BRUSSELS – The European Union is exploring a new proposal to resolve the ongoing gas dispute between Ukraine and Slovakia by utilizing Ukraine’s large underground gas storage capacity, according to two officials involved in the discussions.
The plan, initially discussed by European commissioners during a visit to Kyiv last month, seeks to address Slovakia’s frustration over lost energy revenue following the end of a gas transit deal between Ukraine and Russia in January. Under the previous agreement, gas transited through Slovakia to the EU, providing Slovakia with up to €500 million in annual transit fees.
Slovakia’s pro-Russian Prime Minister, Robert Fico, has pressured Ukraine to resume the deal, threatening to cut power exports to Ukraine and reduce support for refugees. However, Ukraine has remained firm in its position. In response, the European Commission is considering a plan that could help restart gas flows to Slovakia.
Under the proposed plan, Ukraine would increase gas imports from Greece and Turkey and store up to 10 billion cubic meters of gas in its storage facilities. This gas would then flow through Slovak pipelines to countries like Hungary during the winter months when supply is lower.
“This would make Slovakia a transit country again,” said one Commission official, emphasizing that the plan would align with the EU’s REPowerEU strategy, which aims to phase out Russian gas imports by 2027.
Pressure to Resolve the Issue
The EU is under pressure to resolve the dispute after government leaders called for “workable solutions” to the gas transit issue earlier this month. This request was part of efforts to secure Slovakia’s support for EU defense spending initiatives.
The European Commission has previously highlighted the potential of Ukraine’s vast underground gas storage sites, which are the largest in Europe and could theoretically store a quarter of the EU’s total gas capacity. Commission President Ursula von der Leyen mentioned the potential benefits of using these storage sites during her visit to Kyiv last month.
“This generates income for Ukraine,” von der Leyen said. “All these efforts will result in greater energy security for both Ukraine and the EU.”
The proposal also seeks to avoid challenges with an alternative plan that Slovakia previously suggested, which involved importing gas from Azerbaijan. Experts have raised concerns that Azerbaijan might need to rely on Russian gas to meet EU demand, due to limited capacity and lack of transparency in Azerbaijan’s gas export operations.
Support and Concerns
Some EU officials are supporting the new plan. Finland’s Climate and Environment Minister, Sari Multala, said, “Solutions that can lead to EU countries not being dependent on Russian gas or oil are better than those that still do.”
However, the storage plan faces significant logistical challenges. Aura Sabadus, a senior gas market expert at ICIS consultancy, noted that the Trans-Balkan pipeline, which would carry gas from Ukraine, currently only has the capacity to transport around 2.5 billion cubic meters (bcm) of gas, far below the 10 bcm proposed in the plan. The limited capacity is partly due to insufficient gas trading infrastructure in Romania and Bulgaria and high transmission fees charged by Romania’s state-owned gas company, Transgaz.
Sergiy Makogon, former head of Ukraine’s state-owned gas grid operator GTSOU, also expressed skepticism about the plan’s commercial viability. He pointed out that neighboring countries, including Slovakia and Hungary, already have sufficient gas storage capacity to meet their own needs, questioning what additional benefits Ukraine’s storage would bring to the EU.
Business Concerns
Some industry players are also doubtful about the plan. A gas trader acknowledged there is some interest in buying gas from Ukraine, despite the risks posed by potential Russian attacks on storage facilities. However, the trader argued that financially, the plan doesn’t make sense, primarily due to the high costs associated with transporting gas from Ukraine to Slovakia.
“It would require EU countries to subsidize the flow of gas to and from Ukraine,” the trader said. “As long as there is political will and someone is willing to pay for it, fine, but commercially, it doesn’t make sense.”
Conclusion
While the European Commission is considering this new approach to resolve the gas dispute between Ukraine and Slovakia, the proposal faces several challenges, including logistical hurdles and skepticism about its financial viability. The final decision will depend on whether these issues can be addressed, alongside the political will to implement the plan.
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