Contributed by Taylor Wessing.
1. Summary
The oil and gas market in the Slovak Republic is part of the internal market of the European Union (EU), therefore the main regulatory framework and any new trends and goals are set by the EU legislation.
The pivotal point in the trajectory of the Slovak oil and gas market regulatory framework and the common attribute for the current state of the oil and gas market in the country is to cope with the consequences of the war started by the Russian Federation on the territory of Ukraine in 2022.
The Russian Federation, as the traditionally largest supplier of oil and gas to the Slovak Republic, lost its then already relatively damaged position as a reliable business partner, because the risk of political interference in existing contracts for both commodities increased significantly upon the start of the war. Additionally, transit routes of oil and gas towards the territory of the Slovak Republic lead from the Russian Federation through the territory of Ukraine. There was and still is a high risk of the flow of commodities being stopped or interrupted either due to the direct destruction or damage of the infrastructure or due to the impossibility of operating it (loss of power supply, impossibility of control/management/Ukraine's decision in response to the attack). Last but not least, as a direct and logical reaction to the attack on Ukraine, sanctions were introduced against the Russian Federation on a wider international level, as well as on an EU level.
Since the Slovak Republic is a landlocked country without any significant production of oil or gas, it is dependent on the import of oil and gas and at the same time an important transit country for both commodities. All of the aforementioned facts therefore meant significant complications in meeting domestic demand for oil and gas (for a reasonable price), as well as in the use of the transmission infrastructure.
At the same time, however, the new geopolitical reality catalyzed decisions and processes at all levels of the market (EU, national government, infrastructure operators, oil processors, traders, suppliers, customers). This, although not undemanding, resulted in an increase in the importance of interstate infrastructural connections between Slovakia and the neighboring states and, in particular, in significantly greater commercial diversification of oil and gas sources. In the gas market, it was the dawn of the LNG supplies to the Slovak Republic through various European coastal LNG terminals. This specific development regarding the supply chain opens interesting opportunities for new players, especially in the field of gas and oil trade and/or supply, or infrastructure & tech investors.
2. Overview of the Country’s Oil & Gas Sector
2.1. Legal Framework – A Brief Outline of Your Jurisdiction’s Oil & Gas Sector
The Slovak gas market has been designed in accordance with the approximated EU legislation (first to fourth energy package). In addition, the fifth energy package (Fit For 55) and the REPowerEU plan were adopted not so long ago. The existing legal framework for the Slovak gas market is also carved by an extraordinary legal regulation. It was adopted in order to ensure the security of gas supplies in the EU, both from the point of view of commodity sufficiency and affordability. It concerns temporary extraordinary measures on the EU gas market in the form of Regulation (EU) 2022/2576 dealing with the solidarity in the field of gas supply and the voluntary purchase of gas in the EU, Regulation (EU) 2022/2577 concerning the rapid granting of permits for renewable energy sources, Regulation (EU) 2022/2578 on the correction mechanism market, which deals with the ceiling on wholesale gas prices, and Regulation (EU) 2023/706, which concerns the voluntary reduction of gas demand in the EU by 15%.
Directive 2009/119/EC obliges EU countries to maintain minimum oil reserves corresponding to 90 days of average daily net imports or 61 days of average daily consumption of the state, whichever is higher.
As to the national legislative framework, the basic legal regulations in the Slovak Republic in the area regulating the gas market are Act No. 250/2012 Coll. on the regulation in network industries as amended (Regulation Act) and Act No. 251/2012 Coll. on energy as amended (Energy Act).
The rules governing gas exploration and production in Slovakia are regulated in the Act No. 44/1988 Coll. on the protection and utilization of mineral resources as amended (Mining Act), the Act No. 51/1988 Coll. on mining activity, explosives, and state mining administration as amended and the Act No. 569/2007 Coll. on geological works as amended (Geological Act).
The state regulatory body for the energy sector and network industries in the Slovak Republic is the Regulatory Office for Network Industries (RONI). RONI is responsible for the regulation and control of the entire gas market, both the infrastructural part and as well as the commercial part. Licensing the transmission and distribution system operators, licensing suppliers, providers of gas storage services, approval of the commercial conditions and pricing in the regulated market segments, etc. all fall under the scope of the RONI powers. Regarding the oil market, RONI is a licensor only for the oil transmission operator but doesn’t regulate the conditions for the oil transmission system operation.
