BRUSSELS — The EU’s unprecedented effort to penalize Russia’s lucrative gas sector is already crashing into a familiar sanctions foe: Hungary.
The country expressed significant reservations about the new proposal during initial conversations among ambassadors last week, according to several people in the room — refusing to oppose the measure outright but making its wariness evident. Hungary’s top envoy said his country would block any penalties that raise energy costs in Europe.
“We are going to analyze the package but do not support anything that might have a negative impact on [the] EU gas market,” the Hungarian official said during a meeting of diplomats on Wednesday, according to two diplomats with knowledge of the discussions.
The sanctions would bar EU countries from re-exporting Russian liquefied natural gas (LNG), potentially depriving Moscow of significant profits. But they wouldn’t stop EU purchases of Russian gas or directly hit Hungary’s business interests. Still, Hungary is highly dependent on Russian exports and has long opposed further energy sanctions on Moscow, which require unanimous support from all 27 EU countries.
Several other countries, including France, Germany, Italy and Spain, also requested more technical information about the measures during the initial talks, according to the people present. But Hungary was the most hesitant.
“When it comes to energy, they’re worried,” one EU diplomat told POLITICO, who like the others was granted anonymity to discuss the sensitive, closed-door talks. “They fear it will destabilize the markets, even indirectly.”
Keep it flowing
The European Commission, the EU’s executive, proposed the LNG sanctions last week, marking its first attempt to target Moscow’s lucrative gas sector with sanctions.
The push is a significant shift in EU strategy, coming as evidence mounts that its efforts to slash the Kremlin’s fossil fuel revenues — used to finance its war in Ukraine — are falling short.
Until now, Brussels has stayed away from sanctioning the supercooled gas, with prices elevated and some countries needing it to keep the lights on. France, Spain and Belgium have been the biggest hubs for imports of Russian LNG, much of which is then re-exported to countries including Germany and Italy.
Yet both Berlin and Rome have recently offered tentative support for LNG sanctions. And Europe’s LNG markets are far more stable than they were right after Russia’s full-scale invasion of Ukraine, giving Brussels a freer hand to impose restrictions, said Tom Marzec-Manser, head of gas analytics at intelligence firm ICIS.
“We see the global LNG market becoming distinctly longer from 2026 — meaning more supply than demand — which means there’s much more breathing room and we’re likely to see prices becoming cheaper globally,” he said.
However, Marzec-Manser cautioned, while energy markets in Central European countries like Hungary have stabilized in recent months, any changes to supply could make prices for consumers “very, very volatile.”
Unlike other EU countries, Hungary has refused to voluntarily divest from Russian gas in the wake of the war in Ukraine. It has even struck new deals with Moscow’s state fossil fuel giant Gazprom to increase supplies during peak demand. Ukrainian officials have repeatedly called on Budapest to end its dependence on the Kremlin.
Last week, as the latest sanctions proposal — the EU’s 14th wartime package — started circulating, Hungary reiterated its opposition to targeting Russia’s energy sector.
“Hungary considers all sanctions affecting the energy sector harmful, as they greatly limit European competitiveness and lead to price increases and supply risks,” Ministry of Foreign Affairs spokesperson Máté Paczolay told Hungary’s HVG in response to POLITICO’s reporting on the package.
Foreign Minister Péter Szijjártó made similar comments in Moscow last year, insisting that Hungary’s energy security “requires uninterrupted transportation of gas, oil and nuclear fuel.”
He added: “To meet these three conditions, Hungarian-Russian energy cooperation must be uninterrupted. It has nothing to do with political preferences.”