Concerns raised about gas transit

AMIDST plans of Russia’s Gazprom to start building a pipeline to Turkey this June to get natural gas to Europe without going through Ukraine and cutting off gas transiting Ukraine to western Europe, Slovak Prime Minister Robert Fico visited Moscow between June 1 and 2. 

Illustrative stock photoIllustrative stock photo (Source: Sme)

He presented the visit as focused on business issues, including gas transit which brings millions of euros into state coffers annually.

“Starting January 1, 2020, the agreement enabling Ukraine to transport Russian gas via its territory to western Europe will become non-effective,” said Fico, as cited by the Pravda daily.

Russian Prime Minister Dmitry Medvedev confirmed this plan to Fico, but according to Russian President Vladimir Putin the political decision whether and when this would really happen has not yet been made.

“If, as a result, Slovakia were to cease to be a transit country, then our country would sustain huge, incalculable economic losses,” said Fico, as cited by the TASR newswire.

The gas transmission company Eustream does not have any official information about Russian plans to halt transit.

“Eustream has not received any official information about halting gas transit via Slovakia after 2020,” said Vahram Chuguryan, spokesperson of Eustream. “Moreover, Eustream has a signed contract for transport of 50 billion cubic metres of gas annually to the end of 2028.”

Based on its gas transmission contract, if gas stops flowing via its pipes, Eustream might ask for payments from the Russian side on the basis of the ship or pay principle.

The European Commission Vice President for Energy Union, Maroš Šefčovič, who recalled that the transit gas pipeline from Russia going via Ukraine and Slovakia supplied Europe with gas even during the years of the Cold War, does not see any real reason why Russia may stop gas transit via Ukraine and it is in the interest of the EU to keep it.

“Russia is a very important energy partner of the EU and thus we have to look for the way to set up our relations in order they are mutually economically advantageous, transparent and so that we respect rules valid in our countries,” said Šefčovič as cited by Pravda, adding that the EU is very interested in stabilisation of the situation in Ukraine and that it is important that this route is further used and that gas transit via Ukraine is maintained.

Eastring project

To keep gas flowing via Slovak pipes as well as millions of euros into state coffers that Eustream earns on gas transit, also in the event the Russian gas transit would bypass Ukraine with the Turkish Stream, Fico presented in Moscow Eustream’s Eastring project, which is set to connect existing gas infrastructure of central and eastern Europe, as an alternative.

According to Chuguryan, Eustream is closely monitoring and regularly assessing the situation on the European gas market.

“Thanks to detailed expert analyses we are prepared for various alternatives of the development of the situation and we are also arriving with new solutions and projects,” said Chuguryan.

He specified that Eastring has been from the very beginning proposed as a bi-directional pipeline and thus there were various alternatives.

“Primarily it will secure a possibility of supplying Balkan countries with gas from western sources as for example large gas hubs as Germany’s NCG and Gaspool, Austria’s Baumgarten or Italy’s PSV,” said Chuguryan. “In the second phase the pipeline will enable central and western Europe to get to gas from the area of the Caspian and Black sea as well as Iran, Iraq, Israel and so on. Eastring is designed so it is available to any supplier, including Gazprom. Even the possibility to transmit Russian gas from Turkey, if the planned Turkish Stream project is in the end carried out, is not excluded.”

Šefčovič recalled that Eastring was presented in the EU as a project to help countries of south-eastern Europe to overcome their energy dependence and energy isolation. The plan is that thanks to this project countries like Bulgaria, Romania, Greece, Hungary, Slovakia as well as countries of the Balkans, Moldova and Ukraine would obtain access to sources of gas from three various destinations.

“The Eastring project was presented in the context of strengthening of north-southern and south-northern directions, meaning that for example Bulgaria would be able to choose whether it wants gas from Russia, from Norway or liquefied gas from Poland,” explained Šefčovič. “Equally Hungary or Romania could get via Eastring gas that might flow into this area already within a few years from the Caspian area. Bigger universality and a wider selection of gas suppliers would strengthen energy security of the whole region.”

Šefčovič sees reality in the future existence of gas transit via Ukraine as well as the Eastring project.

“I always perceived Eastring as a project to strengthen the energy security of the region of the south-eastern Europe while keeping the transit via Ukraine that should be perceived as a strategic interest of the EU,” Šefčovič told Pravda.

According to Šefčovič, Europe is witnessing a change in the way of thinking of energy companies when creating business models.

“These are realising that they will have to be more universal in the future,” said Šefčovič as cited by TASR. “They will have to be able to sell and transit gas not only from the east to the west but also from the west to the east or the south to the north or vice versa.”

He recalled that last winter Ukraine was supplied with gas from the west.

In mid May ministers of foreign affairs of Bulgaria, Romania, Hungary and Slovakia signed a declaration supporting the need to diversify sources of natural gas supply and transit routes. The document declares the need to ensure stable and uninterrupted natural gas supply to central and eastern European regions.

Eustream has welcomed signing of the declaration as it believes that Eastring is the cheapest and fastest way to interconnect bi-directionally existing infrastructure for natural gas supply on the territories of Bulgaria, Romania, Hungary and Slovakia.

“Big international projects cannot progress without political support,” said Tomáš Mareček, the chairman of the board of directors of Eustream, as quoted in the company’s press release. “Clear political support can bring much closer to reality the projects which otherwise look extremely demanding.”

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