THE SLOVAK-Ukrainian Vojany-Uzhgorod pipeline, modernised to transport natural gas via reverse flow from Slovakia to Ukraine, began testing in mid-August. Its standard commercial operation is planned to start in September. As market watchers perceive the upgrading of the pipeline as a means to help Ukraine reduce its dependence on Russian gas, they also expect Ukraine to continue transiting Russian gas to Slovakia.
Nevertheless, Slovak Economy Minister Pavol Pavlis, in response to the sanction law adopted by the Ukrainian parliament, which also threatens to halt gas transit to Slovakia, paid a visit to Ukraine over such concerns.
“Test pumping of gas has started from Slovakia to Ukraine via Vojany-Uzhgorod,” Naftogaz Chief Executive Andriy Kobolev said in a post on Facebook, as cited by Reuters. “This pipeline could supply up to 40 percent of the country’s gas import needs.”
The Slovak pipeline, a modernised older link from the western Ukrainian town of Uzhgorod built to supply the Vojany power station near the Ukrainian border, can supply up to 10 billion cubic metres of gas a year. Based on earlier information, the costs of modernisation and conversion for Eustream, the operator of the gas transmission network in Slovakia, were €20 million.
Eustream confirmed the launch of the testing operation as of August 16, while the ceremonial launch is planned for September 2.
“The testing operation will comprise gradually the build-up phase, verification and reliability checks,” Vahram Chuguryan, spokesman of Eustream, wrote in a company release, adding that during this phase the interruptible capacity will be offered. “After the finalisation of testing operations at the beginning of September 2014 the standard commercial operation might start.”
The pipeline capacity will gradually increase to about 3 billion cubic metres in annual pumping capacity by the end of 2014. Plans call for the pipeline to reach its full transit capacity in the first quarter of 2015.
Ukraine is already receiving gas via reserve flows from Poland and Hungary. Together with supplies from Slovakia, Ukraine can cover more than 50 percent of its imported gas needs, the ITAR-TASS newswire wrote. These supplies may amount up to 16 billion meters each year via the territory of the three countries.
Ukraine is trying to source more gas from the European Union and cut consumption levels from last year’s 50 billion cubic metres. Officials also hope to boost domestic gas production from current levels of 20 billion cubic metres per year.
Last year, Russia supplied about half of the gas Ukraine used, but Gazprom cut supplies on June 16 in a row over pricing and in the wake of Moscow’s annexation of Crimea.
According to Eustream, the interest to supply gas via the Vojany-Uzhgorod pipeline is high enough. News from the markets speak about the participation of Gaz de France as well as RWE, the Sme daily wrote.
Shippers interested in the reverse gas supplies to Ukraine have booked at Eustream transhipment capacities in the volume of 10 billion by the end of 2019, the SITA newswire reported on August 14.
The possibility of a reverse flow from Slovakia to Ukraine was discussed for more than a year, with the negotiations becoming more intensive after Russia increased the price of natural gas for Ukraine earlier this year. As Ukraine is not buying gas from Russia at the moment, it will likely be unable to fill its underground gas storage facilities, which are important for smooth transmission of gas via Ukraine westwards.
Slovakia advocated the option of using this 700-millimetre-diameter pipeline, built to supply the Vojany power plant with gas from Ukraine, to secure the reverse flow so as not to violate existing contracts. Ukrainian officials instead had hoped to utilise the spare capacity of four other existing pipelines operated by Eustream going through Veľké Kapušany.
The memorandum of understanding paving the way for Slovakia to send gas east into Ukraine was signed in Bratislava on April 28 and fell in line with the Slovak proposal. European Commission President José Manuel Barroso said after officials from Eustream and its Ukrainian counterpart Ukrtransgaz signed the document that this is a contribution to Europe’s energy security.
Pavlis assured about flow
Pavlis went to Kiev on August 19, where Ukrainian Energy Minister Yuriy Prodan assured him that Ukraine would not halt gas transit from Russia via Ukraine to Slovakia.
For the time being, Russia is only sending gas via Ukrainian pipelines for its clients in the west.
Prodan told the broadcaster Slovak Television that halting gas supplies is a matter for Russia’s state-owned Gazprom and that Ukraine is prepared to continue transiting gas.
Pavlis was told that Ukraine would not use the new so-called sanctions law to the detriment of Slovakia, with gas flows from Russia to be provided by Ukraine as they have been until now.
“Slovakia is a country that has provided Ukraine with options for gas supplies very promptly under the reverse flow,” Pavlis said, as cited by the TASR newswire. “We now expect reciprocity in solidarity in that Slovakia will continue to receive gas from Russia. I have to take the minister’s [Prodan’s] word for it that the law will not be used against Slovakia.”
Also, Michal Šnobr, analyst with J&T Banka, said he would be rather surprised if Ukraine used the prepared sanctions against Russia to the detriment of Slovak supplies.
“There would occur a paradoxical situation: Ukraine would pay Slovakia for its willingness by strongly damaging it with sanctions against Russia,” said Šnobr, as cited by Sme.
Nevertheless, the risk of fallouts in gas supplies from the east is growing, Sme wrote.
In respect to gas reserves, which are of key importance for gas transit, Pavlis told the Hospodárske Noviny daily that this is an internal matter of Ukraine.
“I assume that it will meet its duties and its reserve facilities will be filled in by the winter,” Pavlis told Hospodárske Noviny.