The transmission system operator, distribution system operator, and storage facility operators play a key role in the infrastructure part of the Slovak gas industry.
Eustream, a joint stock company (Eustream) holds the license for the operation of the natural gas transmission system. The Slovak gas transmission network with a capacity of slightly more than 90 billion cubic meters per year enables the flow of the natural gas mainly from the Eastern part of Europe to European markets. After some technical upgrades, the system is now able to operate in reverse mode.
SPP –, a joint stock company (SPP - Distribucia) holds the license for the operation of the main Slovak distribution network, which is one of the densest gas distribution networks in Europe. It covers around 98% of the gas distribution services provided in the Slovak Republic.
NAFTA joint stock company (NAFTA), with an actual storage capacity of around 27,7 terrawatts-hour (2.6 billion cubic meters) is the key player in the field of gas storage services in the Slovak Republic.
The set of Slovak gas storage services providers is completed by POZAGAS joint stock company (POZAGAS) and SPP storage, a limited liability company (SPP storage). The storage facility operated by the SPP storage is located in Dolni Bojanovice, Czech Republic, but is technically connected to the Slovak gas network.)
In the commercial field of the gas market, the main gas supplier in the Slovak Republic is Slovensky plynarensky priemysel, a joint stock company, owned solely by the Slovak Republic, with a market share of around 64% at the end of 2023. The rest of the market is split between other alternative suppliers.
The Slovak oil transmission network is operated by TRANSPETROL, a joint stock company (TRANSPETROL), owned solely by the Slovak Republic. Besides the commercial/private storage capacities mainly operated by SLOVNAFT, a joint stock company, a system of emergency oil storage facilities has been established to fulfill the obligations under the European and domestic legislation regarding the security of oil supplies.
2.2. Domestic Oil & Gas Production and Imports/Exports
Domestic oil and gas production in the Slovak Republic is very low, covering an insignificant part of the domestic demand. The current domestic gas production in the Slovak Republic is around 55 million cubic meters per year with a total gas consumption of around 4.4 billion cubic meters per year. The trend of actual production is stable to descending and is determined by the fact that existing production sites are almost depleted.
Not least due to its longtime expertise, the main Slovak gas storage facility operator NAFTA is also the leader in the exploration and production of both oil and gas in the Slovak Republic. As of today, NAFTA is exploring the possibility of producing gas in two areas, one being near Trnava in Western Slovakia (partnership with Vermilion Energy) and one being near Besa and Pavlovce nad Uhom in Eastern Slovakia (partnership with Aspect Holdings). The estimated overall potential of these two areas could cover around 10% of the domestic gas demand in the medium term.
The oil production in the territory of the Slovak Republic is even lower than the gas production. In 2021 it reached a volume of 4,500 tons per year with a total oil consumption of around 6 million tons per year.
Due to the relatively small territory of the Slovak Republic and its geology, the prospect of finding and opening new exploration areas for oil and/or gas is very limited. However, any future exploration and production of oil and/or gas closely depend on the cost-cut-driven technological innovations in the respective field and in the end mainly on the cost-to-revenue ratio of any new project.
Based on the aforementioned domestic production data, the Slovak Republic practically is a full oil and gas importer. Given that, before February 2022, the main supplier of gas and oil to the country was (still, despite the change of geopolitics since 2014) the Russian Federation. In February 2022, the status of the Slovak Republic as a complete importer of oil and gas amplified the seriousness of the risks. Price skyrocketing and the impending risk of commodity flow halting are only some of the challenges that the Slovak government and all gas and oil market participants had and have to deal with.
2.3. Foreign Investment and Participation
The complex regulation of foreign investment screening in the Slovak Republic is provided under the Slovak Act No. 497/2022 Coll. on the screening of foreign investments, which entered into force on March 1, 2023. The act replaced the partial screening mechanism and significantly expanded the scope of the screening regime established by Act No. 45/2011 Coll. on critical infrastructure. The act applies to investments (planned or completed) that enable a foreign (non-EU) investor to acquire a Slovak target or a part of it directly or indirectly. It also applies to an increase in effective participation in the Slovak target. The act defines a “foreign investor” as a person who is not a national of the Slovak Republic or any other EU member state, or a person who does not have a registered office or place of business in the Slovak Republic or any other EU member state.
