Slovakia hits back at Ukrainian gas complaints

By bne IntelliNews June 24, 2015

Tim Gosling in Prague -


Slovak gas pipeline operator Eustream has rejected Kyiv’s complaint over its refusal to reverse part of the mainline route connecting the two countries, which could allow Ukraine to receive more gas from Europe. The tussle comes as Moscow's claim that Russian gas exports to Europe will circumvent Ukraine and Slovakia's gas networks by 2020 sows discord.

Kyiv has repeatedly asked the operator of Slovakia's gas network - state-controlled Eustream - to allow reverse gas flows through one of the four main pipelines crossing the the Ukraine-Slovak border, Ukraine's Prime Minister Arseny Yatseniuk said in a letter addressed to EU presidents. However, it claims Eustream has refused because of its transmission contract with Russia's Gazprom Export. 

"As a result, Ukrainian and European energy companies are not able to use this gas connector," the prime minister complained. He insisted the legacy contract between Eustream and Gazprom is in direct violation of EU law. 

"Full Slovak reverse flow would allow Ukraine to end its dependency on Gazprom and eventually import all of its gas from the EU. This would ease tension and reduce the risk of gas supply disruption for Ukraine and the EU," Yatseniuk added. 

However, the Slovak gas network operator, which makes the bulk of its revenue from collecting Russian gas at the Ukrainian border and carrying it westwards, said Kyiv is wrong about the contract. The operation of a border metering station - the key issue noted by the Ukrainian premier's complaint - "is not governed by the above mentioned contract but by separate agreements on technical conditions of transmission," Eustream said. The complaint is therefore "irrelevant" and any change in direction for the trunk line would have to be negotiated on a multi-lateral level, it insisted. 

Eustream put a smaller disused pipeline into operation in September to supply Ukraine.  Eustream claims the level of current transmission on the route is 20.9mn cubic metres per day, while the reversed pipeline's overall capacity is 40mn cm.

The Slovak company added that it is ready to participate in negotiations with Ukraine, the European Commission and Gazprom to help Ukraine achieve a fully standardised operation on its borders. However, it insists it must also take into account its responsibility to ensure gas transmission to many countries in the EU.

Ukraine covers more than 50% of its gas needs with reverse flows from Slovakia, Hungary and Poland. Deliveries from Slovakia make up the greatest chunk of the total. Over the winter, Bratislava complained that deliveries of Russian gas dropped 50% below requested volumes. Poland experienced similar shortfalls, as Russia appeared to be punishing the countries for sending gas to Ukraine. 

Slovakia and Ukraine signed a deal in April 2014 allowing EU states to deliver gas to Ukraine through Slovakia, as part of a drive to reduce Ukraine's dependence on Russian deliveries. The deal took months of negotiation, with Bratislava mistrustful of Kyiv's committment to pay and wary of Russia's displeasure. 

However, it agreed following a push from the US. Still, rather than use one of the lines on the mainline route which usually carries Russian gas from the Ukraine border westwards to the EU, Eustream put the smaller disused pipeline into operation. 

The tussle will likely please Moscow, which has sought to disrupt EU support to Ukraine on gas supplies since they were launched. It is also well practiced at distracting individual EU states from Brussels policy. 

The European Commission recently reinvigorated a legal case against Gazprom, claiming many of its contracts with individual countries break single market rules by preventing cross border flows. Brussels is pushing to connect the EU market via interconnectors to provide greater cross border flows and improve energy security.

Russia, meanwhile, says it plans to circumvent Ukraine entirely by 2020, and deliver gas exports to southern Europe at the Turkish border. While many see 'Turkish Stream' as highly likely to go the same way as the abandoned South Stream plan, the push has the likes of Ukraine and Slovakia - both of which risk losing billions in transmission fees - seeking back up plans.

Yatseniuk said in his letter that Ukraine could play a role in European energy security, should Eustream reverse the mainline route, by providing gas storage for the bloc. Slovakia is seeking EU funding for a project called Eastring, which it announced in December could supply EU gas to the Balkans should Russian deliveries dry up.

However, in recent months, Slovakia has begun talking up the project to Moscow, noting that it is reversible and could play an important role in Turkish Stream by carrying gas to Central Europe. The EU has said the Russian project won't work because there is no infrastructure to transport the gas from Turkey into the bloc.

That effort could lead to Bratislava's loyalties being questioned once more. Even Eustream has expressed some concern over Prime Minister Robert Fico's recent twin trips to Moscow to talk up the Turkish Stream role, given that is still hoping to secure EU funds for Eastring. 

Although former Czech premier Mirek Topolanek, now head of international development and public affairs for the Slovak gas network operator, stressed earlier this year that Eastring would be "complementary" rather than a competitor to Turkish Stream, he told bne IntelliNews in mid June that Fico's most recent trip had not been helpful. 


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