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Chronic coal-mining problems and shrinking domestic hydrocarbon reserves have plagued the economy since the mid1970s . The reliance on imported energy increased steadily from 37.2 percent in 1970 to 51.3 percent in 1986. The Soviet Union furnished most of Hungary's energy imports, but Soviet production setbacks and demands for better trade terms complicated Hungary's energy supply problems after the mid-1980s. Analysts expected the Soviet Union to demand more and better-quality goods from Hungary in exchange for its energy exports in the 1990s (see Relations with the Soviet Union , ch. 4).

Hungary slashed investment in coal mining in the late 1960s and 1970s, when Soviet oil and natural gas were less expensive alternate fuels. Consequently, coal's share of domestic energy production dropped from 62.7 percent in 1970 to 36.6 percent in 1986. Coal accounted for about 26 percent of Hungary's energy consumption. In the early 1980s, rising oil and natural gas prices prompted Hungary to reopen the flow of investment into coal mining but the country still suffered from a severe shortage of miners, and its mines were unable to keep pace with rising demand. The government approved substantial pay increases for miners in order to attract new workers. In 1986 Hungary's mines employed 79,566 workers who labored between sixty and seventy hours per week and produced coal worth about US$779 million. Total annual coal output has hovered around 24 million tons since 1975, but hard-coal production actually fell by about 23 percent between 1975 and 1986, and the calorific value of coal output declined by about 18 percent in the same period. Coal, coke, and briquette imports totaled US$268 million in 1986.

Hydrocarbons, including oil, propane, natural gas, and gasoline, accounted for 61 percent of total energy consumption in 1986. Natural-gas production has increased considerably since the mid-1960s, exceeding 7 billion cubic meters in 1986 and 1987. Domestic consumption, however, has far outstripped production since 1970, nearly doubling from 5.9 billion cubic meters in 1975 to 11.5 billion in 1986. Hungary's wells supplied about 94.8 percent of its natural-gas consumption in 1970 but only 66.1 percent in 1986. Natural-gas imports totaled 4.8 billion cubic meters in 1986 and cost about US$366 million. The Soviet Union supplied Hungary with about 90 percent of its natural-gas imports.

Hungarian wells have pumped about 2 million tons of crude oil yearly since 1975, mostly from the Szeged region, but observers expected production to decline after 1990. Oil imports totaled US$1.1 billion in 1986, while exports added up to about US$332 million. Hungary exported oil by reselling Iranian and other Middle Eastern oil acquired in various compensation schemes.

Hungary launched an energy rationalization program in the early 1980s aimed at maintaining levels of domestic oil and gas production attained in the mid-1980s, increasing exploration, and substituting natural gas and other fuels for oil. The conservation program, backed by stiff price hikes, netted positive results. Oil consumption dipped from 12.5 million tons in 1979 to 9.1 million tons in 1985, and Hungary's imports of petroleum and petroleum products dropped from about US$1.3 billion in 1985 to US$1.1 billion in 1986.

Hungary's power plants had a 6.8-billion-kilowatt capacity in 1986 and generated 28 billion kilowatts of electricity, almost double the amount generated in 1970. The increase failed, however, to keep pace with demand as consumption rose from 17.9 billion kilowatts in 1970 to 38.6 billion in 1986. Hungary overcame the 1986 shortfall by importing 11.9 billion kilowatts of electricity. Transmission lines from the Soviet Union carried about one-third of Hungary's imported electricity.

In the late 1980s, thermal power stations generated 70 percent of Hungary's electricity and burned about 65 percent of Hungary's brown coal production and nearly all of its lignite output. Hungary has constructed large thermal power stations in the last 15 years, including a 1.9-million-kilowatt heat and power plant at Szazhalombatta in Pest County that generated almost 40 percent of the country's electricity.

Southern Hungary's uranium reserves supplied the 880-million-kilowatt Paks nuclear power plant in Tolna County, the country's only nuclear power facility. The plant's first reactor went on line in 1983, and its second followed a year later. In 1986 the plant generated 7.4 billion kilowatts, or about 26.5 percent of the nation's electricity output and 19.2 percent of its consumption. Hungary and the Soviet Union agreed in 1986 to build four additional 440-megawatt reactors at Paks in the next decade. Officials hoped that the plant would supply about 40 percent of Hungary's electricity by the early 2000s.

In the late 1980s, Hungary's hydroelectric power stations generated less than 1 percent of the country's electricity, but Hungary has joined with Czechoslovakia to build two hydroelectric power stations on the Danube at Gabcikovo in Czechoslovakia and at Nagymaros in Hungary. The project, which was scheduled for completion by 1993, received Austrian financial assistance (see Relations with Other Communist Neighbors , ch. 4). However, in May 1989 the Hungarian government suspended work on the power station because of public concern over the damage it threatened to cause to the environment. The power stations' total projected capacity was 3.6 billion kilowatts per year, and their estimated cost was US$1.4 billion.

Data as of September 1989

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