A specific category of foreign investments, known as “critical foreign investments,” are mandatorily screened before their completion. An enterprise from the oil or gas industry is not excluded from this list, as the assessment of whether or not the enterprise is deemed as belonging to a critical foreign infrastructure depends on the type, scale, technology, and overall sensitivity of the business activity in question and is decided upon on a case by case basis.
2.4. Protection of Investment
The legal basis for the regulation of investment protection in the Slovak Republic, being a member state of the European Union, is given directly in the Treaty on the Functioning of the European Union, and in subsequent secondary EU law governing the rules of free movement of capital between member states and to or from third countries.
In addition to the legal framework based on European law, the Slovak Republic is a party to bilateral international agreements, the subject of which is the mutual support and protection of investments. According to the provisions of the Regulation of the European Parliament and Council No. 1219/2012 on establishing transitional arrangements for bilateral investment agreements between member states and third countries, the list of the bilateral investment agreements (already valid or newly concluded) of the member states (i.e., also by the Slovak Republic) with third countries is published every 12 months in the Official Journal of the European Union.
Last but not least, the Slovak Republic is a party to the Treaty on the Energy Charter (Energy Charter), an international treaty, whose original goal was to ensure a stable and investment-safe environment in the energy sector with the aim of stimulating its development. Due to the fundamental paradigmatic shift in the perception of the further development of the energy industry (deviation or abandonment of sources based on fossil fuels, acceleration of the transition to renewable sources), the Energy Charter is currently perceived as outdated and overcome by development. For this reason, in April 2024, the European Parliament and subsequently the ministers of the EU member states agreed to withdraw the EU (and also Euratom) from the Energy Charter. Due to the different approaches of the individual EU member states regarding an energy policy, it is left to the individual member states, whether or not they will continue to be contractual parties to the Energy Charter, which, given current developments, is very likely to undergo a fundamental reform.
3. Exploration of Oil & Gas
3.1. Granting of Oil & Gas Exploration Rights
According to the provisions of the Mining Act, gas and oil are categorized as reserved minerals. Deposits of reserved minerals constitute the mineral wealth. The geological exploration or extraction of exclusive deposits can be carried out as part of the business activity by a legal entity or a natural person to the extent and under the conditions established by the Mining Act and special regulations, especially the Geological Act.
According to the Geological Act, the Ministry of the Environment of the Slovak Republic (Ministry of the Environment) determines the areas in which it is possible to carry out deposit geological exploration for oil and flammable natural gas (exploration areas). The exploration areas are designated by the Ministry of Environment for a maximum of four years. Upon request of the exploration area holder, this period can be extended by another four years and then again by a further two years. If the specified period is not sufficient to complete the activity in question, it can be extended at the proposal of the exploration area holder by a period that is necessarily needed for the completion of geological works.
It must be distinguished between the holding of the exploration area and the performance of geological exploration itself. According to the provisions of the Geological Act, a geological survey is considered a geological work and only a contractor of geological works who has a geological license is authorized to perform it. A geological license is granted by the Ministry of Environment to a Slovak person or a foreign person based on an application for the issuance of a geological license.
3.2. Foreign Exploration
The Slovak legal order limits the right to apply for the designation of the exploration area only to natural persons – entrepreneurs according to Slovak law or a Slovak legal person only. Therefore, a foreign person interested in the exploration of mineral deposits in the territory of the Slovak Republic can conduct its activities in this area whether as a natural person authorized to do business in the Slovak Republic or through an ownership interest in a Slovak entity incorporated under the Slovak law.
3.3. Stages of the Exploration Process
The exploration process (deposit survey) is divided into three main stages (i) exploratory deposit geological survey, (ii) detailed deposit geological survey, and (iii) mining deposit geological survey. These stages can be carried out separately or jointly, depending on the specific characteristics of the exploration area and the geological work project.
