FT: European traders sharply cut use of Ukrainian gas storage

Among other things, Russia’s spring offensive targeted Ukraine’s energy infrastructure, including gas facilities. Because of the excessive risk, European traders therefore cut their use of Ukrainian underground natural gas storage facilities this summer to roughly a tenth of the level a year earlier. In June, usage fell from 102.7 million cubic metres to 15.4 million cubic metres, and in July from 586.6 to 51.9 million cubic metres. The British newspaper Financial Times (FT) reported this today, citing data from energy media agency Argus.

Ukraine’s underground storage facilities have the largest capacity in Europe. EU member states, by contrast, can store 100 billion cubic metres, although annual demand ranges from 350 to 500 billion cubic metres, depending on the weather and other conditions. Ukrainian capacity therefore proved useful to European companies last year, particularly ahead of the winter months.

European traders stored a total of two billion cubic metres in Ukraine before last winter. Kyiv sought to accommodate them by increasing available capacity and offering favourable storage fees, the FT reported.

This year, European storage facilities are already 86 percent full, but the risk of Russian attacks is putting Europeans off. Ukraine will lose around 200 million euros (five billion Kč) because the storage facilities are not being used, but an adequate counter-guarantee would cost it around one billion euros (25 billion Kč), according to the FT.

While the storage facilities themselves are located deep underground, protecting them from the effects of Russian attacks, above-ground equipment used to pump gas into and out of the facilities remains vulnerable to damage. “The main problem is not the loss of gas, but the fact that it cannot be withdrawn when desired and needed,” Marco Saalfrank of Swiss energy company Axpo, which also operates in Italy, France and Poland, told the FT.

Ukraine’s energy company Naftogaz said it had recorded “several attacks” on above-ground infrastructure in March and April, and that repairs had been carried out. As for gas injection and withdrawal, “there are no problems; we are operating as usual,” Naftogaz CEO Oleksiy Chernyshov said.