Slovakia has experienced a significant drop in income from the transit of Russian natural gas, with deliveries through the country decreasing by more than 70% since the onset of the Ukraine conflict. According to a financial report published by Eustream, the country’s gas transmission network operator, data showed that over a 12-month period leading up to July 2023, Slovakia transported a total of 16.97 billion cubic meters (bcm) of Russian gas, generating €226.5 million ($242.8 million) in revenue. This is a stark contrast to previous years when the country used to transport an average of approximately 60 bcm of Russian gas per year, earning €748.04 million in revenue for the accounting year from August 2019 to July 2020.
The decline in Russian gas transit volumes has been attributed to the Ukraine conflict, as Slovakia receives the commodity from the transit line through Ukraine. Flows of gas through Ukraine dropped after Kiev shut down its key gas pumping station, Sokhranovka, in May 2022. As a result, Russian energy major Gazprom continues to supply gas for transit via the only remaining station, Sudzha, but it only allows for gas flows of roughly 40 million cubic meters per day.
With transit flows dwindling to less than one-third of the pre-conflict average and revenues dropping more than threefold, Slovak analysts are concerned about the country’s budget losing a key source of income. The government receives roughly half of the company’s revenues either through income taxes or dividends.
In addition to the current challenges, there is the looming possibility that Slovakia could lose its link to Russian gas altogether. The head of Ukrainian energy giant Naftogaz, Aleksey Chernyshov, stated in an interview that Ukraine will not extend its gas transit contract with Russia, which expires at the end of 2024. This decision would also impact Slovakia’s access to Russian gas.
Eustream spokesman Pavol Kubik commented on the situation, suggesting that the company would try to work out a solution to avoid losing Russian supplies. He mentioned the possibility of a tripartite agreement, in which a third party would receive gas at the Russian-Ukrainian border and further transport it to the EU. This would technically no longer be considered Russian gas, and Gazprom would not be the one paying for the transit, potentially allowing for its further transportation through Ukraine’s territory.
The potential loss of income from Russian gas transit is a cause for concern for Slovak analysts, with implications for the country’s budget and financial stability. With ongoing negotiations and discussions about the future of gas transit through Ukraine, it remains to be seen how Slovakia will adapt to these changes and seek alternative solutions to maintain its gas supply and revenue streams.