(Updates with Hungarian minister's statement)
By Jan Lopatka and Krisztina Than
PRAGUE/BUDAPEST, April 10 Slovak Prime Minister
Robert Fico called for talks with Ukraine, Russia and the
European Commission to ensure his country can reverse gas flows
to Kiev without violating existing contracts, while Hungary said
it could do so at once.
Financially-strapped Ukraine has been anxious to obtain
affordable natural gas since Russia tore up a discount
negotiated under Kiev's former president Viktor Yanukovich and
this month raised the price it must pay for gas from Russian
supplier Gazprom by 80 percent.
Relations between Ukraine and Russia have been in crisis
since the pro-Russian Yanukovich was ousted by protesters
seeking closer ties with Europe, prompting Russia to seize and
annex Ukraine's Russian-majority Crimea region.
Fico told reporters on Thursday he supported projects to
send gas to Ukraine but needed to ensure Slovakia gets paid and
avoids violating contracts with Gazprom.
"The optimal solution would be a meeting of representatives
of Ukraine, Slovakia, Russia and the European Commission, to
discuss conditions under which Slovakia would be involved in
reverse flow of gas," Fico told a news conference posted on the
Slovakia is the EU's best-placed member nation to pump gas
to neighbour Ukraine should Russia reduce or shut off supplies
from the four pipelines that feed Slovakia via Ukraine.
But reversing flows along any of these pipelines would
breach terms of contracts with Gazprom, a spokesman for Slovak
pipeline operator Eustream said this week.
However, in Budapest, Foreign Minister Janos Martonyi said
on Thursday Hungary was ready to start shipping natural gas to
neighbouring Ukraine "at any time" and the technical conditions
for starting the reverse pipeline flows are in place.
Hungarian national news agency MTI also quoted Martonyi, who
met Ukrainian Deputy Minister for Foreign Affairs Danilo
Lubkivsky in Budapest, as saying that Budapest firmly backed
Ukraine's territorial unity and believed the annexation of
Crimea by Russia was illegitimate.
Hungary is a smaller potential gas source than Slovakia but
its pipeline network operator FGSZ Zrt said earlier on Thursday
in reply to emailed questions that Hungary could ship 16.8
million cubic metres (mcm) of gas per day to Ukraine.
"The technical and legal conditions for shipping ...gas into
Ukraine have been in place in Hungary since March 2013," FGSZ
Russia is Europe's biggest gas supplier, providing around a
third of continental demand, which at current daily flows of 270
(mcm) is worth almost $100 million a day. Around 40 percent of
Russian gas is currently exported through Ukraine and some of it
further through Slovakia.
Fico said the Slovak government was investigating whether
there were technical solutions to reverse flows without
infringing contracts or incurring sanctions.
One possibility could be to allow flow reversal along a
pipeline from Vojany to Uzhorod in Ukraine which could supply 9
billion cubic metres of gas per year, he said.
He added that his European Union member nation also needed
to make sure it gets paid for taking such steps and for any gas
shipments to Ukraine, and needed guarantees from a third party
such as the EU.
"We want to help but we do not want the idea take root that
nobody will pay for such services," Fico said.
Ukraine missed a deadline this week to pay Gazprom $2.2
billion for gas it has received.
Fico said he saw a risk in low levels of gas reserves in
storage in Ukraine which could affect its ability to ship gas to
Europe. He said an extra $5 billion worth of gas was needed to
be added to Ukrainian storage sites.
STOCKS CUSHION BLOW
Reversing flows from West to East requires excess gas to be
pumped out of storage from within the EU. Healthy stocks
following a mild winter would cushion the effects of a shortfall
in Russian supplies.
Gas inventories in Germany, Europe's top gas consumer and
Russia's largest consumer, are currently 58 percent full and
hold the equivalent of 53 days of average daily gas consumption.
Polish inventories are almost 70 percent full, enough to
meet 28 days of demand, while the Czech Republic's gas storage
facilities are 40 percent full and can meet 20 days of demand.
Because these are annual figures averaged between high
demand winter days and days of low gas usage in summer, stocks
going into the warmer spring and summer seasons would likely
last longer than indicated.
"In the short run, Europe could easily survive a complete
loss of Ukrainian transit flow until the end of October," said
Mikhail Korchemkin, director of U.S.-based consultancy East
European Gas Analysis.
"Flows would likely go on through Yamal-Europe, Nord
Stream," he said, referring to Russian pipelines carrying gas
into Germany through Belarus and via the Baltic Sea.
Korchemkin acknowledged, however, that a total cut-off of
Russian gas next winter would be very difficult for Central
Europe to handle.
(Additional reporting by Krisztina Than in Budapest, Michael
Kahn in Prague, Alexander Winning and Henning Gloystein in
London, editing by Anthony Barker and Mark Heinrich)