Reverse opens in a very good time. A greate excess of gas has been formed in Central Europe due to the trade policy of Gazprom, unusually warm winter, as well as due to the advancing of energy conservation and energy efficiency technologies Also the consumption of other fuels, such as biomass for heating in urban areas or coal power, is increasing.
As a result of these factors the price of gas was reduced on the spot market, which is the "source" for Ukraine.
How long such a favorable situation will hold depends primarily on two factors. First of all, it is the continuation of the current trade policy of "Gazprom", which is traditionally very reluctant to change long-term contracts with its European partners.
Thus "Gazprom" creates an increase of gas proposal in the European market, leading to a significant reduction in spot market prices.
The second factor will be this winter - if it will be warm again, as the previous one, a large amount of unused gas will left in the underground storage facilities again, and this will increase more proposal in the market.
As for negative factors, the most important of these is associated with the continuation of Russian-Ukrainian conflict. And without new legislation of Ukraine (on sanctions against Russia) it is clear that the escalation in the east up to the direct military conflict with Russia, will affect the transit of energy resources. Especially now when gas supplies from Russia to Ukraine are at zero level. This situation is very challenging for Ukrainian gas industry to provide the domestic market while guaranteeing stable gas transit.
If winter temperatures in Central Europe falls below zero, this will reduce or even completely stop reverse gas from Europe to Ukraine. However, meantime the estimates of reverse that opens is rather optimistic.
In this regard, I would like to remind you of the difficulties, which accompanied the opening of reverse between Ukraine and Slovakia. Subject of reverse gas from Slovakia to Ukraine until recently was very politicized.
One of the consequences of short-sighted political statements on both sides was the opening of reverse at least six months later that was possible. Politicians and officials in Kiev and Bratislava have to realize finally that in matter of the oil and gas transit both countries are strategic partners, and build up their trade policy with trading partners through this collaboration. The sooner this happens, the faster will be a major benefit for the economies of Ukraine and Slovakia, as well as for citizens of both countries.
Without such cooperation neither Ukraine nor Slovakia will not be able to keep its position in the market of transit services in Europe.
Author: Karel Hirman, energy advisor to Slovak PM in 2010-2012
