During this summer, gas traders from the EU almost did not use Ukrainian gas storage facilities, which is probably related to the attacks of the criminal army of the Russian Federation on these facilities.
Points of attention
- European gas traders are hesitant to use Ukrainian gas storage facilities due to the risks associated with attacks by the Russian army on energy infrastructure in Ukraine.
- The decrease in European gas volumes stored in Ukraine poses a significant challenge, impacting potential profits and the overall dynamics of gas storage in the region.
- The ongoing attacks by the Russian army have diminished trust and willingness to store gas in Ukrainian facilities, despite Ukraine offering additional gas storage capacities to the EU.
- The accumulation of gas in Ukraine's storage facilities during summer months for profit-making in winter is facing obstacles due to security concerns and unfavorable price differentials, affecting the potential earnings for Ukraine.
- Attacks on gas storage infrastructure by the Russian army create risks that may hinder gas extraction when needed, posing uncertainties for European traders.
What is known about the refusal of European traders to use Ukrainian UGS
It is noted that the largest natural gas storage facilities in Europe are located on the territory of Ukraine.
In 2023, Ukraine provided EU countries with sufficient volumes to store surplus gas before the autumn-winter period.
However, in the spring of this year, the aviation of the criminal army of the Russian Federation began to attack energy facilities in Ukraine, including pumping stations for gas storage.
It is emphasized that the volumes of European gas stored in Ukrainian gas storage facilities decreased in June and July to one-tenth of the storage volumes in the same period last year.
Russia's constant attacks on Ukrainian storage facilities increase the risk of gas storage, - explains Marko Saalfrank, head of the trade department in continental Europe of the energy group Axpo.
It is noted that, in total, gas storage facilities in the EU countries can hold about 100 billion cubic meters. of gas, while the annual demand is from 350 to 500 billion cubic meters, depending on weather conditions.
In 2023, Ukraine offered the EU about 10 billion cubic meters. m of additional capacities for gas storage.
Companies from the EU pumped more than 2 billion cubic meters. m before the winter months, as the country offered such incentives as low storage tariffs.
According to Argus, European companies shipped just 15.4 million cubic meters and 51.9 million cubic meters in June and July, compared with 102.7 million cubic meters and 586.6 million cubic meters in the same months last year.
The article emphasizes that the gas storage facilities themselves are located deep underground, but the infrastructure for gas injection is located on the surface and the attacks of the criminal army of the Russian Federation on it create significant risks for the storage of European gas.
The main problem is not the loss of gas, but the impossibility of extracting it when it is needed and in demand, Marko Zaalfrank notes.
According to Naftogaz, in March and April, the occupying aircraft from the Russian army carried out several attacks on the ground infrastructure of Ukrainian nuclear power plants.
In this connection, repair works were carried out.
There are no problems, we are working as usual" regarding gas injection and extraction, - assures the head of Naftogaz Oleksiy Chernyshov.
It is beneficial for Ukraine that European gas traders continue to use natural gas on the territory of the country.
If some additional incentives for gas storage in Ukraine are not introduced, it is difficult to understand how European traders will return, warns Natasha Fielding, head of European gas pricing at Argus.
How much can Ukraine earn from storing European gas
According to high-ranking EU officials, attacks by the criminal army of the Russian Federation on Ukrainian gas infrastructure have become much more frequent, which complicates the resolution of issues related to the storage of European gas in Ukrainian gas storage facilities.
Ukraine could receive about 200 million euros from European traders who store gas, but the counter guarantee should reach 1 billion euros. If you want to support Ukraine, just give them 1 billion euros, - declares a European official.
Accumulation of gas in Ukraine's storage facilities accelerates in the summer months, when gas prices are low compared to other seasons.
Traders then sell it when prices rise to make a profit, typically in the winter months when demand for heating drives up demand for natural gas.
According to price agency Argus, last year the difference often exceeded €20 per megawatt-hour in the summer, but this year it was only around €5/MWh
The difference in prices is not attractive enough to justify the risk of pumping gas into the war zone, Marko Zaalfrank emphasizes
