Gas price falls back to EUR 30/MWh, helped significantly by Ukraine

European gas storage facilities remain close to full capacity, allowing natural gas prices to fall to as low as EUR 30/MWh. A positive factor is gas withdrawals from storage facilities in Ukraine, where European traders transported gas at the end of last year's injection season. “Ukraine plays a key role in gas supply security in Central and Eastern Europe this winter,” Natasha Fielding of Argus Media told the FT website.

Europe has so far avoided another energy crisis, and nothing suggests that the situation seen during the winter months of the past two years will recur this year. After briefly rising to EUR 50/MWh at the start of the winter season, the gas price has returned to levels around EUR 30/MWh. European gas storage facilities, which were still almost 90% full at the beginning of January, have contributed to this.

As the Financial Times notes, gas storage facilities in Ukraine also play a significant role in gas supply security in the European Union. A number of traders stored gas there, particularly at the end of the injection season, when storage facilities within the European Union were nearing full capacity.

Gas from Ukrainian storage facilities is now flowing into Europe, primarily to Poland, Hungary and Slovakia. Stocks of gas stored in Ukraine that traders are now transporting to the European Union reduce the volume of gas that needs to be withdrawn from European storage facilities. As a result, European storage levels remain high, which is a positive signal for gas prices.

Although the names of traders storing gas in Ukraine are not publicly known, several names have emerged in the public domain. In addition to Singapore's Trafigura, EP Commodities, part of the Czech EPH group, also stored gas in Ukraine.

“EP Commodities transports natural gas to Ukraine and uses Ukrainian gas storage facilities. We believe in the reliability of Ukraine's gas transmission and storage systems, which have proven themselves even in such an immensely difficult wartime situation,”said in early August last year Miroslav Haško, chairman of the board of EP Commodities.

Although storing gas in Ukraine may appear risky, it also has a number of advantages. Ukraine has greater gas storage capacity than any other country in the EU, as a result of its historical role as a transit country for Russian gas. Ukraine has total storage capacity of 30 bn m3, with one-third of that capacity available to foreign traders. Most of the storage capacity is also located in the west of the country, an area with lower military activity.