Shell agrees 10-year gas supply deal with Hungary's MVM CEEnergy

BUDAPEST, Sept 9 (Reuters) - Oil and gas major Shell SHEL.L signed a 10-year natural gas deal with Hungary's MVM CEEnergy on Tuesday, in a move designed to strengthen its presence in central and eastern Europe.

Shell, the world’s biggest liquefied natural gas (LNG) trader, said it would sell around 200 million cubic metres (mcm) of natural gas a year to the Hungarian natural gas wholesaler MVM CEEnergy, beginning in January 2026.

MVM Group receives a large amount of its gas from Russia, unlike energy providers in most European countries following Russia's invasion of Ukraine.

Hungary's foreign minister Peter Szijjarto said earlier on Tuesday that the deal would be the country's "largest volume and longest western supply contract ever."

A six-year purchase contract with Shell was concluded in 2020 for 250 mcm of liquefied natural gas annually, between 2021 and 2027. That was Hungary's first long-term LNG deal with a Western energy company.

The LNG comes in via Croatia's Port Krk where it is regasified and then delivered to Hungary through the Hungary-Croatia gas pipeline.

Hungary consumes around 8 billion cubic metres of gas a year. It is still the biggest buyer of Russian gas in the European Union.

RUSSIAN GAS PURCHASES TO CONTINUE

Szijjarto said the cooperation with Shell is working well but it would still be buying gas from Russia's Gazprom.

"With this, are we going to be able to live without Russian gas? No, because of geographical and infrastructural conditions. Not until we have proper infrastructure development in the region," he said.

Earlier this year, Slovakia and Hungary rejected European Commission plans to phase out Russian gas and other energy imports, deepening a rift with Brussels over their relations with Moscow.

Hungary, which has been receiving Russian gas from the south via Bulgaria and Serbia through the Turkstream pipeline, increased its purchases from Gazprom last year.

Szijjarto said earlier this month that Hungary had imported some 5 billion cubic meters of gas via the Turkstream pipeline through Serbia by the end of August, which meant this year's gas imports via Turkstream could hit a record high.

Hungary, which ships gas to Slovakia via an interconnector, also buys gas from Romania, and smaller volumes via the HAG pipeline which runs from Austria into Hungary.