May 9, 2025
Slovakia's SPP cautions about the price effects of the European Commission's suggested ban on Russian gas.
Slovakia's SPP has cautioned that the European Commission's plan to prohibit Russian gas and LNG imports would maintain pressure on gas prices and limit the EU's access to flexible gas supplies. In a statement on May 7, SPP pointed out that the EC's proposal could distort the energy market and jeopardize supply security in Central and Eastern Europe.
The EC unveiled its roadmap on May 6 for phasing out Russian energy imports, with plans to introduce legislative proposals in June aimed at banning the import of Russian gas by the end of 2025, affecting both new and existing contracts. The roadmap, initially anticipated in February, also includes a proposal next month for a ban on remaining Russian gas and LNG imports under long-term contracts, set to take effect by the end of 2027.
SPP disagreed with the EC's plan, arguing it would negatively affect the competitiveness of the EU's business sector and asserting that Russian gas is Europe's only flexible supply source. They noted that alternative sources like Norway, North Africa, and Azerbaijan are already at maximum capacity or lack flexibility as with LNG.
SPP mentioned that Europe compensated for the loss of Russian gas by importing extra LNG at higher prices than other regions are willing to pay. Vojtech Ferencz, SPP chairman and CEO, emphasized that the narrative of reducing dependency on Russian gas does not hold, as the proposed ban would increase reliance on LNG, a globally traded commodity, leading to greater price competition.
European gas prices are relatively high, exacerbated by a cold winter that lowered storage levels amidst halted Russian supplies via Ukraine. As of May 7, Platts assessed the benchmark Dutch TTF price at Eur34.08/MWh.
Ferencz called for the renewal of Russian gas supplies via Ukraine, stating even a volume of 14 Bcm/year could reduce prices. He noted that without Russian supplies, gas prices are unlikely to revert to pre-COVID levels, particularly affecting Central Europe, which lacks infrastructure capacity.
He pointed out that the absence of Russian gas has resulted in Central Europe facing the highest gas prices, needing to import from other regions at elevated costs due to infrastructure shortcomings. SPP had signed a declaration in December with various entities, including Hungary's MVM, to support gas transit through Ukraine, but received a minimal response from the EC after several months.
The five-year Russia-Ukraine gas transit agreement is set to end in 2024, with supplies via this route halted as of January 1, 2025. Slovakia and Hungary receive their Russian gas through TurkStream and onshore pipelines in Southeast Europe. SPP noted that significant technical challenges remain on gas transit routes to Central Europe, which could jeopardize regional energy security without proper infrastructure investment.
Ferencz argued that any binding restrictions on Russian energy sources should be based on a thorough analysis of their economic, legal, security, and technical impacts on member states. He insisted that proposals of this nature must consider the diversity of individual member states, particularly Slovakia and other Central and Eastern European countries, for which Russian gas may still be a more advantageous option.
The EC unveiled its roadmap on May 6 for phasing out Russian energy imports, with plans to introduce legislative proposals in June aimed at banning the import of Russian gas by the end of 2025, affecting both new and existing contracts. The roadmap, initially anticipated in February, also includes a proposal next month for a ban on remaining Russian gas and LNG imports under long-term contracts, set to take effect by the end of 2027.
SPP disagreed with the EC's plan, arguing it would negatively affect the competitiveness of the EU's business sector and asserting that Russian gas is Europe's only flexible supply source. They noted that alternative sources like Norway, North Africa, and Azerbaijan are already at maximum capacity or lack flexibility as with LNG.
SPP mentioned that Europe compensated for the loss of Russian gas by importing extra LNG at higher prices than other regions are willing to pay. Vojtech Ferencz, SPP chairman and CEO, emphasized that the narrative of reducing dependency on Russian gas does not hold, as the proposed ban would increase reliance on LNG, a globally traded commodity, leading to greater price competition.
European gas prices are relatively high, exacerbated by a cold winter that lowered storage levels amidst halted Russian supplies via Ukraine. As of May 7, Platts assessed the benchmark Dutch TTF price at Eur34.08/MWh.
Ferencz called for the renewal of Russian gas supplies via Ukraine, stating even a volume of 14 Bcm/year could reduce prices. He noted that without Russian supplies, gas prices are unlikely to revert to pre-COVID levels, particularly affecting Central Europe, which lacks infrastructure capacity.
He pointed out that the absence of Russian gas has resulted in Central Europe facing the highest gas prices, needing to import from other regions at elevated costs due to infrastructure shortcomings. SPP had signed a declaration in December with various entities, including Hungary's MVM, to support gas transit through Ukraine, but received a minimal response from the EC after several months.
The five-year Russia-Ukraine gas transit agreement is set to end in 2024, with supplies via this route halted as of January 1, 2025. Slovakia and Hungary receive their Russian gas through TurkStream and onshore pipelines in Southeast Europe. SPP noted that significant technical challenges remain on gas transit routes to Central Europe, which could jeopardize regional energy security without proper infrastructure investment.
Ferencz argued that any binding restrictions on Russian energy sources should be based on a thorough analysis of their economic, legal, security, and technical impacts on member states. He insisted that proposals of this nature must consider the diversity of individual member states, particularly Slovakia and other Central and Eastern European countries, for which Russian gas may still be a more advantageous option.