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Central European energy firms push for extension on Russian gas transit deal.
The companies’ plea to the EU comes as the region faces a gas supply cutoff from Moscow via Ukraine later this month.
Top Central European energy firms have written to EU chief Ursula von der Leyen to try to extend a transit deal carrying Russian gas across Ukraine, marking the latest push from the region to ensure continued supplies from Moscow.
In a letter sent to the European Commission president on Tuesday, gas supply firms, network operators and industrial consumers from Hungary, Slovakia, Austria and Italy said the end of the deal could “complicate the supply of gas” and “result in higher gas prices for European consumers.”
Slovakia and Hungary — headed by the Russia-friendly Robert Fico and Viktor Orbán — have for months sought to renew the deal, signed between Kyiv and Moscow in 2019, which allows the passage of gas via Ukraine to Europe. The two nations argue the end of the deal threatens their security of supply and could hike energy prices in the depths of winter.
SPP, Slovakia’s state-owned energy supplier, which signed the letter, warned the cutoff would cost the country “more than 220 million euros” to replace the lost supplies in a statement Tuesday. The letter was also signed by the Federation of Austrian Industries lobby and Gas Intensive Società Consortile, a body representing gas-intensive firms in Italy.
On Monday, Slovakia’s Economy Minister Denisa Sakova said the country intended to secure a deal on the pact by year’s end but that this “depends on [the country’s] partners.” Fico spoke by phone to his counterpart Denys Shmyhal on Monday evening about the deal, after saying over the weekend that officials were in “very intense” talks on the agreement.
Following the call, Shmyhal said he would discuss options to extend the pact as long as they did not include flows continuing from Russia and if the Commission “officially address[ed]” the issue with Kyiv.
Hungarian Energy Minister Csaba Lantos on Monday told reporters before a regular meeting of the bloc’s ministers in Brussels that it would “of course” be helpful for the Commission to step in and support these efforts.
Still, the EU executive has repeatedly said the bloc will not face serious consequences if the gas flows stop and has ruled out helping negotiate an extension.
Economic loss
Despite these calls, experts are skeptical that an end to the deal would have dramatic implications for Budapest and Bratislava.
According to Sergiy Makogon, a Ukrainian energy expert and former CEO of the country’s state-owned gas grid operator, Slovakia is unlikely to face skyrocketing prices and a supply crunch if the pact expires, but it will lose around $1.5 billion a year from reselling and transit of Russian gas.
“The main reason for Slovakia to ask for this continuation is … pure[ly] economical,” he said.
An early draft of the letter, seen by POLITICO, also included mentions of Czech, German and Ukrainian energy companies, which did not appear in the final version. In that version, Moldova’s state-run gas supplier Moldovagaz had provisionally signed onto the declaration too, but its signature is also missing from the missive published Tuesday.
Makogon argues that this was likely because Slovak firms hoped to get wider backing for the declaration, but failed to drum up enough support due to the pact’s controversial nature.
Unlike Central Europe, however, Moldova would likely be impacted by an end to the deal.
That’s because the pro-Russian breakaway territory of Transnistria in the country’s east gets heavily subsidized gas from Moscow via Ukraine, Makogon explained. With no alternative gas exports foreseen for January, it would be left without supplies, forcing Moldova’s government to buy pricier imports on the EU market, he said, and replace 70 percent of the country’s electricity supplies.
The Commission declined to comment. Moldovagaz, the Slovak and Hungarian governments, and their energy firms SPP, Eustream, MVM and MOL, did not immediately respond to questions from POLITICO.
