Boston, MA -- (SBWIRE) -- 07/23/2013 -- As a net importer of energy, Slovakia faces the challenge of securing long-term gas supplies without becoming too dependent on Russia. Linking its gas network to others in the region is therefore a priority, as it will allow for more flexibility when negotiating gas purchases. Reduced nuclear power usage points to a greater reliance on gas, until sufficient renewables capacity can be established. However, efforts to raise domestic gas prices are being resisted by the government, which may reduce the attractiveness of the Slovak gas sector to foreign investors.

The key trends and developments in Slovakia's oil and gas sector are:

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- German utility E.ON and France's GDF Suez said in February 2013 they have agreed to sell their combined 49% stake in Slovak gas group SPP for EUR2.6bn to Czech investment fund Energeticky a Prumyslovy Holding (EPH). The SPP deal had been long expected and was pending the formal agreement of the Slovak government, whose 51% stake will also be sold to EPH. E.ON and GDF Suez had an equal share of their stake.
- Natural gas demand may rise at a more rapid rate if the power industry builds new gas-fired plants to offset nuclear reactor closures, although the residential gas market is close to saturation. Under our forecast Slovakia will consume 7.1bn cubic metres (bcm) of gas by 2017, virtually all of which will be imported. We believe this will rise to 8.4bcm by the end of our forecast period in 2022. SPP announced three measures in June 2009 to protect Slovakia from future gas supply cuts. The first was to diversify its gas imports away from Russia through new supply deals with Western European companies. The second was to speed up the time it takes to reverse gas flows in its pipelines from east-west to west-east, while the third was to fill its gas storage facilities. The company has successfully implemented all three of these measures.
- Slovakia and Hungary have signed a memorandum of understanding (MoU) to launch an EU-supported gas interconnector pipeline between the two countries. Eustream has come to an understanding with its Hungarian counterpart Orszagos Villamostavvezetek, and will commit to the 71-mile pipeline. It is hoped work on the project will begin in 2013, with commissioning due in January 2015.
- The operators of Poland and Slovakia's gas networks have selected a contractor to study a planned gas link that would be part of a corridor joining liquefied natural gas (LNG) terminals in Poland and Croatia. Poland's Gaz-System and Eustream aim to boost energy security in Central and South East Europe by creating a regional gas market and diversifying away from Russian supplies. If everything goes to plan, the connection could be operational in 2017.

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