Ukraine to launch virtual reverse of gas from Slovakia on March 1: Naftogaz

Kyiv — Ukraine will start imports of gas from Slovakia via virtual reverse, or backhauling, on March 1, the national energy company Naftogaz Ukrayiny said Friday.

Ukrainian gas transmission system operator GTSOU and Eustream, the Slovakian operator, will launch virtual reverse flow at the Velke Kapusany-Uzhgorod interconnection point, a major link for Europe-bound Russian gas supply via Ukraine.

"We have been looking forward to this event for almost five years," Serhiy Makohon, the head of GTSOU, said in a statement.

Eustream will offer capacity of 10 million cu m/d via the virtual reverse flow practice, but the operators may agree to increase the level of virtual reverse flow in case of firm market interest, Naftogaz said.

"The backhaul capacity depends on the availability of the direct flow and therefore it is interruptible and may be interrupted in the event that no gas flows in the direction from Ukraine to Slovakia are available," GTSOU said.

Ukraine is capable of importing physically about 43 million cu m/d from Slovakia through the Vojany-Uzhgorod pipeline (Budince interconnection point), which is the biggest source of gas imports for Ukraine.

Russia's Gazprom for decades opposed backhauling practices, but relented in December 2019 before signing a new five-year gas transit agreement with Ukraine. Gazprom pledged to ship 65 Bcm of gas to Europe via Ukraine in 2020, and 40 Bcm/year in 2021 through 2024.

Interconnection agreement

GTSOU and Eustream signed an interconnection agreement on December 30 last year, paving the way for backhauling.

Replacing European gas imports with Russian gas that is already in Ukraine via backhauling is a cheaper option for Ukraine that will make gas trading more efficient.

Ukraine seeks to be able to use backhauling also because it has used 100% capacity of physical gas importing last year, running at 66.3 million cu m/day in July 2019.

Ukraine will be capable to import up to 300 million cu m/d via backhauling if necessary, according to GTSOU.

Ukraine stopped buying Russian gas directly in November 2015. It started importing gas from Poland via backhauling since January 1 and plans to launch virtual reverse flow from Hungary later this year, according to GTSOU.

Ukraine's imports of gas increased by 34% year on year to 14.2 Bcm in 2019 from 10.6 Bcm in 2018, according to Naftogaz.

It imported 9.1 Bcm of gas from Slovakia, up 40% from 6.5 Bcm imported in 2018. Imports from Hungary rose to 3.7 Bcm from 3.4 Bcm and imports from Poland soared to 1.4 Bcm from 700 million cu m in 2018.