On Tuesday, Hungarian foreign minister Péter Szijjártó and Rosatom CEO Alexey Likhachev struck a deal to add two new VVER-1200 reactors to Hungary’s Paks nuclear plant, the Budapest Business Journal (BBJ) reports.

It extends an original contract between the two countries signed in 2016. The cost of the project is estimated at around $13.2bn (€12bn), $10.9bn (€10bn) of which will come from Russian loans, the Global Construction Review (GCR) reports.

Szijjártó said via the BBJ that advancing the project to add two more blocks at the Paks plant was “not made any easier” by the war in Ukraine and sanctions against Russia. Technological challenges and other circumstances have also changed to a degree requiring modifications to the contractual framework in the interest of finally allowing the implementation of the investment.

“We’re moving forward with the project, but the financing and construction contract needed to be clarified to guarantee the investment can be carried out in this changed environment,” he added.

Lawyers are making the final changes to the text of the contract, after which time the modifications can be submitted to the European Commission for clearance.

A deal despite the war

According to the GCR, the European Commission approved original proposals for the new reactors in 2019, before Russia’s invasion of Ukraine. Since then, sanctions imposed on Russian energy supplies by the EU, of which Hungary is a member, have forced many countries and companies to pull away from Russia. Hungary has instead obtained exceptions to sanctions and has negotiated extra deliveries of Russian natural gas.

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By GlobalData

In April last year, Russia began to ship nuclear fuel to Hungary by air to feed the Paks nuclear plant. Air shipments became a necessary alternative to the usual method of rail transport via Ukraine, after the war caused damage to crucial routes.

“We hope that the European Commission does not wish to jeopardise the long-term security of Hungary’s energy supply … which can be guaranteed by the construction of the new blocks at Paks,” Szijjártó said about the latest agreement.

The main licence for construction of the reactors was issued by Hungary’s regulator in August last year. Szijjártó said at the time that the approval was a big step, an important milestone,” adding that it was “realistic” that the reactors could enter service by 2030.

Paks is Hungary’s only nuclear power plant, and its four Rosatom VVER-440 reactors generate about half of the country’s electricity.