Last month, the European Union (EU) pledged to buy $750 billion worth of energy from the United States in an apparent win for Donald Trump. Experts, however, have argued that the plan is a tall order at best, and “impossible” and “delusional” and at worst. But even if the EU doesn’t manage to buy $250 billion in oil, gas, and nuclear from the United States each year of President Trump’s term, the deal could still go a long way toward weaning Europe off of Russian energy sources.
“We still have too much Russian LNG that is coming through the back door … to our European Union,” says Ursula von der Leyen, President of the European Commission, which serves as the EU’s executive branch. “We want to absolutely get rid of Russian fossil fuels, and therefore it is much welcome to purchase the more affordable and better LNG from the United States,” she said.
Russia is also a central player in global nuclear energy supply chains. Nearly one-fifth of all nuclear power plants in the world are either in Russia or are Russian-built. The Kremlin’s dominance in global nuclear fuel supply chains, enrichment services, and lines of funding for new nuclear facilities has served as a lifeline for Russia’s economy as the West has ramped up sanctions over the course of President Vladimir Putin’s war in Ukraine.
But increased trade with the United States, particularly in the form of Small Modular Reactors (SMRs), could undercut Russia’s presence in Europe’s nuclear sector. Just last week, Hungary’s nuclear energy development firm Hunatom and private Polish developer Synthos Green Energy signed a letter of intent to back the construction of as many as ten BWRX-300 SMRs. This model is designed by GE Hitachi Nuclear Energy, headquartered in Wilmington, North Carolina.
This could signal a major geopolitical turning point, as Hungary has deep ties with Russian energy. At present, Russia provides 75 percent of Hungary’s natural gas, between 60 and 80 percent of its oil (60-80 percent), and 100 percent of its nuclear fuel. Diversifying Hungary’s energy imports would therefore be a major pivot point for energy sanctions on Russia and for the EU’s continued cleaving from the Kremlin.
“This civil nuclear cooperation agreement might signal a policy shift, suggesting Hungary is looking away from Russia and toward the EU and United States,” reports the Atlantic Council. “Nuclear energy agreements set up a one-hundred-year relationship between the countries involved, assuming ten years for project construction, eighty years for the life of the reactor, and another ten years for decommissioning.”
On the other hand, Hungary is still economically intertwined with Russia’s nuclear sector via its Paks nuclear power plant, which provides almost half (45 percent) of all of Hungary’s electricity. And Hungary has no plans to phase out the Russian technologies at Paks – rather, it plans to upgrade them, with Trump’s blessing. Plus, Russia will likely continue to supply nuclear fuel to Europe, as the United States is not a major producer of uranium, and relies heavily on imports for its own supply.
What’s more, Hungarian Prime Minister Viktor Orban pleaded with the EU just last month to reconsider a Russian energy ban in the context of increased conflict in Iran, arguing that it would cause an untenable rise in energy prices for Hungarians. “This is a serious threat. Therefore, we must remove in Brussels the regulations and bans on Russian energy,” Orban said. “We have enough problems given the negative impact of the Iran-Israel war on energy prices.”
Despite a changing energy landscape, it’s clear that Hungary is not ready to cut ties with Russia. “Hungary’s apparent intention to continue its dependence on Russian technologies may indicate that it is merely hedging its bets and walking a fine line between its EU membership on the one hand, and Russia’s influence on the other,” reports the Atlantic Council.
One SMR, or even ten SMRs, using technology from the United States will not come close to Paks’ level of production – but it does signal a new openness to collaboration between the Hungarian and U.S. governments, from both sides.
By Haley Zaremba for Oilprice.com
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