Natural Gas Transmission

FGSZ Földgázszállító Zrt. (hereinafter FGSZ) is the sole transmission system operator of the nearly 6,000 km long high-pressure natural gas transmission pipeline system in Hungary. It performs its activities under regulated market conditions. In international comparison, the Company’s grid is operated according to the highest technological standards. FGSZ belongs to companies of strategic importance within the region. Aside from domestic natural gas transmission, FGSZ conducts transmission activities towards Serbia, Bosnia-Herzegovina, Romania, Croatia, Ukraine and Slovakia. Its dynamism and efficiency make the company one of Europe’s most significant natural gas TSOs.

HIGHLIGHTS

  • 5,874 km long pipeline system
  • 25 entry points, nearly 400 exit points
  • 3 transmission regions with 2-2 sites, 8 compressor stations
  • High technical class control centre in Siófok
  • Record transmission volumes of 24 bcm in 2019, 22 bcm in 2020

FGSZ is the sole transmission system operator of Hungary. It performs its activity under market conditions regulated by law. Besides the domestic natural gas transmission, FGSZ is also engaged in international transmission activities and operates bidirectional interconnection points with Slovakia, Ukraine, Romania and Croatia, a unidirectional inlet point from Austria, and a unidirectional exit point to Serbia. The security of supply of Hungary is inseparable from the energy security of the CEE region and the whole of Europe. Therefore, within the framework of European gas market cooperation based on mutual advantages, FGSZ aims to ensure the interoperability of the natural gas networks of the region on the part of Hungary; FGSZ also strives to increase the volumes of transmission and transit through Hungary. The developments of the pipeline and trade infrastructure implemented by FGSZ in the recent years laid down the foundations for the company’s future, and its regional activities.

On 10 October 2019, FGSZ became the 100% owner of Hungarian Gas Transit Ltd. through the acquisition of the state-owned MGT shares, successfully completing the transaction to acquire MGT’s line of business and its state-owned shares. In October 2019, FGSZ took over the operation of the 92 km long natural gas transmission pipeline connecting Hungary to Slovakia, and on 31 December 2019, as a result of the multi-month transaction process closing, MGT and FGSZ were merged. Accordingly, as of 1st January 2020, FGSZ acts as the legal successor of MGT.

The Regional Booking Platform (RBP) of FGSZ is an IT application developed in accordance with the EU network code governing the capacity allocation mechanisms used in natural gas transmission networks and with other relevant EU and national legislation. The capacity allocation application enables capacity allocation procedures and secondary capacity trading among other services. Today – beyond FGSZ – fourteen other transmission system operators use it partially or entirely on their system capacities throughout the EU and the Energy Community: Eustream (Slovakia), Transgaz (Romania), Plinacro (Croatia), Bulgartransgaz (Bulgaria), DESFA (Greece), Gas Connect Austria (Austria), Gaz-System (Poland), Gas TSO of Ukraine (Ukraine), Gastrans (Serbia), Moldovatransgaz (Moldavia), Ontras, Gascade, NEL Gastransport and Opal Gastransport (Germany). As a result of a successful 3-year long development project, RBP and all other business applications operated by FGSZ (most notably the Informatic Platform and Trading Platform) were completely renewed in 2018, but the applications are continuously being developed in line with regulatory and business needs.

OUTLOOK

Regional pipeline developments

FGSZ, as a reliable and efficient operator of the Hungarian natural gas transmission system, intends to enhance flexibility and security of supply on the regional natural gas market. Developments aim to establish new routes or strengthen existing connections providing opportunities for system users to access new sources and exploit trading possibilities. FGSZ supports incremental capacity developments, which are enhancing efficient utilization of the existing grid.

As a reliable and efficient operator of Hungary's natural gas transmission system, FGSZ is committed to strengthening the flexibility and security of supply of the regional gas market. Its developments are aimed at creating new routes and strengthening existing connections, providing opportunities for system users to access new resources and exploit commercial opportunities. FGSZ supports incremental developments promoting the more efficient use of the existing network.

Current projects

As the first virtual interconnection point between an EU and a non-EU country, as of 1 May 2020, FGSZ and its Ukrainian partner merged the two physical border crossing points on the Ukrainian-Hungarian border in Beregdaróc in a single virtual interconnection point (VIP Bereg). Thus, through VIP Bereg, the applied rules have become simpler for the users of the neighboring natural gas transmission systems, enabling more intensive booking and use of capacities between the neighboring entry-exit systems. Further purpose of VIP Bereg is to facilitate gas transportation and trade between the two countries, as well as to ensure and strengthen liquidity and, consequently, market competition conditions in both gas markets.

Construction works of the Romanian-Hungarian interconnection (RO-HU) project phase I on the Hungarian side, including the new compressor station at Csanádpalota, was completed by FGSZ by 1 October 2019. After the Romanian developments were also carried out in 2020, the RO-HU interconnector offers 2.6 bcma capacity towards the Romanian direction, while 1.75 bcma of natural gas can be imported to Hungary from Romania. The Open Season procedure regarding ROHU project phase II ended without success in April 2020, but FGSZ, alongside its Romanian partner Transgaz is examining the possibilities of further capacity increase between the two countries based on market demand.

Regarding the Serbian-Hungarian border point (SRB-HU), MEKH in its ordinances decided in April 2020 that FGSZ should submit a proposal for an unconditional infrastructure development investment with a capacity of 6 bcma, and after its approval to implement the project by 1 October 2021. Construction works are progressing are well under way on the interconnector. Any further expansion of the southern entry point capacity will depend on the outcome of a subsequent results of a market-based capacity expansion procedure.

The HU-SI project aims to develop physical connection between Hungary and Slovenia, because currently Slovenia is the only neighboring country without direct pipeline connection with Hungary. As a result of this project a bidirectional gas transit corridor could be established between Italy and Hungary through Slovenia.

For the purpose of security of supply, FGSZ aims to ensure the transmission possibility of natural gas from every possible direction to Hungary. FGSZ also strives to become an integral part of the region’s gas transmission network by cost-effectively making existing cross-border interconnections bidirectional and expanding its capacities.