“This shows that SPP is ready to do without Ukrainian transit,” Sergiy Makogon, a Ukraine-based energy expert and former CEO of the country’s gas transmission system operator (GTSOU), told Montel on Wednesday evening.
Although the Slovak company initially favored the option of extending the transit of Russian gas through Ukraine, this agreement indicates that the probability of an extension of the transit contract is becoming increasingly low, Yuriy Onyshkiv claimed. , gas market analyst in kyiv for LSEG.
The five-year contract for around 14 billion cubic meters with Russian company Gazprom for gas transit through Ukraine expires at the end of December.
Slovakia’s largest energy supplier, SPP, announced on Wednesday that it had signed a short-term trial contract for gas supplies from Azerbaijani state oil and gas company Socar, without specifying the volumes involved.
“In the event of an interruption of deliveries via the Ukrainian gas pipeline, Slovakia has diversified transport routes, and it is possible to transport natural gas through each of the neighboring countries,” SPP added.
Among the available alternatives, the company mentioned its preference for gas pipeline flows from Germany, via the Czech Republic, as well as the Turkstream gas pipeline, via Turkey and Bulgaria.
SPP spokesman Ondrej Sebesta did not disclose volume details, but said the purchase would take place next month, with delivery planned to Austria.
More expensive supply
According to Makogon, the gas would be purchased in Italy, thanks to transport from Azerbaijan via the Trans Anatolian Natural Gas Pipeline (Tanap), even if this route is more expensive for Slovakia.
The Slovak supplier estimated that the loss of Russian supplies via Ukraine would cost the company an additional EUR 140m, due to high transit rates, which are expected to increase further next year.
Although the exact volumes of this contract remain confidential, Mr Onyshkiv estimated that these would likely be “very low”, given the limited capacity available at the entry point of the Turkstream gas pipeline in Bulgaria.
“This shows that SPP is finally starting to take diversification and the possibility of transit without Ukraine seriously from next January,” he added.
A last minute deal?
A source close to a major gas buyer via Bulgaria said transiting Russian gas via Ukraine had always been “very advantageous” for SPP, due to the relatively low costs. But according to it, the Slovak company could still try to negotiate a last minute agreement with Russia and Ukraine by the end of the year.
However, the market reacted with some indifference to this news, with details on volumes not provided, noted an analyst at a German energy company.
The benchmark gas contract on the Dutch stock exchange TTF for delivery next month closed on Wednesday at EUR 43.91/MWh, down EUR 0.35 compared to the day before, on the Ice Endex platform.
“The important thing, in my opinion, is the growing importance of Azerbaijan for the EU,” the analyst added.
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