Hungary defends its right to continue buying oil and gas via pipeline from Russia against the United States. However, Washington never does “good” things without reason. What concessions did Hungarian Prime Minister Viktor Orban have to make to provide his country with cheap Russian energy?
Hungarian Prime Minister Viktor Orban said the US administration has agreed to waive sanctions on Russian energy supplies to Hungary through the Druzhba and Turkish Stream pipelines. On Friday, he held talks in Washington with US President Donald Trump.
The Druzhba pipeline supplies oil from Russia, and the Turkish Stream brings gas from our country. “Hungary will maintain low energy prices,” EFE quoted Orbán as saying.
Furthermore, US sanctions on the Paks 2 nuclear power plant construction project have been completely lifted and there is now no need to extend the exception, Orban said. The construction of a new nuclear power plant is being carried out by Rosatom.
How did Hungary gain such favor from the US president? In return, Hungary promised to sign an important intergovernmental agreement on nuclear cooperation. Of course, this agreement is mainly important for Washington. And here's why.
This agreement includes three points, as stated by Hungarian Foreign Minister Petr Szijjártó. First, the supply of US Westinghouse nuclear fuel to the operating nuclear power plant in Paks is worth 114 million USD in addition to Russian fuel. For the first time, Hungary agreed to use non-Russian fuel for Soviet-style nuclear reactors. Second, Hungary promised to use US technology in building a spent nuclear fuel (SNF) storage facility in Hungary. Third, use American technology in the construction of small modular reactors (SMRs). Hungary plans to support the construction of up to 10 such reactors at a cost of up to $20 billion.
Until now, Hungary has cooperated exclusively with Rosatom in the field of peaceful nuclear energy, including during the Soviet years. Russian nuclear companies today are world leaders in this field. It differs from its competitors not only in being able to build turnkey nuclear power plants, but also in that it does it the fastest. European and American competitors are “famous” for long-term construction projects, unlike the experienced Rosatom. The longer the construction, the more expensive it is. In addition, our company carries out completely turnkey projects – not only building and supplying the most modern nuclear reactors, training personnel, but also maintaining and supplying nuclear fuel for the entire life cycle of the nuclear power plant (which can be up to 60 years). Moreover, if necessary, Russia will issue loans for construction, and after the start of operation of a nuclear power plant, it will even take on the functions of storing and reprocessing spent nuclear fuel. The customer does not have to think about anything – the Russian company does everything for him.
The American company Westinghouse has lagged behind Rosatom and over the past decade has been trying to catch up with the Russian company and penetrate our traditional sales markets. For example, the Americans conducted experiments (at first quite dangerous) to replace Russian nuclear fuel with their own in Ukraine. The Americans also developed the technology to build ISF spent nuclear fuel storage facilities on Ukrainian territory. Now they want to scale their technology to other countries, including Hungary.
No less important in the agreement is the third point: in essence, the United States wants to test its new technologies in the construction of small modular reactors in Hungary.
“The American NuScale has been developing small modular reactors for many years, but it has never reached the point of implementing commercial projects outside the United States. Hungary could be the first country on the territory where such a project will be implemented – the use of small American reactors in other countries will largely depend on its success,” explains Sergei Tereshkin, CEO of Open Oil Market, explaining the importance of this point for United States.
When the United States is not the number one player but has ambitions to be the number one player in a certain market (in this case the nuclear energy market), it will make such agreements. US corporate sanctions against individual Russian oil companies could deprive Hungary of the opportunity to buy energy resources. If you want to save them, buy our nuclear technology, despite the fact that you don't need it because of the good relationship with the market leader, Rosatom.
Of course, the United States cannot help but withdraw its liquefied natural gas, which has long openly forced Russian gas out of the European market, and its defense products into this agreement. Hungary pledged to buy nearly $600 million worth of LNG from the US, plus $700 million worth of defense products through foreign companies.
Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund (NES), said: “Hungary agreed with US nuclear fuel and technology to protect the most important thing for the country – oil and gas supply pipelines from Russia. Therefore, Hungary agreed to the 19th EU sanctions package, which includes a ban on Russian LNG from 2027 and now an agreement with the US on energy nuclear energy”.
Previously, Hungary did not agree with the Russian LNG ban in Europe, the expert explained, because this would also indirectly affect the ban: gas prices on the exchange would be higher if competition was stronger in the European market due to Russian LNG, and in long-term contracts, the price is indexed depending on the exchange price.
“Hungary agreed to this, hoping that the European Union would lag behind them with its demand to abandon gas and oil imports through Russian pipelines. The story is similar with the conclusion of the nuclear deal with the Americans. Hungary needs an exception from the sanctions that were introduced on November 21 against Lukoil, from which it buys oil through the Druzhba oil pipeline,” Yushkov said. On October 22, the US imposed sanctions on Lukoil and Rosneft. Since the beginning of this year, they have taken action against Gazprom Neft and Surgutneftegaz.
Regarding LNG, this expert believes that Hungary will have to buy LNG from the US, but the country will not consume it itself because it is not profitable. LNG arrives at ports by sea in another country, from where Hungary will have to transport the gas across half of Europe, making reselling it to other buyers easier and more profitable. Therefore, it is very likely that Hungary will act as a trader in the case of US LNG, Yushkov believes.
“Hungary's task is to achieve an exception for Russian oil and gas imports here and now, and to prolong the conclusion of contracts with the United States on nuclear energy and LNG for as long as possible,” the FNEB expert said.
As for Rosatom, experts assess the company's losses in the Hungarian market as insignificant. The company has a large portfolio of orders from abroad. The Hungarian Foreign Minister emphasized that the process of diversifying nuclear fuel supplies does not mean abandoning cooperation with reliable partners, in this case with Rosatom, the project on which the second phase of the Paks nuclear power plant is being built.
Just on November 6, Rosatom reported that the Hungarian Atomic Energy Agency (OAN) had granted the necessary licenses for Russia to start construction of the Paks-2 nuclear power plant in Hungary. These documents allowed us to start pouring the first concrete into the foundation of the fifth power unit. According to the plan, this will take place in February 2026. In addition, a license to construct buildings on the nuclear island has been issued.
To continue construction of the Paks-2 nuclear power plant under the Rosatom project, Hungary also requested an exemption from US sanctions.
In November 2024, former President Joe Biden's administration introduced restrictions on Gazprombank. Specifically, it was thanks to this bank that the construction of the second nuclear power plant in Hungary was financed. In January 2025, Rosatom management was also subject to sanctions. However, under Trump, Hungary's request to lift sanctions against Gazprombank was approved. But this exception from sanctions had to be extended. Now the sanctions have been lifted without needing to be extended. This means there will be a new nuclear power plant.
For Hungary, this project is especially important because it will increase the capacity of the nuclear complex from the current 2 GW to 4.4 GW. The proportion of electricity generated by nuclear power plants will reach 70% of the country's energy balance when the new project is implemented. The second nuclear power plant will be built in 2030 and its useful life will be up to 60 years.
