The Dakota Access pipeline saga…
The recent drop in oil…
In late April, Slovakia signed an agreement with Ukraine to reverse the flow of natural gas, allowing Ukraine to receive gas shipments in the event that Russia decides to cut off supplies. The deal could eventually open up an annual 10 billion cubic meters of natural gas capacity.
About 40 percent of Europe’s gas from Russia flows through Slovakia, which makes the small country an important transit point for the Russian-European gas trade.
But Slovakia is under intense pressure from Russia to resist appeals for more help, according to a May 5 article in The New York Times.
Slovakia balked at tweaking its full pipeline system in order to assist Ukraine, only agreeing to use an unused pipeline to ship gas to Ukraine. The pipeline will receive upgrades and could come online later this year, but initially only at 3 billion cubic meters (bcm) of annual capacity, which is a tiny fraction of what Ukraine will need next winter if Russia decides to turn off its gas flows. Ukraine needs around 55 bcm per year, half of which comes from Russia.
Related Article: Why Hasn’t The U.S. Gone After Gazprom?
Ukrainian officials have grown frustrated with what they feel is Slovakia’s unwillingness to help. Some say that Slovakian Prime Minister Robert Fico is too deferential to Russia and Gazprom. “We have been struggling for a long time to convince them to find a solution,” Andriy Kobolev, the chairman of Ukraine’s state-owned Naftogaz, told the newspaper. “We have now identified the problem, which was obvious from the beginning — restrictions placed by Gazprom.”
Slovakian officials are worried that Gazprom could raise natural gas prices, just as it did with Ukraine, if Slovakia helps Kiev too much. When asked about Gazprom’s position on reversing the flow of natural gas, Gazprom’s chief Alexander Medvedev said that such a move would “require the agreement of all parties involved,” meaning that Slovakia could not make a decision without Gazprom’s approval.
By Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com