Slovakia Signs Deal to Send Gas to Ukraine

Slovakia and Ukraine signed a deal on Monday that allows the European Union to send a limited amount of gas to Ukraine, but providing Kiev with less than it hoped for to cushion the blow should Russia turn off the taps.

Ukraine has been trying to secure alternative supplies to those from Russia's Gazprom since Moscow annexed Crimea last month and Gazprom raised prices for its gas to levels Ukraine is refusing to pay.

Russia's seizure of Crimea from Ukraine has set off the most serious East-West rift since the end of the Cold War, resulting in EU and U.S. sanctions and raising the threat of interruption of gas supplies from Russia to Europe.

Any supplies Ukraine does contract, however, will likely be from Russia delivered through Slovakia or the Nord Stream pipeline running through Germany.

Under the deal, Slovakia will make technical adjustments to an old unused pipeline to ship around 8-9 billion cubic metres (bcm) of gas starting in the autumn. A fallback option would see smaller volumes initially before ramping up to 8 bcm by April.

This means that Ukraine could eventually receive up to around 16-17 bcm per year from EU neighbours Poland, Hungary and Slovakia, Slovak Prime Minister Robert Fico said. This represents around a third of Ukraine's annual consumption of about 55 bcm.

European Energy Commsissioner Guenther Oettinger said the agreement strengthens the ties between the European Union's energy market and that of Ukraine.

"It is a first step for gas flows from Slovakia to Ukraine and strengthens the ties between the EU's energy market and Ukraine," he said in a statement. "Deliveries from EU Member States offer Ukraine access to gas priced on the basis of fair and transparent principles."

Europe takes about a third of its gas imports from Russia, and about 40 percent of that amount flows through Ukraine and into the west via Slovakia.

Talks with Hungary
Ukraine has been pushing for another technical solution allowing larger volumes of up to 30 bcm. Slovakia has refused because it fears doing so would violate its contracts with Gazprom and risk sanctions or a supply halt.

Gazprom's consent for such reverse flow is needed, the Commission and the Slovak government say.

Ukraine will soon start gas import talks with Hungary and seek European Union support to negotiate more supply from Slovakia, its Energy Minister Yuri Prodan said on Monday.

Germany's RWE has started pumping modest amounts to Ukraine from Poland, and has said it could ramp up the shipments once there is an agreement on the Slovak reverse flows.

Moscow, which does not recognise the Ukrainian government that replaced ousted President Viktor Yanukovich in February, nearly doubled the gas price for Ukraine to $485 per 1,000 cubic metres, starting from April. Kiev, which is in deep financial trouble, refused to pay.

(Reporting by Jan Lopatka, writing by Michael Kahn, editing by William Hardy)