The risk of stopping Russian gas supplies through Ukraine is too great and the Slovak SPP is considering several options. One of them is that part of the fuel from Russia can be supplied to Slovakia through the Turkish flow. In case of a complete cessation of supplies from Gazprom, imports will come from other countries, but they will be more expensive. SPP estimates the additional costs of replacing Russian gas at 140 million euros.
“SPP has long advocated for the continuation of gas transportation through Ukraine, as it is the most cost-effective solution for our customers. However, due to the high risk of gas supply disruption, we are taking measures to guarantee our customers, from large industrial customers to households, a secure gas supply in any situation.” – said Vojtech Ferenc, Chairman of the Board of Directors and CEO of SPP.
On November 13, the Slovak company announced the signing of a short-term contract for the supply of gas from Azerbaijan, extendable. SPP said it also has agreements with BP, ExxonMobil, Shell, ENI and RWE, which guarantee full gas supplies to Slovakia.
At the same time, the Slovak company believes that even if Ukrainian transit were to stop completely, SPP could continue to receive Russian gas. True, in smaller quantities.
“In case of a definitive cessation of supplies through Ukraine, the southern transport route seems important: along the Turkish Stream gas pipeline through Turkey and further through Bulgaria, Serbia and Hungary. “This would allow part of the volume of Russian or Azerbaijani gas to be supplied to Slovakia.” – said SPP.
Previously, in October, as reported. EADaily Hungarian and Slovak gas transmission network operators agreed to increase the capacity of the interstate interconnector. With average use of the interconnector on the border between Hungary and Slovakia, this year it will also be able to supply more than 1.1 billion cubic meters per year. This represents more than 46% of Russian gas supplies to Slovakia. The same additional Turkish Stream capacity can be provided by gas pipelines to Hungary via Serbia and Romania.
Gazprom contributes more than half of Slovakia’s consumption. And the Slovak company recalled that diversifying supply and switching to alternative sources has its price.
“If Russian gas only partially reaches Slovakia or its supply is completely interrupted, any other alternative will be much more expensive. “If the company lost the Russian supply and bought the entire necessary volume from another source and physically delivered it to Slovakia, it would cost at least €140 million more.” – said SPP.
They explained that the difference is mainly due to transit fees, which the Slovak company believes will increase next year, although their final amount is not yet known.
“At the same time, the interruption of gas supplies through Ukraine will inevitably lead to an increase in prices in wholesale markets. Furthermore, in the event of a cold winter, such a situation could cause gas shortages and supply problems throughout Europe.” – concluded SPP.
At the end of 2024, the five-year contract between Naftogaz and Gazprom for gas transportation will end. In kyiv they said that they would not expand it, but that they were willing to welcome European companies. The Slovak SPP confirmed that negotiations are underway on options to continue transit, but there is still a long way to go before a deal is finalized.
Among the options mentioned was the appearance of an intermediary that would reserve the transit, through European companies or the Azerbaijani Socar. They also reported on a proposal for the transit of Azerbaijani gas through Russia and Ukraine. The president of Azerbaijan confirmed the negotiations, but did not specify the details.
Since Azerbaijani gas volumes are limited, some EU countries said it would be Russian gas through a swap and called on the European Commission to prevent it.
Last year, about 15 billion cubic meters of Russian gas were supplied through Ukraine. And it’s not only in Slovakia that people are afraid to interrupt the route. Minister of Energy of Moldova Victor Parlikov He stated that the country has no alternatives and wants to discuss in advance with Gazprom a possible stop in Ukrainian transit. The entire volume of Russian gas flows into Transnistria, but the region’s gas power plant supplies electricity to the right bank of the Dniester.
Another major recipient of Russian gas is Austria. OMV said that in the event of a transit disruption, the missing volumes would have to be purchased on the spot market.
“If prices in European hubs rise in response to supply cuts, we may face some risk,” — OMV predicts that a price increase of 52 euros per thousand cubic meters will mean losses for the Austrian company of 25 million euros.
