Slovak SPP signs pilot agreement for Azerbaijani gas supplies

Slovakia's SPP has signed a short-term pilot agreement for the purchase of natural gas from Azerbaijan and will consider a longer-term deal in the wake of a possible suspension of Russian gas supplies through Ukraine.

SPP noted that it has already diversified its natural gas purchases by signing contracts with BP, ExxonMobil, Shell, Eni, and RWE. These contracts are flexible both in terms of volumes and delivery time. Thanks to them, the company has up to 150% of its customers' consumption.

“Due to the high risk of gas supply interruption through the Eastern Pipeline, we are taking measures to guarantee reliable gas supplies to our customers - from large industrial consumers to households - in any situation,” said SPP CEO Vojtech Ferenc.

Supply routes

The company said in a statement that the southern transit route through the Turkish Stream pipeline across the Black Sea would be important if transit through Ukraine is cut off and that some Russian or Azerbaijani gas could be transported through the pipeline.

The document also states that in the event of a supply interruption through Ukraine, additional measures will be taken to ensure the security of supplies, but they will be more expensive.

The signed contract may be the first of potential contracts for the supply of Azerbaijani gas through Ukraine in 2025. There is no official confirmation yet and, likely, the parties have not yet agreed on the transit of natural gas through the Ukrainian gas transportation system.

Price impact

Front Month natural gas futures prices (December resource) on the Dutch TTF fell sharply by 2% to €42.6/MWh after the news was released. Nevertheless, in the next hour, prices returned to the level of €43.6/MWh, which is 1.4% lower than the previous day's closing level.