Boston, MA -- (SBWIRE) -- 02/20/2013 -- BMI View: 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:

- According to Reuters, the Slovak Prime Minister Robert Fico said in October 2012 that his government will hold up plans by GDF Suez and E.ON Ruhrgas to sell a minority stake in national gas transport firm Slovensky Plynarensky Priemysel (SPP) in order to make it give up its demand to increase prices in 2013. The French and German firms are in talks to sell their 49% stake in SPP to privately-held Czech firm Energeticky a Prumyslovy Holding (EPH). Permission to sell is being withheld after SPP refused to withdraw a proposal to increase enduser gas prices by 18.5-25.4% in 2013. Under our forecast Slovakia will consume 8.6bn cubic metres (bcm) of gas by 2017, virtually all of which will be imported. We believe this will rise to 9.9bcm by the end of our forecast period in 2021.
- Slovakia and Hungary have signed a memorandum of understanding (MoU) to launch an EUsupported 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.
- Slovak oil consumption is forecast to rise steadily, keeping pace with underlying GDP growth over the near term and accelerating as the number of cars on the road increases. We believe that oil consumption will reach at least 102,000 barrels per day (b/d) by 2021; this volume will be imported, largely from Russia. Domestic crude production is predicted to be as low as 3.3mn barrels (bbl) a year by the end of the forecast period in 2021, reflecting the decline of mature fields and the slow progress in locating and developing new reservoirs. Taking into account refinery processing gains, overall liquids production is likely to be around 8,900b/d by 2021.

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