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Hungary, energy access and geopolitics

The energy crisis caused by the war in Ukraine and related European Union sanctions have not only caused energy prices to skyrocket, but have also made access to energy more difficult.

However, Hungary has enough oil reserves for several weeks, and the government enacted a series of measures aimed at ensuring that families do not experience shortages of electricity, gas or fuel.

On May 24, 2022, the government declared a state of danger in connection with the armed conflict in neighboring Ukraine.

As of January 1, 2022, the population of Hungary was approximately 9.7 million.

Approximately 70.1% of the population lived in urban areas and 1.7 million lived in Budapest, which is the political, administrative, cultural and commercial center of Hungary.

Although 84% of the population is Magyar (or Hungarian), there are ethnic Armenian, Bulgarian, Croatian, German, Greek, Polish, Roma, Romanian, Ruthenian, Serbian, Slovak, Slovenian and Ukrainian minorities.

The state of danger is in force from May 25, 2022 until further notice and provides for the Prime Minister to prevent and remedy the negative consequences caused by the war in Ukraine.

Access to energy

According to the Hungarian government, the war in Ukraine poses a constant danger to Hungary, including physical security, energy supply and financial security.

The state of danger, similar to that introduced during the Covid-19 pandemic, will allow the government to take timely action to effectively protect Hungary.

On August 12, 2022, the government announced that the Druzhba pipeline had been shut down as scheduled at the beginning of each month, on August 4, 2022.

After the Hungarian oil and gas company MOL stepped in and assumed payment of a transit fee, oil deliveries from Russia through the pipeline resumed on August 10, 2022.

According to volume indices prepared by Hungarian Central Statistical Office (HCSO), gross industrial production increased 9.5%, and total sales grew 9.7%, in 2021.

Between 2018 and 2021, industrial export sales accounted for more than 60% of the sector’s total sales.

In 2021, export sales increased 8.9 percent, and domestic sales grew 10.9 percent.

At the same time, in the past year, 95.5 percent of total industrial output was attributable to manufacturing.

The production value of mining and quarrying amounted to 0.4 percent of total industrial production, and the production value of electricity, gas, steam and air conditioning supply amounted to 4.1 percent of total industrial production.

According to preliminary volume indices compiled by HCSO, export sales increased 4.1%, while domestic sales grew 8.4% during the seven-month period ended July 31, 2022.

As a result, total sales increased 5.8%, and gross production grew 4.9% during the seven-month period ended July 31, 2022, according to preliminary data.

 

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