Slovakia's SPP warns of price impact of EC's proposed Russian gas ban

Slovakia's SPP has warned that the European Commission's proposal to ban Russian gas and LNG imports would keep pressure on gas prices and reduce the EU's access to flexible gas supply.

In a statement late May 7, the gas importer and supplier said the EC plan could also "distort" the energy market and threaten the security of supply in Central and Eastern Europe.

The EC on May 6 presented its long-awaited roadmap for eliminating Russian energy imports, saying it would give legislative proposals in June to implement a ban by the end of 2025 on the import of Russian gas both under new contracts and existing spot contracts.

In the roadmap, first expected in February, the EC also said it would propose next month a ban on the remaining imports of Russian gas and LNG -- volumes imported under existing long-term contracts -- to take effect no later than the end of 2027.

SPP said it disagreed with the new EC plan, saying it would have a negative impact on the competitiveness of the EU's business sector.

It added that Russian gas was the only flexible source of supply that Europe has.

"All other sources of gas -– Norway, North Africa, Azerbaijan -– either have supply at the maximum of their technical capabilities or, as in the case of LNG, are not flexible in terms of time," it said.

SPP said Europe had offset lost Russian gas by importing additional LNG at prices that other parts of the world were not willing to pay.

"The narrative of 'we are getting rid of our dependence on Russian gas' does not apply and the proposed measure to ban Russian gas will create greater dependence, in this case on LNG," Vojtech Ferencz, SPP chairman and CEO, said.

"Moreover, unlike pipeline gas, LNG is a globally traded commodity. Therefore, we have to fight for supplies of this commodity with wider competition, which of course creates pressure on the price," Ferencz said.

European gas prices remain relatively high, with a cold winter having left storage levels much lower than in previous years amid the halt in Russian supplies via Ukraine.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price on May 7 at Eur34.08/MWh.

Ukraine transit

Ferencz also called for the resumption of Russian gas supply via Ukraine, saying that even a volume of 14 Bcm/year would help lower prices.

"Without Russian supplies, gas prices are unlikely to return to pre-COVID pandemic levels," he said.

He added that Central Europe was the most vulnerable region due to the lack of infrastructure capacity.

"In the absence of Russian flows, our region will face the highest gas prices, as it will have to import it from other parts of Europe and pay high fees for capacity and transit," Ferencz said.

"The lack of gas resources in our region has been clearly evident for several months now, when gas is traded 10-15% more expensive than in Western Europe. We have not had such significant differences here before," he said.

SPP in December last year signed, together with other entities including Hungarian importer MVM, Slovakia's grid operator Eustream and gas consumer groups from Austria and Italy, a declaration to support the preservation of gas transit through Ukraine.

The declaration was presented to EC President Ursula von der Leyen.

"The company received a terse response to the declaration only after several months," SPP said.

The five-year Russia-Ukraine gas transit deal expired at the end of 2024 and Russian gas flows to Europe via the route ceased on Jan. 1, 2025.

Slovakia and Hungary take their Russian gas via TurkStream and onshore pipeline infrastructure in southeastern Europe.

SPP said there were still "significant" technical obstacles on the gas transit routes to Central Europe that have not been sufficiently resolved.

"Without investments in infrastructure modernization and regional interconnections, these restrictions could further jeopardize energy security in our entire region," it said.

Ferencz said that any binding restrictions on energy sources originating from Russia should be based on an analysis evaluating the economic, legal, security, and technical consequences for member states.

"At the same time, proposals of such a fundamental nature must take into account the diversity of individual member states, including Slovakia and other countries of Central and Eastern Europe, for which gas from Russia may be a more advantageous alternative," he said.