Hungary’s energy ties to Russia set limits on post-Orbán pivot

Hungary’s incoming prime minister Peter Magyar may ease tensions with Brussels, but he says he won’t end imports of Russian oil and gas for now.

Brussels will be happy to see the departure of former Hungarian Prime Minister Viktor Orban, who has defied Brussels’ calls to stop imports of Russian fossil fuels and intends to ban Russian imports of gas completely by 2027. However, landlocked at the heart of Europe, far from the sea, both Hungary and Slovakia remain heavily dependent on deliveries of oil and gas via the old Soviet-era pipeline networks. Magyar says that he wants to reconnect with Europe, but that doesn’t extend to Hungary’s energy ties to Russian supplies.

Gas

Hungary continues to import significant volumes of gas from Russia under long-term agreements between Gazprom and state-owned Magyar Villamos Művek (MVM), signed shortly before the invasion of Ukraine and extending until 2036. The contracts initially covered up to 4.5bn cubic metres annually through Serbia (3.5bcm) and Austria (1.5bcm). The 15-year agreement can be renegotiated after 10 years.

However, Hungary caused an outrage when the Minister of Foreign Affairs and Trade Peter Szijjarto visited Moscow again in July 2022 and extended the deal to a total of 7.7bcm under a long-term agreement with Gazprom after the Russian invasion of Ukraine.

Szijjarto’s visit came on the day the EU approved the seventh sanctions package on Russia, banning the purchase, import, export, or transfer, directly or indirectly, of gold originating in Russia to the EU or any third country. At the time, neither oil nor gas imports had been sanctioned, but the high level meeting with top Russian officials was seen as unsightly at best.

The Russian supplies have kept the cost of power and heating in Hungary low and also allowed Budapest to make some money on the side by re-exporting surpluses to the rest of the EU. The Russian supplies will also insulate Hungary from the mushrooming gas crisis that started in January after a big freeze led to faster drawdowns of gas this winter that has left the EU’s storage tanks unusually empty, just as imports of Qatari LNG dried up after the start of Operation Epic Fury.

At prevailing European contract prices of roughly $300–350 per thousand cubic metres, the Hungarian gas deal translates into an annual flow of about $2.5bn to Russia — a meaningful revenue stream for Gazprom, which has lost the bulk of its European business, although not decisive for the broader Russian economy.

For Hungary, the calculation is more immediate: replacing pipeline gas with LNG remains impractical. It would mean higher and more volatile costs and the infrastructure is not in place.

Oil

Budapest can be a bit more flexible on Russian oil imports. Hungary has been one of the last EU countries to receive Russian crude via the Druzhba pipeline, with flows of around 10mn tonnes per year. However, the pipeline was offline since January 2026 following a drone attack that Orban blamed on Ukraine.

That led to a major row between Budapest and Kyiv, causing Orban to renege on a promise not to block the passage of the €90bn EU loan agreed at an EU summit in December. Zelenskiy said the repairs were proving difficult. Orban countered “no oil, no money.” Suspiciously, on the day Magyar was elected, Zelenskiy congratulated him and announced the pipeline repairs were complete and oil flows would resume the next day.

Brussels has pushed for a full phase-out of Russian pipeline oil, and Hungary is expected to comply by 2027. On paper, that would remove roughly $6bn in annual revenue from Russia. Magyar has yet to commit to this timetable, although he has said that he intends to “phase out” the import of Russian oil.

Nuclear

The most durable link between Hungary and Russia lies in nuclear energy. Budapest has commissioned the Paks II nuclear power plant (NPP)— a €12.5bn ($13.6bn) project led by Russia’s state nuclear corporation Rosatom and financed by the Kremlin.

As the EU and many developing countries remain dependent on Russian nuclear technology and it is an almost monopolistic supplier of enriched uranium, the nuclear fuel has not been included in the sanctions regime.

The construction of Pak II officially began in February 2026 and the first reactor is slated to come online in 2033 and the second around two years later.

That leaves the new government with limited room to manoeuvre. Cancelling the project would carry substantial financial penalties and raise long-term energy security concerns. A delay is more plausible than an exit, potentially mirroring Turkey’s approach to its Akkuyu plant, where timelines have stretched without formal cancellation.

The project also comes with significant energy dependence. As IntelliNews has reported, uranium is the new gas: Rosatom projects typically include a 60-year maintenance and fuel supply contract that gives the Kremlin significant clout over the host country’s government.

Banking

Even if Magyar wants to distance himself from the Kremlin and diversify away from Russian energy supplies, his hands are tied for the meantime. The three pillars — gas, oil and nuclear — make up the outer limits of Hungary’s geopolitical shift. Hungary’s energy dependency on Russia will be hard to unwind.

More importantly for Moscow is the loss of Hungary as a financial conduit. Despite nineteen rounds of sanctions, Russia still exported around €100bn worth of goods to the EU in 2025 – mostly energy and raw materials. Those exports have to be paid for and Hungary’s banks are a major conduit.

Here, Hungary's OTP Bank plays a key role. OTP's Russian subsidiary is the 20th-largest bank by assets in Russia and one of the few banks in the country not directly subject to US sanctions.

Austria's Raiffeisenbank (11th) and Italy's UniCredit (23rd) still operate in Russia. However, they are under constant pressure from the European Central Bank (ECB), which is demanding a swift exit.

The situation with OTP is fundamentally different: since Hungary is not in the eurozone, its regulator is not the ECB, but the Hungarian central bank. The European regulator has no direct leverage over OTP, and the Hungarian regulator under Orban turned a blind eye to banking sanctions on Russia.

The Magyar government is unlikely to protect the bank's operations in Russia. Hungarian companies that continue to operate in Russia and participate in schemes to circumvent technological and financial sanctions could be at risk. New work arounds will have to be found. Currently, while major Russian financial institutions are heavily sanctioned and cut off from SWIFT, Gazprombank remains a key channel for EU imports of energy, as it is not fully sanctioned to facilitate these payments.