Slovakia Signs Pilot Deal for Azerbaijani Gas as Russia Gas Deal Expires

Slovakia's main gas buyer, Slovensky Plynarensky Priemysel (SPP), has signed a short-term pilot contract to purchase natural gas from Azerbaijan. This move comes as a current agreement between Russia and Ukraine on gas exports through Ukraine to Europe expires at the end of December 2024.

Slovakia's state-owned energy supplier, SPP, has signed a short-term pilot contract with Azerbaijan's State Oil Company of Azerbaijan Republic (SOCAR) to purchase natural gas in December. The gas is expected to be delivered to Austria, with smaller volumes potentially being shipped through Bulgaria's Trans Balkan pipeline.

The current gas export agreement between Russia and Ukraine is set to expire at the end of the year. This has prompted Slovakia and other European Union countries to seek alternative gas suppliers. Additionally, SPP is proactively preparing for a potential disruption in Russian gas supplies through Ukraine due to the ongoing conflict.

SPP has taken steps to diversify its gas supply by entering into contracts with major energy companies like BP, Exxon Mobil, Shell, Eni, and RWE. To ensure a reliable supply, the company maintains a gas purchase cushion of up to 150% of its customer consumption. In anticipation of potential disruptions to the Ukrainian pipeline, SPP is exploring alternative transit routes, including a pipeline from Germany through the Czech Republic and the Turk Stream pipeline route through Turkey, Bulgaria, Serbia, and Hungary.

SPP estimates it would cost an additional 140 million euros ($148.6 million) annually to purchase and transport gas from another source if Russian supplies cease.

SPP CEO Vojtech Ferencz said about the deal, "Due to the high risk of stopping gas supplies via the eastern pipeline, we are taking measures to guarantee safe gas supplies to our customers...in any situation."

EU Energy Commissioner Kadri Simson had earlier in September said that, "Europe is 'fully committed' to phasing out Russian gas and is 'ready to live without this Russian gas coming from the Ukrainian transit route.'"

The reason for this deal is quite simple. Slovakia heavily relies on Russian energy supplies. Meanwhile, Azerbaijan has been increasing its imports of Russian gas since the war began. In response to these developments, the European Union is actively working to reduce its dependence on Russian gas.

About  the SOCAR –

SOCAR is Azerbaijan's state-owned oil and gas company based in Baku. It extracts oil and natural gas from both onshore and offshore fields in Azerbaijan's part of the Caspian Sea.