Slovakia’s state energy giant SPP Eyes Full Russian Gas Supply as EU Phases Out Russian Imports
In a significant move, Slovakia’s energy major Slovensky plynarensky priemysel (SPP) is planning to source 100% of its gas supplies from Russia by 2026, according to Bloomberg. The decision, reported on Monday, comes amid the EU’s push to phase out Russian energy imports by the end of 2027 as part of its RePowerEU initiative. The plan includes a ban on new pipeline and LNG contracts with Moscow, as well as an end to imports under existing spot agreements. However, Slovakia and Hungary are expected to receive transitional exemptions, allowing them to continue their long-term contracts with Gazprom.
SPP officials cited cost efficiency as the primary reason for this move, stating that Russian gas remains the most cost-effective option for the company. “Russian gas is the most cost-effective for us, which is why we prioritize it,” said Michal Lalik, SPP’s trade director, in a statement to Bloomberg. “We could be buying 100% of our needs, that’s about 8 million cubic meters per day,” he added.
The EU’s RePowerEU strategy aims to reduce Russia’s energy dominance in the region, but the plan has faced significant pushback from countries like Slovakia and Hungary. Both nations have warned of the economic repercussions of severing ties with Russia, particularly as they rely on long-term contracts with Gazprom. Slovak Prime Minister Robert Fico recently said the country had accepted guarantees from the European Commission to limit the impact of a potential halt in Russian gas supplies, leading to the lifting of Bratislava’s veto on the EU’s 18th package of sanctions against Russia.
Despite the pushback, the EU’s ban on Russian energy imports is set to take effect in January 2025, with the full implementation by the end of 2027. Analysts believe this move could free up additional pipeline capacity for Slovakia’s SPP and Hungary’s MVM Magyar Villamos Muvek, allowing them to diversify their energy sources in the long term.
The shift away from Russian gas poses significant challenges for Slovakia, which currently receives Russian supplies via the TurkStream pipeline under a long-term contract with Gazprom that extends through 2034. Without TurkStream, Slovakia would be forced to rely on Western supply routes, mainly through Germany, Austria, and the Czech Republic, resulting in higher transit costs. “Price disparities within the supposedly unified European energy market will distort competition and severely weaken the position of Slovak companies,” said Roman Karlubik, vice president of the Federation of Employers’ Associations.
Slovenia’s resistance to the EU’s energy plan highlights broader tensions within the bloc as member states navigate the complexities of energy security and economic stability. While the EU remains committed to reducing its dependence on Russian energy, some countries argue that the transition must be managed carefully to avoid economic shocks, particularly in regions still heavily reliant on Russian gas.