The exploratory deposit geological survey is used to search for and verify the deposit, while its approximate extent is determined on the discovered exclusive deposit and reserves are verified and calculated, suitable rock structures or underground spaces are detected and verified, their possible leaks and their suitability for gas and liquids storage, and other conditions important for possible mining are determined (occurrence of caves, stability of underground spaces, influence of old mine works, etc.).
A detailed deposit geological survey of an exclusive deposit serves to further verify the deposit stock in the quantity and quality necessary for their use, verify the extent of rock structures or underground spaces detected in the exploratory survey, calculate their volume, examine the permeability to the surroundings, hydrogeological conditions and prepare geological documents for further possible use of the underground space released by oil and/or gas extraction.
The mining deposit geological survey of the exclusive deposit serves to refine knowledge about the distribution of reserves and their quality and pollutants, as well as to refine knowledge about geological and mining technical conditions, which are necessary for the conversion of deposits of oil, flammable natural gas, technically usable natural gas or salt into an underground reservoir of gases or liquids.
3.4. Obligatory State Participation
According to Slovak legislation, mineral wealth is owned by the state. Among other things, mineral wealth is made up mainly of deposits of reserved minerals, which also include oil and gas.
The Slovak Republic does not condition the designation of the exploration area (enabling the search for minerals) or licenses for the extraction of minerals by its direct or indirect participation in the mining process itself (on a private law level). The state monopoly over the mineral wealth is implemented (i) by public law regulation of the licensing process through state administration bodies in the relevant section (Mining Activities, environmental protection) and (ii) by monetizing Mining Activities in the form of payments to the state budget (payment for mining area, payment for extracted minerals).
3.5. Risks To Be Considered
We do not see any particular legal risk associated with the oil and gas exploration process.
4. Production of Oil & Gas
4.1. Granting of Oil & Gas Production Rights
According to the provisions of the Mining Act, only an organization that has a mining authorization (authorization according to Act No. 51/1988 Coll.) and has a designated mining area to it, has the right to mine from an exclusive deposit and to dispose of the mined minerals (i.e., gas or oil). The mining area, its change, and cancellation shall be determined by the decision of the district mining office.
The priority right to designate the mining area belongs to the organization that holds a designated exploration area and has conducted the exploration at its own expense. The right of priority can be exercised by submitting a proposal for the designation of the mining area no later than one year after the assessment and approval of the final report containing the calculation of reserves during the deposit geological survey period by the Ministry of the Environment of the Slovak Republic. During the validity of the decision on the designation of the exploratory area, it is not possible to designate within its borders the mining area of another organization for the same type of mineral for which the exploratory area is designated. If the authorized organization did not exercise the priority right to designate the mining area within the statutory period and the proposal to designate the mining area was submitted by another organization or several other organizations, the district mining office will conduct a tender procedure to designate the mining area.
4.2. Foreign Production
The foreign production of oil and/or gas is governed by the same principles as foreign exploration.
4.3. Stages of the Production Process
The production process can be divided into the stages of opening, preparatory and extraction work, treatment, and refinement of mined minerals. The respective mining and geological legislation sets up the regulations under which the whole process and its individual stages and activities can be conducted. They also govern the duties of the organizations to which the mining authorization is granted.
4.4. Obligatory State Participation
The principles of state participation in oil and/or gas production in the Slovak Republic are explained in Section 3.4. related to the state's participation in the exploration process.
4.5. Risks To Be Considered
We do not see any particular legal risk associated with the oil and gas exploration process.
5. Termination of Production of Oil & Gas
5.1. Abandonment and Decommissioning
The decommissioning of the oil or gas mining facilities is governed mainly by the provisions of the Mining Act. After the termination or permanent stoppage of operations in the main mining facilities, if it is not possible to use them for any other purpose under the provisions of the Mining Act or special regulations the mining area holder is obliged to carry out their liquidation. Part of it is a recultivation of agricultural land and forest land affected by the mining activity.
5.2. Environmental and HSE Consideration
Health protection, safety at work, and the protection of the environment are very important areas on which Slovak legislation places emphasis during the entire process of authorizing, operating, and closing facilities for oil and gas exploration and production. The goal is to ensure the safety, health, and working ability of employees of companies implementing such activities related to the exploration and extraction of oil and gas, which are obliged to implement technical, organizational, and personnel measures to achieve this goal. Environmental protection is a factor that is inherently and integrally linked to the process of oil and gas exploration and production, and ultimately, with the right of the public to participate in permitting processes, is decisive in the overall economics of any exploration or production project.
