Green light for Slovak-Ukraine natural gas pipeline after open season results

Slovak grid operator Eustream is to continue with the commissioning of a pipeline between Slovakia and Ukraine after enough suppliers bid for natural gas capacity on the connection point, the company has said.

The pipeline is expected to become a key source of gas supply to Ukraine after Russian Gazprom stopped supplying gas to the country from 16 June, after incumbent Naftogaz failed to pay in advance for gas for the month.

A Eustream spokesman would not provide details on Wednesday of participating companies, citing confidentiality agreements. Neither would he provide details on how much capacity was booked on the 8 billion cubic metres per year Vojany pipeline.

A high number of smaller companies interested in sending gas to Ukraine, as well as the majority of former incumbents from eastern European companies, participated in the project, ICIS understands.

German utility RWE, which previously said it would be interested in transporting gas to Ukraine via Slovakia if the pipeline became available, is also known to have participated. RWE supplies gas to Ukraine from both Poland and Hungary.

One trader at a mid-sized European company involved in the open season said in June his main concern was being able to find buyers for gas in Ukraine, and then overcoming the myriad of contractual problems including legal credit issues.

The Vojany pipeline will connect into the Ukrainian grid at Budince, not far from the main transfer point for Russian gas entering Europe at Velke Kapusany, but it will be separate from the Velke Kapusany lines.

A memorandum of understanding to flow gas from Slovakia into Ukraine was signed on 28 April. Under the agreement, 22mcm/day will be able to flow in reverse via the Slovak border to Ukraine from October. It is understood Eustream hopes to start flowing gas earlier in September.

The final costs of the project are still being assessed, but it is understood the first phase of implementation will be just under €20m.

Any expansion of the pipeline, which would include the procurement and permitting processes, would be added to this cost. Miriam Siers