Fitch Ratings: CEE countries have expressed interest in longer-term deals with Azerbaijan 

The further reduction of Russian gas supplies to Europe and the search for alternative sources continues to put central and eastern European (CEE) sovereigns under pressure, Report informs, citing Fitch Ratings.

According to the Agency, since the publication of an analysis, “Impact of Gas Rationing on CEE Sovereigns,” in June 2022, the issue of energy supply has become even more critical, weighing on some ratings. The main challenge for the region is to secure stable and less costly supplies over the medium term.

“In recent months, CEE countries have reached supply deals for short-term LNG deliveries from the US, Norway, and Qatar and have expressed interest in longer-term deals with countries such as Azerbaijan. For Slovakia, Czechia, and Hungary, we still see significant uncertainty around long-term alternatives, including the potential costs of additional infrastructure and sources of funding.

“Prices for natural gas in Europe have surged (by close to 15-fold in the last 12 months), a trend that has no comparison in recent decades. A complete shut-off of gas supplies would intensify risks to growth and weaken the region´s public and external finances.

“Of the three we deem most vulnerable, Slovakia (A) and Czech Republic (AA-) are now on Negative Outlook. The Outlook remains Stable for Hungary (BBB), in part reflecting the risks captured at a lower rating and improved prospects for receiving EU funds,” the Agency said.