Russia has just extended its contract to supply gas to Hungary. The deal was sealed following the visit of Russian President Vladimir Putin to Budapest on Tuesday, February 17.

The contract was due to expire this year, but it was renewed after Putin and Hungarian President Viktor Orban agreed to keep it in effect. The two heads of state talked for several hours in which they ironed out a kink in the original deal.

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The previous contract that served as basis for the transaction had stated that Hungary must pay for gas it committed to buy, even if it it was not actually used.

The snag was resolved after it was settled that Hungary can still use the excess gas in the coming years. Hungary can just pay Russia later on, when gas has been actually drawn from Russian pipes. 

Orban did not disclose how much Hungary will pay Russia for the new arrangement.

The extension of the contract draws the diplomatic ties of the two countries even closer. Orban is even shrugging off criticisms being hurled against Russia by the rest of Europe, after its intervention in Ukraine.

"We are convinced that locking Russia out of Europe is not rational," the Hungarian president said. "Whoever thinks that Europe can be competitive without economic cooperation with Russia, and whoever thinks energy security can exist in Europe without the energy that comes from Russia, is chasing ghosts."

Russia's Gazprom has supplied the lion's share of Hungary's gas for the past 20 years.

Prior to Putin's visit, Orban had said he wanted to seek a fresh, shorter-term contract with Russia.  The Hungarian leader also wanted an option that would allow his country to cut the volume of gas from Russia or pay lower prices if the market price falls.

TagsRussia, hungary, gas deal, Viktor Orban