Slovakia is ready to stop the transit of gas through Ukraine
However, stopping the transit of Russian gas through Ukraine is not a rational decision, as it will cause prices to increase on European markets and damage the European economy. This move will also have a negative impact on Slovakia. However, gas from Russia will continue to be transported to Europe via other routes, as no sanctions have been imposed on it. In addition to Slovakia and other European countries, Ukraine itself will also be negatively affected by this move, as it will lose transit fees. However, Slovakia has prepared for this illogical step by Ukraine in advance and has sufficient gas reserves and alternative supplies ready for 2025. However, if the Russian gas transit situation cannot be resolved by early 2025, Europe will face difficulties before next year's winter heating season.
„We have discussed gas transit through Ukraine at length at joint meetings of the Slovak and Ukrainian governments, as well as in negotiations with the Russian side. There are several alternatives that we have considered. However, Ukraine has decided to take a unilateral step that will also affect Slovakia. Nevertheless, I would like to assure all Slovak citizens and businesses that we are prepared for this scenario and that there is currently no risk of a gas shortage in Slovakia," said Deputy Prime Minister and Minister of Economy Denisa Sakova.
Technically, Slovakia is well prepared for the stoppage of gas supplies from Russia via Ukraine. The state-owned company SPP has stored 20 per cent more gas in its underground tanks than it did a year ago. Furthermore, the storage tanks contracted by SPP were practically 100 per cent full by the end of December, which is unusual for this time of year. The state-owned gas company has a diverse portfolio of gas supplies from five major international energy suppliers, including BP, ExxonMobil, Shell, RWE and Eni. Similarly, the ZSE Group, which includes the major gas suppliers ZSE Energia and Východoslovenská energetika, announced in early July an agreement with the ORLEN Group for the supply of liquefied natural gas (LNG), primarily sourced from the USA. Slovakia has also established pipeline interconnections with each of its neighbouring countries. This means that natural gas can be transported from any direction.
The main direct financial consequence of stopping the transit of Russian gas from the east will be for Slovakia. Slovak gas companies alone will pay around €177 million more in transit fees for gas flowing from the west rather than the east. However, this estimate already takes into account a reduction in costs of around €90 million, which has been offset by the abolition of the German storage charge. Furthermore, Slovakia will lose tens of millions of euros by no longer charging for the transit of gas to third countries. Consequently, the cost to Slovakia of stopping the flow of gas through Ukraine will exceed the amount earmarked for energy subsidies for all Slovak households in the 2025 budget.
This will have an even more dramatic impact on the European economy, which is already struggling with high energy prices. It is estimated that this move by Ukraine will lead to higher gas prices and, indirectly, higher electricity prices in Europe. This would result in additional costs for Europe of around EUR 51 billion for gas and roughly EUR 77 billion for electricity over the next two years. These costs would then be passed on to businesses and households, triggering inflationary pressures and slowing or halting the European Central Bank's monetary easing.
The Press Department of MoE SR