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Naftogaz of Ukraine reserves Vojany-Uzhgorod pipeline for reverse-flow supplies

July 03, 2014, 19:58 UTC+3 KIEV
Reverse-flow gas supplies from Slovakia are expected to begin in September 2014 and may amount to about 27 million cubic metres a day
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© ITAR-TASS/Alexander Ryumin

KIEV, July 03. /ITAR-TASS/. Naftogaz of Ukraine has reserved a part of the Vojany-Uzhgorod pipeline capacities for reverse-flow gas supplies from Slovakia, the company said in a statement on Thursday, July 3.

“The company has purchased the biggest part of the new gas pipeline’s transit capacities until 2019,” it said, adding that several dozen companies had competed in the tender.

Reverse-flow gas supplies from Slovakia are expected to begin in September 2014 and may amount to about 27 million cubic metres a day (10 billion cubic meters a year).

On Wednesday, July 2, Slovakia’s gas operator Eustream announced the successful completion of the Open Season procedure to accept requests for gas supplies to Ukraine from Slovakia. About two dozen European companies had filed their bids.

Eustream will invest in the construction of the Vojany-Uzhgorod pipeline estimated at 21 million euros.

Everything will depend on how much reverse-flow gas we can buy from Europe. We have been getting some very good offers from European companies at prices that are much better than those of Gazprom, even after discounts Yuriy Prodan Ukrainian Energy and Coal Industry Minister Ukrainian Energy and Coal Industry Minister Yuriy Prodan said Ukraine could become independent from Russian gas “if Slovakia begins large-scale reverse-flow supplies” and added that closely linked to this issue was “the pumping of gas into underground storage facilities is closely linked”.

“Everything will depend on how much reverse-flow gas we can buy from Europe. We have been getting some very good offers from European companies at prices that are much better than those of Gazprom, even after discounts,” he said.

“We hope we will be able to begin ‘minor’ Slovak transit from October 1 even though some technical issues remain to be worked out,” Prodan said.

As for the “big” revere-flow supplies, he said “the gas transportation network in the direction of Slovakia is working at only 40% of its capacity. So there is a possibility.”

EU Energy Commissioner Guenther Oettinger confirmed that the European Union was committed to reverse-flow gas supplies to Ukraine but this gas would be sold at market prices to be determined by the companies that sign relevant contracts.

Prodan said he was hopeful that “big reverse-flow supplies” would give Ukraine “up to 30 billion cubic metres a year”.

Oettinger’s spokesperson Sabine Berger said Ukraine could count on no more than 8 billion cubic metres of reverse-flow gas a year through Slovakia a part of the “minor reverse-flow scheme”. Gas will be supplied by the Vojany-Uzhgorod pipeline, not the transit pipeline.

As for the “big reverse-flow supplies” there is no concrete agreement yet as it would require Slovakia to agree to reverse the flow of gas by a trunk pipeline, which it is not prepared to do because this would run counter to its contract with Gazprom.

Oettinger said reverse-flow gas supplies from Slovakia to Ukraine by the trunk pipeline would be impossible without Gazprom’s consent as it would run counter to the Slovak company Eustream’s contractual obligations.

However he said such supplies by the Vojany-Uzhgorod pipeline would not require the Russian company’s agreement and would give Ukraine up to 10 billion cubic metres of a gas a year.

Oettinger believes that diversification of supplies will help to solve Ukraine’s gas problem in part. However reverse-flow supplies from Poland and Hungary by the Vojany-Uzhgorod pipeline will not be enough for Ukraine get through the coming winter comfortably.

The European Union has promised assistance to Ukraine in diversifying natural gas supplies.

Kiev is planning to buy about 290 million cubic metres of gas in Europe in reverse mode (about 140 million cubic metres will be delivered through Poland and the rest through Hungary).

Ukraine has been receiving natural in reverse flows from Europe since November 1, 2012. The gas is supplied across the Ukrainian border with Poland under a contract with from German RWE.

The gas is supplied across the Ukrainian border with Poland. RWE planned to supply up to 5 billion cubic metres of gas to Ukraine until May 2013. Last year Naftogaz imported 55 million cubic metres of gas using the reverse flow scheme.

Gazprom said it might impose restrictions on European companies which supply gas to Ukraine using reverse-flow mechanisms.

“A reverse flow is a semi-fraudulent mechanism whereby gas runs in circles. But this is Russian gas,” Gazprom CEO Alexei Miller said.

Infographics Russian gas in Europe Russian gas in Europe
One-third of gas consumed in EU comes from Russia. Infographics ITAR-TASS
Miller said that the points where gas was delivered to and accepted by European consumers were located in Europe, but “Ukraine uses our gas (intended for Europe) on its territory any way it likes”.

“Reverse-flow gas supplies run counter to the contracts with European companies that buy Russian gas, and for that reason restrictions may be imposed on them,” Miller said.

In 2013, Ukraine consumed about 50 billion cubic metres of gas.

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