Slovakia is witnessing 50 percent drop in Russian gas deliveries. What to do?

What would be your explanation and what can Slovakia do, maybe to rise the issue more vocally also on the EU level? Read few comments.

Jonas GrätzResearcher, Global Security Team, Center for Security Studies

These are very worrying times. Russia wants to destroy EU solidarity with Ukraine. It also wants to increase the pressure on the EU to relieve existing sanctions. Therefore it is targeting small member states directly involved in the reverse flow of gas to Ukraine. But it is also targeting companies in bigger member states which are increasingly upset with Gazprom’s behavior.

Gazprom bases its actions on a legal argument, which is shaky. To understand it we have to distinguish between the delivery point of the gas and the destination clause. First of all, the delivery point. This is where the gas is changing hands from Gazprom to a EU customer. For gas destined for Slovakia or maybe even Czech Republic this will be Velke Kapusany, but the bulk of the gas going to the EU will change hands in Baumgarten or Waidhaus. This means that without reverse flow from Austria to Slovakia and further to Ukraine, only the volumes delivered to Slovakia (and Czech Republic) may be used to deliver gas back to Ukraine. And even this pertains only if there is no destination clause in the Slovak and Czech contracts. According to the EU, destination clauses are not valid anyway, but according to Russia they have to be deleted from the contract if they are to be voided.

But even if Gazprom would have a destination clause in a contract I doubt that the contract provides for the automatic reduction of volumes in case that it is breached. This would be pretty extraordinary. I guess Russia would have to negotiate and then go to arbitration. But it cannot simply reduce volumes.

So, Russia’s actions are an act of blackmail concealed behind legalistic rhetoric, which may be more or less shaky.

What Slovakia could do? The transitioning out of the old EU commission is of course worrying. So I would take the bilateral track and go to Berlin, to the MFA, and raise their awareness. It is an issue of European solidarity, and Berlin was also interested in reverse flow. Slovakia is standing in the line of fire and there should be no doubt about the EU’s solidarity. In any case, Slovakia is well equipped with reverse flow capabilities from Germany, and German gas storage is almost full.

Agata Loskot-StrachotaEnergy Policy Research Fellow, Centre for Eastern Studies 

Why Slovakia? Probably because it is presently the most important country in promoted by the EU policy of assisting Ukraine in its gas problems by enabling the so called reverse flow gas supplies. It is presently feasible to supply Ukraine with 10-12 bcm of gas a year via Slovak, Hungarian and Polish interconnections with Ukrainian gas system,but only ~6bcm on a firm basis and that 6bcm would need to go via Slovakia. Additionally reverse gas flows via Hungary have been since last week temporarily halted, so available capacities shrank by about 3bcm. Less gas flowing to and via Slovakia means more difficult conditions for reverse gas flows: less gas available and probably at higher prices. It also increases uncertainty over the motives and next steps of Gazprom/Russian side. It is important both in the context of the ongoing trilateral Ukraine-Russia-EU gas talks and the winter season that has just started.

But Slovakia is not alone. Poland has been also experiencing since Sept. 8 lower gas supplies (on average 20%) than nominations by Polish PGNiG. Austrian regulator e-Control had twice confirmed lower gas supplies from Russia (on Sept 19th stating that decreases reach 25% which is below normal fluctuations). Romania and Serbia experienced decreased supplies for shorter periods.

That shows that problems with lower than ordered Russian gas supplies are not only national issue. They affect several EU (and Energy Community) Member States, and they affect situation on internal gas market (at least in CEE), feasibility of EU policy of assisting Ukraine in its gas problems and may have an impact on the trilateral gas talks (which aim is to prevent such situations as decreasing gas transit/supplies to the EU). That requires an EU answer * by both *old* and *new* Commissioners – as for all of them Ukraine crisis and security of gas supplies remain key areas of interest. That also calls for more coordination among CEE countries (including Austria): as this is their common challenge (even if some of them as Hungary and Czech Republic remain presently much less affected than the others) and requires special focus both on regional and EU level. Properly formulated policy answer right now might enable greater preparedness for the winter time.

 

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