László Fritsch, MFGK: The Role of Natural Gas Will Remain Stronger in

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László Fritsch, MFGK: The Role of Natural Gas Will Remain Stronger in SEE

Date: February 22^nd 2021

Author: Alenka L. Klopčič, Tanja Srnovršnik

Several new gas projects were launched in South East Europe (SEE) at the beginning of this year: the liquefied natural gas (LNG) terminal in Croatia, and the Balkan Stream - as part of the Turkish Stream - in Serbia, while the first Azeri gas deliveries have arrived in Bulgaria and Greece via TAP. How important are such new projects for the region? According to László Fritsch, the CEO of Hungarian Gas Trade Ltd. (MFGK), they are extremely important, especially because the role of natural gas will remain stronger for longer in the SEE region than elsewhere. Check out what else the head of MFGK (part of the MVM Group), which, among others, received the first LNG cargo at the Croatian LNG terminal on 1 January, told Energetika.NET in a recent video interview on the future of gas in the SEE region.

New natural gas sources bring freshness to the energy mix

The new gas flows in the SEE region are extremely important for this region and they are going to change the whole picture, not only from a market perspective, but also in terms of security of supply and diversification of resources, said Fritsch, adding that these two perspectives – security of supply and diversification of sources – are also the same two that MFGK sees in LNG. The company also received the first LNG cargo at the Croatian LNG terminal on 1 January. At that time, the MVM Group, of which MFGK is a part, said that the commissioning of the Krk LNG terminal and the start of LNG supply “marks the start of a new age in Hungary’s natural gas supply.”

Since this was also the only delivery that MFGK has had from the Croatian terminal so far, the experience is still limited, however, the expectation is that it is going to be the most important participant and that it will get the biggest share of the capacity of the Krk terminal, replied Fritsch in response to the question about the effects of this new source in the market so far and whether it is expected that Hungary will get the bulk of LNG coming to Croatia.

Having access to the LNG terminal is also opening up the world to Hungarian gas suppliers and the next step is to get more active in the global LNG market, said Fritsch, adding that the company decided some years ago to ‘go regional’, thus beyond just Hungarian borders.

Since Hungary is also a crucial market for Russian gas and its gas giant Gazprom, Energetika.NET also asked MFGK’s CEO about the impact of this new LNG source on the position and share of Russian gas in Hungary as well as in the region. Fritsch, meanwhile, believes that the overall situation in terms of Russia’s gas position in the whole region will not change really drastically, the extent of this regional dependency on Russian gas will, however, change.

When asked about the competitiveness of LNG compared to pipeline gas, Fritsch said that as can be seen by the current situation in Asia, LNG can become very competitive, but can also become more expensive; either way it will become an important part of the whole energy mix.

In the SEE region “gas is much more than a transitional fuel”

Coronavirus impacted every part of the energy sector last year, and the gas sector, too, where demand fell and prices went down…, so what can be expected this year? “We hope that this year will be less hectic and less volatile, and we also anticipate that prices will not drop to such an extent as last year,” replied Fritsch, among others.

When talking about MFGK’s plans for 2021, the company’s CEO recalled the establishment of its two daughter companies – one in Croatia and one in the Czech Republic – adding that it wants to stabilise what it currently has, and plans to remain focused on the Balkans, where it also wants to take part in the Southern Corridor. In addition to stabilising the existing portfolio, MFGK is determined to follow its roadmap, including further expansion to countries where it is not yet present, he said.

Since there has been a lot of discussion about the future role of gas and gas as a transition fuel, Energetika.NET asked Fritsch if he sees gas as the ‘new coal’ and also how long does he see it (natural gas) still playing an important role. Among others, he answered by saying that gas is much more than a transition fuel in the SEE region, since this area is more dependent on gas than other European regions.

When we are considering gas as a transitional fuel, we should also bear in mind that most of the chances lie in hydrogen, but how near this ‘hydrogen future’ is also poses a question. So, hydrogen can be a part of the future and it can contribute to the decarbonisation process, he believes. Fritsch also spoke about this topic at the Budapest Energy Summit 2020 (MORE), but one of the big questions remains when will gas transmission system operators be able to transport hydrogen and how much of it in the existing pipelines? Another question is connected to the underground storages for hydrogen. If it (hydrogen) will only be used locally, the economy of scale will not be reached, he said.

Nevertheless, the role of natural gas will remain stronger for longer in the SEE region than elsewhere, assured Fritsch.