Ukraine signs reverse natural gas flow agreement with Slovakia

A memorandum of understanding to flow natural gas from Slovakia into Ukraine was signed on Monday afternoon, the Ukrainian prime minister Arseniy Yatsenyuk has announced.

Under the finalised agreement, a daily rate of 22 million cubic metres (mcm) of gas will be able to flow from Slovakia to Ukraine via the Vojany pipeline from autumn 2014. This corresponds to 8 billion cubic metres (bcm)/year. Last year, Ukraine imported around 2bcm of gas from EU member states via Poland and Hungary.

The agreed supply route via the Vojany pipeline ensures that the physical reverse flow into Ukraine from Slovakia will not interfere with the current flow of Russian gas from Ukraine into Slovakia at the entry point of Velke Kapusany, the major entry point for Russian gas into Europe.

The memorandum of understanding had been expected to be signed by Slovak grid operator Eustream earlier in April, but negotiations had come to a stand-still due to a change to the proposal from the Ukrainian side ( see ESGM 16 April 2014 ). The Ukrainian negotiators had insisted on a new virtual reverse flow project through the main transit pipelines leading to the Velke Kapusany entry point, in order to supply more gas to Ukraine ( see ESGM 25 April 2014 ). This was rejected by the Slovakians, however, as it would have jeopardised Eustream’s contractual obligation to Russian producer Gazprom.

Negotiations were concluded on Sunday between the Slovak grid operator, its Ukrainian counterpart Ukrtransgaz, the Ukrainian energy incumbent Naftogaz as well as representatives from the Slovak economy ministry, the Ukrainian energy ministry and the European Commission.

Earlier in April, Slovak economy minister Tomas Malatinsky was quoted in local media reports as saying Slovakia could start reverse flow of gas into Ukraine by November this year ( see ESGM 14 April 2014 ).

Eustream announced on Monday it would check technical details to confirm the implementation of the agreed solution within the coming weeks. Should the 22mcm option prove not to be feasible, Eustream will start with a smaller volume and increase the capacity of the pipeline up to 22mcm/day by April 2015.

Once the deal is signed, an open season will need to determine which companies are willing to commit to booking reverse flow capacity. German utility RWE has indicated its interest in sending gas reverse flow to Ukraine via Slovakia. The company also started flowing volumes from Poland to Ukraine earlier in April ( see ESGM 15 April 2014 ). Miriam Siers