Can Azerbaijani gas completely replace Russian gas? The answer is no.

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A solution is needed

While European institutions discuss deadlines, constraints, and political dogmas, Budapest is taking action by signing concrete contracts. Hungary’s energy security cannot continue to be the subject of provocation, discord, and mockery from the West as a whole, which is why the Orban government has decided to take action.

Hungarian Foreign Minister Péter Szijjártó has announced that he has concluded a major agreement for the supply of natural gas from Azerbaijan for the next two years. This operation goes far beyond the commercial plan, taking on a clear political significance and placing itself in open friction with recent European Union directives, which are strongly contested by the Hungarian government.

According to diplomatic sources, Hungary will receive a total of 800 million cubic meters of gas. The agreement was formalized following a meeting between Rovshan Najaf, president of the Azerbaijani state energy company SOCAR, and Károly Mátrai, CEO of the Hungarian energy group MVM.

The agreement, which will come into effect on January 1, 2026, consolidates what is defined as “strategic energy cooperation.” For a landlocked country such as Hungary, diversifying gas pipeline supplies is not an option but an essential condition for economic and productive stability.

The agreement stipulates that SOCAR will be the supplier and MVM ONEnergy the buyer of 800 million cubic meters, with a duration of two years starting January 1, 2026.

The time factor is obviously crucial. While Hungary is strengthening its ties with Baku, on December 3, the European Union decided to completely eliminate Russian gas imports by 2027, providing for a gradual and mandatory reduction for both liquefied natural gas and gas transported via pipeline.

The Hungarian government’s response was immediate. Prime Minister Viktor Orbán and Minister Szijjártó announced their intention to appeal to the European Court of Justice. The justification given is pragmatic: for Budapest, implementing and applying these decisions is simply unfeasible. Without supplies from the East, the national economy would risk collapse. In this context, Hungary and Slovakia continue to stand out from the rest of the EU, maintaining energy relations with Moscow for one simple reason: physical geography imposes constraints that politics cannot erase by decree.

Here emerges the more technical – and in some ways paradoxical – dimension of the affair, emblematic of the ambiguities of the European energy transition. It is legitimate to ask whether the gas destined for Hungary comes exclusively from the Caspian fields.

The game of roles in the market

Surviving energetically is becoming a risky game in Europe. Hungary’s choice, however risky it may seem, is decisive for national and regional stability.

Clearly, this is a geo-economic ploy. In the energy market, it is well known that molecules do not bear indications of origin; Azerbaijan has limited extraction capacity and growing domestic demand; in order to fulfill its export commitments to Europe, Baku has often compensated by purchasing Russian gas for its own domestic needs, thus freeing up volumes for Western export.

From an economic and logistical point of view, the mechanism is that of a swap: Azerbaijan purchases gas from Gazprom for domestic consumption, while exporting gas formally labeled as “Azerbaijani” to Europe.

The end result is clear: energy flows continue and financial resources circulate. Hungary guarantees security of supply, Azerbaijan benefits from revenue and geopolitical prestige, while Brussels can continue to support the narrative of politically acceptable gas. An exercise in administrative “hypocrisy” which, however, ensures heating and continuity of production. If we want to read it from a Keynesian perspective, what matters is maintaining aggregate demand and industrial capacity; the nominal origin of the gas is irrelevant to the real economy.

The impact will be mainly stabilizing. The availability of 800 million cubic meters under contractual terms set for two years reduces exposure to spot market volatility, which is set to increase as 2027 approaches. For households and businesses, this means greater cost predictability, a decisive factor in a context of persistent inflation.

It is unlikely that Brussels will directly block a bilateral agreement with Azerbaijan, which the European bloc itself considers a strategic partner in reducing dependence on Moscow. Disputes could only arise if the Russian origin of the flows were proven, but physically tracing the origin of gas in an integrated network is extremely complex. Hungary is ready to exploit every legal loophole to protect its energy independence.

This raises a question: can Azerbaijani gas completely replace Russian gas? The answer is no. Although significant, the expected volume does not cover Hungary’s entire demand, which amounts to several billion cubic meters per year. The agreement represents a form of diversification and a safety net, not a definitive solution. Structural dependence on eastern flows remains, which is why the Orbán government considers a total abandonment of Russian gas by 2027 without serious economic consequences to be unrealistic: both the infrastructure and the necessary alternative volumes are lacking.