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15 Nov, 2023 05:41

EU state reveals huge financial damage from lost Russian gas transit

Deliveries through Slovakia have diminished by more than 70% since the onset of the Ukraine conflict
EU state reveals huge financial damage from lost Russian gas transit

Slovakia has lost more than two-thirds of the income it used to generate on the transit of Russian natural gas, according to a financial results report published this month by the country’s gas transmission network operator Eustream.

Data showed that in the 12 months leading up to July 2023, the country transported a total of 16.97 billion cubic meters (bcm) of Russian gas, with revenue from the transit amounting to €226.5 million ($242.8 million).

Meanwhile, prior to the Ukraine conflict and the resulting EU sanctions against Russia, the country used to transport an average of approximately 60 bcm of the Russian commodity per year. In the accounting year from August 2019 to July 2020, for instance, Eustream transported just short of 61 bcm and its revenue amounted to €748.04 million.

Industry experts have linked the sharp decline in Russian gas transit volumes with the Ukraine conflict. Slovakia receives the commodity from the transit line through Ukraine, where flows shrank after Kiev shut down its key gas pumping station, Sokhranovka, in May 2022. 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 that the country’s budget is rapidly losing one of its key sources of income. According to the local Denník Postoj news outlet, the government receives roughly half of the company’s revenues either through income taxes or dividends.

Moreover, analysts are worried that Slovakia could soon lose its link to Russian gas altogether. In an interview last month, the head of Ukrainian energy giant Naftogaz, Aleksey Chernyshov, said his country will not extend its gas transit contract with Russia, which expires at the end of 2024.

This would mean that Slovakia would also stop receiving the commodity. Commenting on the development, Eustream spokesman Pavol Kubik indicated that the company would try to work out a solution which would help it avoid losing Russian supplies.

As for the transit of Russian gas through Ukraine after 2024, we think that this matter is not yet closed today, and will probably be subject to future negotiations,” he stated, adding that one of the options to keep the transit working could be a tripartite agreement, in which a third party would receive gas at the Russian-Ukrainian border and further transport it to the EU. As the transported gas would technically no longer be considered Russian, and Gazprom would not be the one paying for the transit, it would allow for its further transportation through Ukraine’s territory, Kubik explained.

For more stories on economy & finance visit RT's business section

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