Russian gas continues to flow to the EU

Supplies to EU and Slovakia via Ukraine continue.

(Source: Sme)

AMID the start of the winter season, Russia has ceased supplying Ukraine with natural gas, raising some concerns over gas supplies to Slovakia and the European Union. Gas companies and experts, however, see it as common commercial decision and perceive the situation as stable.

Russian gas giant Gazprom halted gas supplies to Ukraine on November 25 after Kiev failed to send a new prepayment for deliveries, saying that it could find a cheaper supply from Europe. While resumption of Russian gas supplies to Ukraine is not expected before the end of the year, Gazprom CEO Alexei Miller assured Slovak Economy Minister Vazil Hudák that gas supplies for the EU and Slovakia will be not halted. Hudák met with Miller during his visit to Moscow on December 7.

“Mr Miller has assured me that from the Russian side no halt in supplies of gas via Ukraine for European partners and thus also Slovakia will occur,” said Hudák, as cited by the TASR newswire.

The suspended gas supplies from Russia to Ukraine have not had any impact on gas transit from Ukraine to Slovakia and further west. Immediately after the halt in deliveries the Slovak Economy Ministry said it had not registered any cuts in supplies of Russian gas to Slovakia. Spokeswoman Miriam Žiaková remarked that it is necessary to distinguish between deliveries for needs of Ukraine that were halted and gas supplies for gas transit to Europe.

“In terms of transit via Ukrainian territory, the portion for Slovakia as well as the whole of Europe is fluently continuing in line with contracts,” Žiaková told TASR.

Read also:Fico, EU critical of pipeline projectRead more 

Eustream, the partially state-owned Slovak company that transits Russian natural gas across Slovakia, reported that the halt of deliveries has not had any impact on Slovakia yet and that it is closely monitoring the development of the situation on gas markets.

“Gas transit via Slovakia goes on in the standard regime,” Eustream spokesman Vahram Chuguryan told The Slovak Spectator, adding that pressures in pipes and volumes of gas transported are in line with agreements.

Eustream perceives the situation around the halted gas deliveries from Russia to Ukraine as needlessly dramatised.

“It is a common commercial decision of the Ukrainian side which currently does not need to buy gas from Gazprom,” Chuguryan said. “Moreover, Ukraine can buy gas cheaper from the West.”

Eustream does not see any reason for concern and believes that the current situation is maintainable in the long term.

Energy analyst Karel Hirman sees the situation in supplying Ukraine with gas as stable, pointing out that due to warm weather for this period of year and the slowed Ukrainian industry, the gas consumption in Ukraine is low. Local gas production is also functioning and there is enough capacity for importing gas from the EU, especially Slovakia.

“Thanks to very warm weather there is already now a surplus of gas in the EU and its price is decreasing,” Hirman told The Slovak Spectator, adding that it makes sense for Ukraine to wait for a drop in Russian gas prices in long-term contracts after the beginning of 2016 before purchasing more. “Gas transit is not endangered in any case.”

Hirman added that Ukraine has about 1.5 billion cubic metres more gas in its reservoirs than during the same period of 2014. The reservoirs are about half full while some market watchers said that Ukraine had been filling its gas reservoirs more slowly than last year.

“One should realise that the capacity of Ukrainian reservoirs is the biggest in Europe – almost 30 billion cubic metres and thus it does not make sense to fill them completely,” said Hirman.

Nord Stream II

Eustream believes that the aim of spreading nervousness and portraying the Ukrainian route as unreliable is to push through an extension of the Nord Stream pipeline bypassing Ukraine and Slovakia.

In the meantime a group of Baltic and eastern European governments wrote a letter to the European Commission arguing that Russia’s plans to extend its gas link to Germany run counter to EU interests and risk further destabilising Ukraine. The letter, dated November 26 and signed by Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia – but not the neighbouring Czech Republic – says the project should come under the closest possible regulatory scrutiny and called for “an inclusive debate” at the December EU summit.

Hudák touched on the extension of Nord Stream also during his meeting with Gazprom chief Miller.

“I explained to him Slovakia’s position, which in essence states that the expanding of North Stream should not, according to us, completely exclude the traditional Ukrainian route leading through Slovakia further to the west,” said Hudák, as cited by TASR.

According to Hudák, Miller proposed that part of Russian gas flowing through the northern route should go via a reverse flow from Germany, the Czech Republic and Slovakia further to Austria.

“This could be quite an interesting solution for Slovakia,” admitted Hudák.

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