of the remaining customers of Russian gas losing their supply would send global gas prices soaring.”
--With assistance from Daniel Hornak, Zulfugar Agayev, Anna Shiryaevskaya and Patrick Sykes.
(Updates with further comments from Szijjarto in fourth paragraph, MVM Group in seventh.)
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