6. Safety of Oil & Gas Exploration and Production
6.1. International Treaties to Which the Jurisdiction Is a Party
Besides the participation in the Energy Charter mechanism, currently looking for fundamental reconstruction, the legislative framework of the Slovak Republic in the field of oil and gas exploration and production is based on EU law with an accent on environmental protection.
6.2. Offshore Safety Directive
Since the Slovak Republic is a landlocked country, the provisions of the Offshore Safety Directive (except for some minor exceptions) are not relevant to activities carried out on its territory.
7. Import, Export, and Sales of Oil & Gas
7.1. Import and Export of Oil & Gas
Import and export of the gas to and from the Slovak Republic are physically realized by the facilities of the gas transmission network operated by Eustream. It is a system of four compressor stations and four to five parallel pipelines with a total length of almost 2,270 kilometers, connected to the primary transmission systems of the neighboring counties by the entry/exit points Velke Kapusany and Budince (connection to Ukraine), Baumgarten (connection to Austria), Lanzhot (connection to the Czech Republic), Velke Zlievce (connection to Hungary) and Vyrava (connection to Poland). A specific “domestic point” serves as the entry/exit point connecting the transmission network with the Slovak distribution system and storage facilities. A limiting factor regarding the import and export of gas is the volume of the cross-border capacity of the network. According to the provisions of the Energy Act, Eustream as the transmission system operator has the duty to conduct without discrimination to any user of the network and to provide the cross-border capacity on fair conditions upon the fulfilment of the conditions under the issued operational order.
Only the infrastructure operated by TRANSPETROL is available for the import and export of crude oil to and from the Slovak Republic. Historically, the vast majority of crude oil imported to the Slovak Republic was of Russian origin. After the sanction mechanism came into force, the oil pipeline Adria became an important source pipeline for the import of crude oil from the Southern part of Europe to the Slovak Republic. Due to the different mixtures of crude oil flowing through the Adria pipeline and in order to adapt to the change, massive investments in the oil refining infrastructure had to be made by the SLOVNAFT refinery.
7.2. Transportation
Access to the gas transmission network is provided by means of capacity allocation at the respective entry or exit point, by entering into a contract on the access to the transmission network and gas transmission, and by depositing a financial guarantee. Subject to the fulfillment of the conditions set out in the Eustream operational order and after the financial guarantee has been deposited, the contract on access to the transmission network and gas transmission may be entered into by electronic means. Capacity at the EU interconnection points (entry and exit points Lanzhot, Baumgarten, Vyrava, and Velke Zlievce) is allocated in auctions in accordance with the Regulation of the European Parliament and of the Council No. 715/2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005. Capacity at the interconnection points to/from third, non-EU, countries and the domestic point is allocated based on a request for access to the transmission network and gas transmission, based on a first-come-first-served principle.
TRANSPETROL provides the service of transit and domestic transportation of crude oil through the oil pipeline system of the Slovak Republic and its storage in its storage tanks. Access to the oil pipeline system and transportation of oil is made possible by TRANSPETROL after concluding a business agreement and a technical agreement with the user and with the precondition of having concluded a valid and effective connection agreement between TRANSPETROL and the user. Oil transportation will be carried out by TRANSPETROL based on a disposition order from the user, with whom it has concluded both the commercial and the technical agreement.
7.3. Land Rights
According to the provisions of the Energy Act, the holder of a license for activities in the gas industry or an authorized person may, to the extent necessary and in the public interest, carry out authorizations and specific activities related to the operation of the gas facility for which the license has been issued. In particular, it is a right to establish gas pipelines and equipment for the transmission network, distribution network, and storage facility as well as equipment intended for their protection, prevention of malfunctions or accidents, or to mitigate the consequences of malfunctions or accidents for the protection of life, health and property of persons.
When permitting such construction, the construction authority decides on the conditions under which the construction can be carried out and operated on someone else's land. The rights of the builder to carry out the construction are created by the legal validity of such a decision. Other authorizations of the license holder include the right to enter and access someone else's land and other objects and equipment to the extent and in a manner necessary for the performance of the licensed activity and the right to carry out the licensed activity on gas facilities on foreign real estate if this is considered necessary to ensure the operation of the gas network, the construction of which was allowed according to construction regulations.
