The extension of the Russian-Turkish Blue Stream natural gas pipeline towards Europe is a much more viable solution for Central Europe's energy supply problems than the planned Nabucco pipeline connecting Central Asia and Central Europe, according to Laszlo Molnar, managing director of Hungarian state-run energy-efficiency agency Energia Kozpont Kht.
Among other concerns surrounding Nabucco, Molnar said that Central Asia and Iran present as much potential for instability and inadequate supply security as Russia and Ukraine. By contrast, Russia's overtures on the Blue Stream project also included plans to make Hungary a regional natural gas hub, including the construction of new gas storage facilities.
Our view: It seems that after signing the agreement with Gazprom on construction of new gas storage facilities, the Hungarian government started favoring the prolongation of the Blue Stream pipeline to Hungary over the Nabucco project. For MOL this decision brings more advantages: since Nabucco will be operated by OMV, the natural gas hub will be in Austria not Hungary. We expect a slightly positive reaction from the market.