The Slovak Gas Industry (SPP) concluded a short-term, pilot contract for the supply of natural gas from the Azerbaijani company SOCAR. After a successful evaluation of the cooperation, the company will consider concluding a gas supply contract for a longer period as well. SPP spokesman Ondrej Šebesta informed about this on Wednesday.
“SPP supports the continuation of gas transportation through the territory of Ukraine for a long time, because it is the most cost-effective solution for our customers. However, due to the high risk of stopping gas supplies via the eastern branch, we are taking measures to guarantee safe gas supplies to our customers, from large industrial customers to households, in any situation.” said CEO of SPP Vojtech Ferencz.
Currently, SPP has concluded standard diversification business contracts for the purchase of gas from a non-Russian source with BP, ExxonMobil, Shell, ENI and RWE. These contracts are flexible both in terms of volume and time. Thanks to them, the company has up to 150 percent of the consumption volume of its customers at its disposal. Thus, SPP has a 50 percent volume reserve, which it can expand up to 100% if necessary, and thus cover the complete supply of gas for its customers exclusively from these diversification contracts.
If deliveries through the Ukrainian gas pipeline were to stop, Slovakia has diversified transport routes and there is a possibility to transport natural gas through each of the surrounding countries. The preferred alternative transport route for SPP during the winter season is the gas pipeline from Germany through the Czech Republic, in which sufficient transport capacity is purchased. In the event of a definitive failure of supplies through Ukraine, the southern transport route via the Turk Stream gas pipeline through Turkey and then Bulgaria, Serbia and Hungary appears to be important. Part of the volumes of Russian or Azerbaijani gas could reach Slovakia through it.
“We have increased the volume of gas in underground reservoirs in Slovakia, which we currently have at our disposal, by approximately 20% compared to last year. Moreover, during this winter, we at SPP made a decision that our storage capacity will be filled to 100% not only at the beginning of the heating season, but also at the beginning of the year, i.e. in January 2025. From the point of view of security of supply, SPP has the largest volume of gas in recent years at its disposal during the ongoing winter through a combination of diversification contracts, secured transport routes and gas in storage tanks.” added Ferencz.
From the beginning of securing alternative supplies, SPP has warned that diversification has its price, and in the event that Russian gas will only partially flow to the territory of Slovakia or stop flowing completely, any other alternative will be significantly more expensive. If the company were to lose Russian supplies and purchase the entire necessary volume from another source and physically transport it to Slovakia, it would cost it at least 140 million euros more.
The difference is mainly caused by transit fees, which will probably increase by next year, while their final amount is not yet known. At the same time, the interruption of natural gas supplies through Ukraine will naturally also result in an increase in prices on the wholesale markets. In addition, in the case of a cold winter, this situation can cause gas shortages and supply problems throughout Europe.