The obligations of real estate owners corresponding to the authorizations of the holder of a license for activities in the gas industry under the Energy Act are considered easements associated with the ownership of real estate. The proposal to make an entry in the real estate cadastre (to register an easement) must be submitted by the license holder in the prescribed manner. A geometric plan setting out the scope of the easement is also attached to the proposal for entry to the real estate cadastre.
The property owner is entitled to adequate one-time compensation for the establishment of an easement. Compensation will be provided for the acreage in which the owner is limited in the use of the property due to the application of a legal easement by the license holder.
Rights corresponding to easements belong to the license holder. If there is a change in the person of the license holder, the rights corresponding to the easements are transferred to the new license holder.
7.4. Access and Integration
The main gas facilities on the territory of the Slovak Republic have the character of being unique facilities. It is due to the specific requirements for their construction (e.g., suitability of the geological subsoil for the establishment of gas storage facilities) or due to the significant financial cost of building similar alternative networks. Therefore, they do not have, and naturally, it cannot reasonably be assumed that they could have any competition. For this reason, the operation of these gas and oil facilities can be considered a monopoly or quasi-monopoly activity.
To ensure that there is no abuse of the said privileged position of the operators of the main gas facilities, the Regulation Act and the Energy Act regulate the activities of the relevant license holders. They have a duty to operate the facilities in a way that enables the use of them (their available technical capacities) by all interested parties after meeting transparently established conditions (commercial, technical, contractual). In the mentioned industries RONI applies material and/or price regulations.
The details of the rights and obligations of the affected market participants when using the mentioned unique facilities are established by the operating orders of Eustream as the gas transmission network operator, SPP – Distribucia as the main gas distribution network operator (and other local gas distribution network operators), NAFTA and POZAGAS as the operators of gas storage facilities and TRANSPETROL as the oil pipeline network operator.
7.5. Gas Transmission and Distribution
Due to the relatively small territory of the Slovak Republic, there are no specific zones or areas for gas transportation and gas transmission. Thus, the pipeline, the compressor stations, and other facilities of Eustream serve as the transmission and transportation system for the whole territory.
On almost the whole territory of the Slovak Republic, the natural gas is distributed by SPP – Distribucia. Only in relatively small areas (areas and/or infrastructures of former larger factories, new residential projects, etc.) local distribution systems are operated by local gas distribution system operators.
Under the provisions of the Energy Act, the transmission system operator, as well as the distribution system operators, have the duty to enable access to the system and to provide the transmission/distribution service on an equal basis, without any discrimination to any user after the fulfillment of the technical, financial, and commercial conditions of the relevant systems operators.
8. Trading
8.1. Trading License
According to the Energy Act, RONI is the licensing authority with regard to the activities related to the energy sector in the Slovak Republic. In the oil & gas field, a license is required for the production, transportation, distribution, storage, and supply of gas, the operation of oil pipelines, the operation of pipelines for the transport of propellants, the operation of equipment for filling pressure vessels and for the operation of equipment for the distribution of liquefied gaseous hydrocarbon.
A license for the supply of gas in the Slovak Republic can be granted by RONI to foreign persons upon application and under the fulfillment of certain obligatory conditions. These include the permanent residence or a registered office on the territory of a state that is a contracting party to the European Economic Area Agreement and an authorization to supply gas, issued under the law of the state of permanent residence or registered office or of another state that is a contracting party to the European Economic Area Agreement.
A license for conducting business in the energy sector for the activity of gas supply (for a natural or legal person) is required for business activities regarding the sale of gas to consumers in a defined territory of the Slovak Republic and for the sale of gas in a defined territory of the Slovak Republic at the entry-exit point "domestic point" of the transmission network operated by Eustream.
A business license in the energy sector for the activity of gas supply is not required for business activities concerning gas storage in a gas storage facility, gas transportation to the territory of the Slovak Republic, cross-border (transit) gas transportation, the sale of gas to traders or customers at the border entry-exit points of the transmission network Velke Kapusany, Lanzhot, Baumgarten, Velke Zlievce and Budince, and finally gas trading in the virtual trading point (VTP).
