Slovak natural gas capacity to Ukraine unlikely to increase soon

Author: Ekaterina Kravtsova

2015/09/08

A planned increase in eastbound pipeline capacity to flow natural gas from Slovakia to Ukraine may not happen this year, a source at the Slovak grid operator Eustream has told ICIS.

In July it was announced that capacity at the Budince border point would rise from 40 million cubic metres (mcm)/day to 57mcm/day by 1 December.

“This is not an easy task, this project requires both investment and construction,” the source at Eustream said. “We are conducting a technical analysis and waiting for permissions from different government agencies at the moment.”

Neither the exact date of when the project could be implemented, nor the final capacity have been agreed yet.

The source said that the Ukrainian grid operator Ukrtransgaz – which approached its Slovak counterpart with an offer to increase the capacity in late spring – was pushing Eustream to accomplish the project as soon as possible. “We are very unhappy about their method,” he said.

Despite repeated requests, Ukrtransgaz was unable to comment on the planned expansion at Budince.

There is currently no written agreement between the two parties over the project, with Eustream unwilling to sign any deal with Ukrtransgaz unless all the details are properly analysed.

Eustream is planning to discuss the technical side of the project this month but no exact date has been scheduled.

Another issue that Eustream is concerned about is how the additional capacity would be sold. The source said the Slovak operator would only want to sell the capacity through an open season.

“For us, it’s the only chance to see if there is any interest among shippers to book the capacity before we invest large amounts of money into this project,” he said.

A trader active on the Slovak and Czech markets said there was enough gas in Slovakia for reverse flows to Ukraine, but the major question was if Ukraine would be able to buy more gas from the EU.

All of Ukraine’s gas is currently being imported via Slovakia, with the country choosing not by Russian volume, or via Poland or Hungary.

Eustream data shows that gas flows from Slovakia to Ukraine via the Budince point fell by 30% over the previous week, averaging at about 26mcm/day.

Ukraine is currently trying to get funding from the European Bank for Reconstruction and Development to buy more European gas. But a representative of the bank told ICIS last week that the EU might may not allocate a $300m financial loan to the country earlier than mid-October. ekaterina.kravtsova@icis.com