Nord Stream Won’t Dry Up Slovak Gas Pipeline

The launch of operation last week of the Nord Stream gas pipeline between Russia and Germany will have an impact on gas transmission via Slovakia, but the transmission system operator Eustream is making the most of the situation.

Here the Daily provides you with the translation of an article from daily SME by Milan Sedláček from Eustream explaining how the gas transmission market is changing.

Nord Stream won’t dry up the Slovak gas pipeline  

Gas transmission map (c) Samuel Bailey

The Nord Stream project is proof of the strong competition in the field of gas transmission. Pressure on the Slovak transmission network operator Eustream looks set to increase further if another project, South Stream, also goes ahead. Even so, this does not mean that the Slovak gas pipeline will “dry up” with the arrival of competition. Competition in gas pipelines is nothing new for Eustream, as the Jamal gas pipeline entered the market over ten years ago, bypassing Slovakia via Poland.

A sure income for the next seventeen years
Not even Nord Stream comes as some kind of unexpected surprise and the Slovak operator has been preparing for this very situation for some time already. The best evidence of this is the long-term contract on gas transmission. Eustream reserved transmission capacities through Slovakia amounting to a minimum of 50 billion cubic metres a year up to 2028 (for the sake of illustration, the number corresponds to the annual consumption of 25 million households). This means that the company, just like the state budget, has a sure income guaranteed for at least the next 17 years (20-year contract signed in 2008 was for the transmission of 1,000,000,000,000 cubic metres of gas).

Despite these guarantees, Eustream was not content with the role of passive observer. The company reacts actively to changes in the market environment and to the growing competition in gas transmission. The transmission system operator is keeping in step with the system operators in the surrounding countries.

The market demands increased flexibility when it comes to ordering transmission capacities and also in respect of transmission itself. Traders are increasingly opting for short-term and even one-day contracts, which are even concluded online. Eustream meets the expectations of its clients and comes with ever new products and services. That is how to ensure a greater number of short-term contracts, especially for transmission between the various trading points in Europe.

The Slovak operator as a key operator of European infrastructure has long been working on building up and strengthening it. After resolving the issue of reverse flow of gas from the Czech Republic and Austria, in co-operation with colleagues from abroad, it focused it new projects. One of them was the Slovakia-Hungary interconnector, which strengthens the position of Slovakia and will serve as a bridge for the South Stream and Nabucco lines. This together with the Slovakia-Poland project will become the basic pillar for the planned north-south connection, which is strongly backed by the European Union. Eustream also launched into the automation and reengineering of the whole transmission system with the aim of replacing old technology with newer and more ecological equipment. It completely changed the technological base, which will now be more flexible in managing the large volume changes during transmission. Over the next five years the company will invest over EUR 350 million into modernisation.

The situation is not critical

Nobody can claim that the rise of competition will not have an impact on the Slovak transmission system, but all of the above facts show that the situation is not critical. Eustream is endeavouring to find new opportunities in this, which are there. The decline of nuclear energy in Germany and other Member States will increase the consumption of natural gas and so also transmission volumes. The growing importance of natural gas as a fuel that is friendly to the environment over the medium and long term horizons boosts the position of the Slovak transmission system and will probably compensate for the short-term negative influences on transit through Slovakia.

Based on these reasons, we can state that over the long term Slovakia will continue to be one of the most important routes for Russian gas to Europe.

About the author: Milan Sedláček is head of the Strategy and Regulation Section of the company Eustream

Translation: Language Sense

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