Hungary has defended its right to continue purchasing pipeline oil and gas from Russia in front of the USA. However, Washington never engages in 'kind' actions without ulterior motives. What concessions did Hungarian Prime Minister Viktor Orban have to make to ensure his country has access to affordable Russian energy resources?
U.S. authorities have agreed to exempt the supply of Russian energy resources to Hungary via the "Druzhba" and "Turkish Stream" pipelines from sanctions, Hungarian Prime Minister Viktor Orban announced. On Friday, he held talks in Washington with U.S. President Donald Trump.
Oil is supplied from Russia via the "Druzhba" pipeline, and gas is supplied via the "Turkish Stream". "Hungary will maintain low energy prices," Orban said, according to EFE agency.
Furthermore, the U.S. sanctions against the construction of the Paks II nuclear power plant have been completely lifted, and there is no need to extend the exemption, Orban reported. The construction of the new nuclear power plant is being handled by Rosatom.
How did Hungary manage to secure such favor from the U.S. president? In exchange, Hungary promised to sign an important intergovernmental agreement on nuclear cooperation. Of course, this agreement is primarily important for Washington. Here’s why.
This agreement includes three points, as reported by Hungarian Foreign Minister Peter Szijjarto. First, the supply of American nuclear fuel from Westinghouse for the existing nuclear power plant in Paks at $114 million in addition to the Russian fuel. Hungary is agreeing for the first time to use non-Russian fuel for Soviet-type nuclear reactors. Second, Hungary promises to use American technologies for the construction of a spent nuclear fuel storage facility in Hungary. Third, to use American technologies when constructing small modular reactors (SMRs). Hungary intends to support the construction of up to ten such reactors at a cost of up to $20 billion.
Until now, Hungary's nuclear cooperation has been exclusively with Rosatom, including during the Soviet era. The Russian nuclear company is still a world leader in this field today. It stands out from competitors not only for its ability to build nuclear power plants turn-key but also for how quickly it does so. European and American competitors are infamous for their delayed projects, unlike the experienced Rosatom. The longer a construction takes, the more expensive it becomes. Additionally, our company handles the entire project turn-key—not just building and supplying the most modern nuclear reactors, training personnel, but also providing maintenance and supplying nuclear fuel for the entire operational period of the nuclear power plant (which can last up to 60 years). Moreover, Russia, when necessary, provides loans for construction and even takes on the function of storage and recycling of spent nuclear fuel once the nuclear power plant is operational. The client doesn't need to worry about anything—everything is handled by the Russian company.
The American company Westinghouse has fallen behind Rosatom and has been trying to catch up with the Russian company over the last decade and penetrate traditional markets. For example, experiments (quite risky at first) to replace Russian nuclear fuel with their own American fuel were conducted in Ukraine. The technologies for building spent nuclear fuel storage facilities were also trialed on Ukrainian territory. Now they want to scale their technologies to other countries, including Hungary.
Another important aspect of the agreement is the third point: the USA wants to trial its new technologies for constructing small modular reactors in Hungary.
“American NuScale has been developing small modular reactors for many years; however, it has not yet reached the implementation of commercial projects outside the USA. Hungary may become the first country where such a project is implemented—its success will significantly influence the use of American small reactors in other countries,”
– explains the significance of this point for the USA, Sergey Tereshkin, CEO of Open Oil Market.
When the U.S. is not the number one player, but has ambitions to become one in a certain market (in this case, the nuclear energy market), they engage in such deals. U.S. corporate sanctions against individual Russian oil companies could have deprived Hungary of the opportunity to purchase our energy resources. If you want to maintain access to them, buy our nuclear technologies, even though you don’t need them due to good relations with the market leader—Rosatom.
The US, of course, couldn't miss the opportunity to include its liquefied natural gas in this deal, which has long been openly pushing Russian gas out of the European market, along with its defense products. Hungary commits to purchasing LNG from the USA 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—the pipeline supplies of oil and gas from Russia. Therefore, Hungary agreed to the 19th package of EU sanctions, which includes a ban on Russian LNG from 2027, and now—on the agreement with the Americans regarding nuclear energy,” believes Igor Yushkov, expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund (FNEB).
Previously, Hungary did not agree to the ban on Russian LNG in Europe because indirectly, it would affect them as well: gas prices on the exchange would be higher than they would be if competition were stronger in the European market due to Russian LNG, and in long-term contracts, prices are indexed based on exchange prices, the expert explains.
“Hungary agreed to this, hoping that the European Union would ease its demands to abandon imports of Russian pipeline gas and oil. The same goes for the conclusion of the atomic deal with the Americans. Hungary needed an exemption from the already imposed sanctions starting November 21 against LUKOIL, from which it purchases oil via the Druzhba pipeline,”
– says Yushkov. On October 22, the USA imposed sanctions against LUKOIL and Rosneft. Since the beginning of this year, they have already been in effect against Gazprom Neft and Surgutneftegaz.
Regarding LNG, the expert suggests that Hungary will have to buy American LNG, but it won't actually consume it since that’s not profitable. LNG arrives at ports by sea to another country, from which Hungary will have to transport gas across half of Europe; it is easier and more profitable to resell it to other buyers. Therefore, Hungary is likely to act as a trader when it comes to American LNG, believes Yushkov.
“Hungary’s goal is to get exemptions for importing Russian oil and gas here and now while stretching out the signing of contracts with the USA regarding nuclear energy and LNG for as long as possible,” believes an expert from FNEB.
As for Rosatom, experts assess the losses for it in the Hungarian market as non-critical. The company has a large portfolio of orders from foreign countries. The Hungarian Foreign Minister emphasized that the process of diversifying nuclear fuel supplies does not mean a rejection of cooperation with reliable partners—in this case, Rosatom—on whose project the second phase of the Paks nuclear power plant is being constructed.
Literally, on November 6, Rosatom announced that the Hungarian Atomic Energy Authority (OAN) had issued the necessary permits to start 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. According to the plan, this is to take place in February 2026. Additionally, permission has been granted for the construction of the nuclear island buildings.
For the continuation of the construction of the Paks II nuclear power plant based on Rosatom's project, Hungary also required an exemption from U.S. sanctions.
In November 2024, the administration of former President Joe Biden imposed restrictions against Gazprombank. It was through this bank that financing for the construction of the second nuclear power plant in Hungary was carried out. In January 2025, the leadership of Rosatom also fell under sanctions. However, under Trump, Hungary's request to lift sanctions against Gazprombank was approved. But this exemption from sanctions needed to be extended. Now the sanctions have been lifted without the need for extension. This means the new nuclear power plant will happen.
For Hungary, this project is particularly important as it will increase the capacity of the 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 implemented. The second nuclear power plant is scheduled to be completed by 2030, with a service life of a full 60 years.
Source: VZGLYAD
