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Eustream to begin reverse-flow gas supplies to Ukraine September 1

July 23, 2014, 22:27 UTC+3 PRAGUE
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PRAGUE, July 23. /ITAR-TASS/. Reverse-flow gas supplies from Europe to Ukraine may begin on September 1 to deliver about 10 billion cubic metres of fuel a year using a hitherto unused municipal pipeline in eastern Slovakia, its gas operator Eustream said on Wednesday.

“Russia’s Gazprom has no objections. The gas pipeline was built in the town of Vojany in the east of Slovakia for the local power plant but was never put into operation. Currently repairs are underway on the pipes that lay buried in the ground for several decades,” Eustream spokesperson Vahram Chuguryan said.

In June, Ukraine asked the European Union to supply up to 30 billion cubic metres of gas a year using a reverse-flow mechanism. Ukraine has been receiving gas from Poland since April 15 and from Hungary since May 20.

In June of this year, Ukraine received 315.8 million cubic metres of gas from Western Europe in reverse-flow mode, which signified a considerable increase from 170 million cubic metres in May. In the first two weeks of July, reverse-flow gas supply to Ukraine amounted to 93.2 million cubic metres.

Ukrainian Deputy Prime Minister Vladimir Groisman said earlier that Kiev could buy 6-7 billion cubic metres of gas from Russia in 2014 “in order to get through the winter smoothly”.

According to the Ukrtransgaz gas transportation company, the amount of gas in Ukrainian storage facilities increased by 0.8% in June 1-8 to 14.488 billion cubic metres. Ukraine produces about 50 billion cubic metres of gas daily.

Ukraine is also exploring possibilities for reverse-flow gas supplies from Romania. Supplies from four destinations will bring up to 30 billion cubic metres of gas to Ukraine annually. Slovakia is the most preferable among them.

Kiev is expecting to receive the first gas from Slovakia from September 1.

“Reverse-flow supplies from Slovakia can begin in August but I think September 1 is more likely,” Ukrainian Energy and Coal Industry Minister Yuri Prodan said.

He admitted, however, that reverse-flow gas supplies to Ukraine had been more than halved over the past two weeks from 18 million cubic metres to 7 million cubic metres a day.

Slovakia has confirmed that supplies to Ukraine would begin on September 1 by the Vojany-Uzhgorod pipeline, Eustream spokesperson Vahram Chuguryan said.

The pipeline’s capacity is no more than 27 million cubic metres of gas a day or 10 billion cubic metres a year.

“Supplies will begin on a regular basis in September, subject to certain technical conditions, and will become permanent from March 2015,” the official said.

Naftogaz of Ukraine has reserved a part of the Vojany-Uzhgorod pipeline capacities for reverse-flow gas supplies from Slovaki.

“The company has purchased the biggest part of the new gas pipeline’s transit capacities until 2019,” it said.

Eustream will invest in the renovation of the Vojany-Uzhgorod pipeline an estimated 21 million euros.

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 as 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 gas in reverse flow from Europe since November 1, 2012. The gas is supplied across the Ukrainian border with Poland under a contract with from German RWE.

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