Slovakia's SPP Signs Pilot Deal For Azerbaijani Gas

Wedoany.com Report-Nov 14,  Slovakia's main gas buyer SPP has signed a short-term pilot contract to buy natural gas from Azerbaijan and will consider a longer-term deal as it prepares for a possible halt to Russian supplies via Ukraine, it said on Wednesday.

A deal between Moscow and Kyiv on Russian gas exports through Ukraine to Europe expires at the end of the year, forcing SPP and others in the European Union to search for alternative sources, including Azerbaijan.

In SPP's trial deal with SOCAR of Azerbaijan, it will purchase supply in December. Delivery will come to Austria, it said, without giving more details.

A source with knowledge of the deal said small volumes of Azerbaijani gas will be shipped via the Trans Balkan pipeline in Bulgaria.

SPP has been a leading voice in trying to keep transit open through Ukraine but has also sought to diversify its supply.

It said it had diversified gas purchase contracts with BP, Exxon Mobil, Shell, Italy's Eni and Germany's RWE, and has up to 150% of its customers' consumption volume available as a cushion. It said that could rise.

"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, from large industrial customers to households, in any situation," SPP CEO Vojtech Ferencz said.

SPP said Slovakia also had diversified transit routes for supplies in case of a stoppage via the pipeline running through Ukraine. That includes a pipeline from Germany running through the Czech Republic. 

It said a southern transit route through the Turk Stream pipeline across the Black Sea via Turkey and then Bulgaria, Serbia and Hungary would be important if Ukraine transit stops, and part of its Russian or Azerbaijani gas could travel via that pipeline.

It added it would take more measures for supply security if flows via Ukraine were stopped, but that these would be more expensive.

"If the company were to lose Russian deliveries and purchase the entire necessary volume from another source and physically transit it to Slovakia, it would cost it at least 140 million euros ($148.6 million) more," SPP said.