Bulgaria, Romania and Hungary sought to secure direct gas supplies from Russia via the South Stream pipeline across theBlack Sea, but the project was recently canceled by Russian President Vladimir Putin.
A special high-level team, led by European Commission Vice President for Energy Union Maros Sefcovic, was set up to develop an energy security plan for Central and Southern Europe.We welcome the announcement of setting up the highlevel working group,” Andriy Kobolyev, the CEO of Naftogaz, said in a statement. “Ukraine has ample storage and transmission capacities needed to remedy the situation, and we are happy to contribute.”
Ukraine’s proposal calls for using four primary pipelines interconnecting Ukraine and Slovakia to enable two-way flows, including backhaul, also known as virtual reverse flow, to deliver gas from Western Europe via Slovakia and Ukraine to Romania, Bulgaria and Hungary.
The pipelines are used exclusively for shipping Russian gas via Ukraine and Slovakia to markets in Europe. Russia’s Gazprom has opposed the use of the pipelines for imports of European gas into Ukraine.
“This solution can unlock a total annual capacity of 100 billion cubic meters for the region,” Naftogaz said in the statement. “It is important that Ukraine, Slovakia and the European Commission urgently address this issue together.” The stress tests recently conducted by the European Commission show that the countries of Southern Europe run the highest risk in the case of disruptions of gas supply from Russia.
Most urgent step
“Therefore, unblocking the primary interconnector between Ukraine and Slovakia is currently the most urgent step to undertake to bolster European energy security,” Naftogaz said. “If unblocked, this reverse flow can ensure that Southeastern Europe has full access to European gas market liquidity.
“The solution is already technically available and requires no investments from either the EU or Ukraine,” Naftogaz said. “Unlocking this option requires certain action from the European Commission that would bring the situation in line with the Third Energy Package.”
By using the backhaul procedure, which is common in the rest of Europe, the Ukrainian and Slovak transmission system operators would be able to match gas volumes purchased in the EU and nominated for shipment to Ukraine against gas volumes nominated for shipment from Ukraine to the EU.
“Only the resulting net volume would then be physically transmitted through the interconnector,” Naftogaz said. “Such a change would not negatively affect Gazprom’s ability to deliver contracted gas to its European customers.”
Ukraine’s vast underground storage amounts to nearly 40% of EU’s total capacity and is being offered to interested parties to build reserves and take advantage of the seasonality of gas prices.
Ukraine is capable of shipping up to 120 Bcm of Russian gas annually to Europe via its pipelines, but the shipments have gradually declined over the past several years after Russia commissioned its Nord Stream gas pipeline across the Baltic Sea to Germany in November 2011.
In 2013 Ukraine transported 86.1 Bcm of Russian gas to Europe, including to the EU and Moldova, up 2.3% from 84.2 Bcm shipped in 2012, according to the energy and coal industry ministry. — Alexander Bor