VTP is located in the gas transmission network between entry and exit points and allows the change of ownership of gas not only between users of the transport network with reserved transport capacity but also between registered gas traders in accordance with the Eustream operational order.
The Slovak legislation sets a straightforward administrative permitting procedure for some activities in the energy sector. Only a notification by the entrepreneur (prior to commencing the activity) to RONI is required to conduct such activities. Such a regime concerns the specific list of activities (e.g., the production and supply of gas from biomass or biogas, the sale of compressed natural gas intended for motor vehicles, etc.).
Some activities in the energy sector are not considered as an energy business, therefore a license or permission is not required. They include the gas production and gas distribution exclusively for one’s consumption and the gas supply (including the provision of gas transport, gas distribution, and other services connected with gas supply) for other persons at purchase prices (including price components for gas transportation, gas distribution and other services associated with gas supply) without further increase. However, the legal entity or natural person has the duty to notify RONI of these activities.
8.2. Products
On the trading level of the natural gas market, commercial activity is realized mainly through commodity exchanges (PXE, EEX) or gas trading hubs (CEGH, TTP). Also, the standardized EFET bilateral contracts are frequently used.
Gas wholesale by the gas suppliers to the largest commercial customers is conducted using EFET contracts, non-standardized bilateral contracts, or by the mix of the midterm exchange hedging with final bilateral contracts concluded before delivery.
Under the provisions of the Regulation Act, the price for the supply of gas to the so-called vulnerable customers is regulated. The maximum price of gas supplied to vulnerable customers is set by the decision of RONI.
9. Competition
9.1. Authorities
The central authority of the state administration in the area of the protection of economic competition in the Slovak Republic is the Antimonopoly Office of the Slovak Republic. It focuses on the protection of competition and state aid coordination. It intervenes in cases of various forms of competition restriction, controls mergers, and ensures conditions for further competition development. Its competencies include investigating relevant markets, addressing anticompetitive practices (such as cartel agreements, the abuse of a dominant position, and vertical agreements), and overseeing state and local administration authorities’ actions related to competition.
9.2. Anti-competitive Actions
The Antimonopoly Office of the Slovak Republic grants clearances in various contexts related to competition. In the area of mergers and acquisitions, it assesses mergers between undertakings that meet turnover criteria. If a merger fulfills notification criteria, this must be notified to the Slovak Antimonopoly Office for evaluation.
Cartel agreements between directly competing undertakings are considered serious infringements of competition rules. The Antimonopoly Office of the Slovak Republic also addresses anti-competitive practices such as vertical agreements and the abuse of a dominant position.
10. Stability Clause and Dispute Resolution
10.1. Stability Clause
No particular stability clauses for oil & gas companies have been identified. In general, the licenses and permissions for business activities in the energy sector are not time-bounded, which means that for the time the subject has the valid license or fulfilled all the mandatory conditions for the entitlement to doing business in the energy sector, it has the right to conduct business. In the field of oil and gas exploration, the subject holding the exploration area is entitled to repeatedly request time extension for finishing the exploration.
10.2. Compulsory Dispute Resolution Procedure
Under the provisions of the Regulation Act, RONI is granted by the limited competence to solve disputes concerning the regulated gas market participants at least as one of the dispute participants, if the participants agree with such procedure and only if no more than one year has passed since the breach of the obligation of the party to the dispute proceedings. Otherwise, the dispute has to be decided by the competent court.
Disputes not concerning the regulated participants of the gas market are frequently solved by the arbitration courts based on the commonly used arbitration clauses.
10.3. International Treaty Protection
Since May 28, 1993, the Slovak Republic has been a contractual party (as the successor of the former Czechoslovakia) to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Under EU law, based on the provisions of the Treaty on the Functioning of the European Union and for the sake of the free movement of judgments, Regulation of the European Parliament and the Council No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters applies in the Slovak Republic regarding the question of the recognition and enforcement of judgments of the courts of EU member states in other EU member states.
In addition, the Slovak Republic is a party to many bilateral international agreements regarding mutual legal assistance. Depending on the specific agreement, the scope of the assistance can also subsume commercial matters.
