Today in the Russian Government Reception House Chairman of the Gazprom Management Committee Alexey Miller and President of MFB (Hungarian Development Bank) Dr. Janos Eros signed in the presence of Russian Prime Minister Vladimir Putin and Hungarian Prime Minister Ferenc Gyurcsany a Basic Cooperation Agreement for the construction of a gas pipeline and transit of natural gas across Hungary within the South Stream project.

The Basic Cooperation Agreement determines the principles of the cooperation between the parties at the pre-investment and follow-up project stages. In particular, the Agreement fixes the terms, formation procedures and operation mechanisms for a joint venture to be set up on a parity basis for developing a construction project for the Hungarian section of the South Stream gas pipeline.

“The relationships between Russia and Hungary in the gas industry date back more than 30 years. Over this period we have established good partnership relations with a huge potential for further development. Today we are making another step forward to fulfill this potential to the maximum extent possible.

Over the past year Russia and Hungary have performed a big scope of preparatory work aimed at the South Stream project execution. We are confident that Hungary will play an important role in this project and its participation in the gas pipeline construction will be a guarantee of success,” said Alexey Miller.

Background:

First Russian natural gas started arriving in Hungary in 1975. In 2008 Gazprom export supplied around 8.9 billion cubic meters of gas to Hungary.

By now, Gazprom provides around 70 per cent of Hungary’s total gas imports. Additionally, Russian gas is being transited via Hungary to Serbia, Montenegro and Bosnia.

With a view to diversify natural gas export routes Gazprom is exploring the possibility of constructing a gas pipeline across the Black Sea to South European and Central European countries – the South Stream project.

At the pre-investment stage of the project a number of optional gas pipeline routes are being addressed including onshore sections across the Russian Federation (from the Pochinki compressor station to the Black Sea coast) and several European countries, as well as offshore gas pipelines via the Black and Adriatic Seas (in case the option of gas supply to the Southern Italy is selected).

The South Stream design capacity accounts for 31 billion cubic meters per annum.

In February 2008 Russia and Hungary signed the Intergovernmental Agreement envisaging Hungary’s engagement into the South Stream gas transmission system project.

The Hungarian Development Bank (MFB) – a specialized financial institution focused on investments in small and medium-sized businesses, implementation of projects promoting sci-tech development and employment growth, creation of an optimal operational environment for securing energy efficiency and protecting the natural environment.

MFB also cooperates with large companies through investing in major projects contributing to the Hungarian economy development.