Slovakia 'prepared' for end of Russian gas deliveries via Ukraine: ministry

Slovakia's economy ministry said Dec. 31 the country was "prepared" for the suspension of Russian gas imports via Ukraine, but again slammed Kyiv's decision to end transit of Russian volumes.

The five-year Russia-Ukraine gas transit deal expires at the end of 2024, with Slovakia set to be among the countries worst hit.

"We are prepared for this scenario and there is currently no threat of a gas shortage in Slovakia," economy minister Denisa Sakova said in a statement.

Sakova said Slovakia had held talks on the transit of gas through Ukraine "for a long time" at joint meetings with the Ukrainian government, while negotiations with Russia have also taken place.

"There are several alternatives that we have discussed. However, Ukraine has decided to take a unilateral step that will also harm Slovakia," she said.

The ministry said that halting the transit of Russian gas through Ukraine was not a "rational" decision and would cause an increase in prices on European markets, which in turn would harm the European economy.

It added that gas from Russia would continue to be transported to Europe via other routes given that there are no sanctions imposed on it.

"Slovakia has prepared in advance for an illogical step by Ukraine and has sufficient gas reserves and alternative supplies ready for 2025," it said.

"If the situation with the transit of Russian gas cannot be resolved by the beginning of 2025, Europe will have to deal with a difficult situation before next year's winter heating season."

Gas stocks

The ministry said Slovakia was "technically" well prepared for the cessation of gas supplies from Russia via Ukraine.

State-owned SPP has 20% more gas stored in underground storage tanks than a year ago, it said.

"In addition, the storages contracted by SPP are practically 100% full even at the end of December, which is not standard at this time of year," the ministry said.

SPP, it said, also has a diversified portfolio of gas supplies from five large international energy companies, namely BP, ExxonMobil, Shell, RWE and Eni.

The ZSE Group also announced an agreement at the beginning of July for the supply of LNG originating mainly from the US with Poland's Orlen.

"Slovakia also has a gas pipeline connection with each of the surrounding countries. Natural gas can thus be transported from any direction," the ministry said.

Financial impact

The ministry warned, however, of the financial impact of sourcing alternative gas supplies. It said that in transit fees alone, companies in Slovakia would pay approximately Eur177 million more.

This estimate already takes into account lower costs of approximately Eur90 million that were eliminated by the abolition of the German storage levy for cross-border flows from Jan. 1, 2025.

The ministry said Slovakia would also lose tens of millions of euros by ceasing to collect fees for Russian gas transit to its neighbors.

"As a result, the Slovak bill for shutting down the gas flow through Ukraine will be higher than the amount allocated for energy subsidies for all Slovak households in the 2025 budget," it said.

Finally, the ministry said the move by Ukraine would be reflected in higher gas prices in Europe.

Platts, part of S&P Global Commodity Insights, last assessed the benchmark Dutch TTF month-ahead price on Dec. 30 at Eur47.64/MWh.