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Ukraine, Slovakia Strike Reverse Gas Supply Deal

Kyiv, April 29, 2014. Slovakia’s Minister of Economy, Tomas Malatinsky, has confirmed that Ukraine and Slovakia have reached an agreement on reversing the flow of gas between the two countries, according to Deutsche Welle.

The agreement stipulates that gas will now be supplied to Ukraine though the Voyany-Uzhgorod pipeline. The Slovakian gas transport company Eustream reported earlier that reverse gas supplies through this route could commence in October and could reach three billion cubic meters per year. Starting in March 2015, this figure could rise to 10 billion cubic meters annually, according to information posted oneconomics.lb.ua.

Ukraine has been trying to secure the reverse of gas supplies through Slovakia for the past year and a half. Ukrainian experts believe that the route could provide the country with about 12 billion cubic meters a year, or  about half of the annual volume of natural gas Ukraine currently imports from Russia.

Notably, in February 2014, the Visegrad Four (V4 Group: Czech Republic, Hungary, Poland and Slovakia) expressed readiness to resume a project which involved reversing the supply of natural gas from Europe to Ukraine. A joint statement on the project was issued by the Ministers of Foreign Affairs of the V4 Group during their meeting in Budapest, as reported by ITAR TASS.

In January 2014, Ukraine’s Cabinet of Ministers signed an agreement with Slovakia on reversing natural gas supplies, reported the Ministry of Energy and Coal Industry of Ukraine. The document ratified by the Ukrainian party has been signed by the Slovakian counterpart on April 28, 2014.

Ukrainian officials reported that the Slovak corridor for reverse natural gas supplies was the most promising for Ukraine, but that it had previously been blocked by Russia’s Gazprom, according to rbc.ua. Moreover, in 2013 Ukraine negotiated cheaper reverse gas supplies through the European countries’ territories, including Poland and Hungary, and is still working on reaching an equivalent agreement with Romania.

In May 2012, Ukraine signed a framework agreement with German electric utilities company RWE regarding the supply of gas to the Eastern European country. The company agreed to sell Ukraine up to five billion cubic meters of gas annually. By the end of 2012, RWE had sold Ukraine 56 million cubic meters of gas.

Interestingly, the majority of Russian gas flows through Ukraine to Slovakia. Eustream has been contracted by Gazprom to accommodate the transfer of 50 billion cubic meters of gas annually under take-or-pay conditions. Slovakia has allocated 93 percent of its gas transportation system for the transfer of Russian gas but has been using only 75 percent of its capacity so far. Therefore it cannot accommodate the substantial reverse gas supply without a new pipeline. Nevertheless, for the plan to work, it is enough to build an additional section of the pipeline, or approximately 300 meters, which may cost up to USD 10 million, reported lb.ua.


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