Natural gas reserves in the Ukrainian UGS exceeded 14 bcm, steadily approaching the government's goal of 14.7 bcm before the start of the heating season. Read more about how companies use Ukrainian storage facilities in the ExPro article.
The full version of the material was published in ExPro Daily Gas on August 28, 2023.
Russia's unprovoked military invasion of Ukraine on February 24, 2022, fundamentally changed the European gas market. Europe has realized that a terrorist country uses any tool as a weapon, including resources such as natural gas.
Traditionally, Russia has been a key supplier of cheap and affordable natural gas to European countries. Natural gas was supplied by a network of gas pipelines that operated for decades.
Even though no restrictions were put in place against Russian gas, European nations started diversifying their sources of natural gas as soon as the invasion occurred. By the end of 2022, less than 20% of pan-European gas imports would come from pipeline supplies from the Russian Federation.
Europe was able to pass the previous winter without significant problems, reducing gas consumption and increasing supplies from other sources - first, LNG (including Russian). Nevertheless, the next winter is approaching, which may turn out to be colder than the previous one, and Russia may at any moment stop gas supplies (at least through Ukraine).
Europe has quite actively started preparations for the winter of 2023-2024, setting itself the goal of filling storage facilities by 90% by November 1, 2023. However, it was achieved on August 16, 2.5 months ahead of schedule. As of August 26, 99 bcm of natural gas were stored in European gas storage facilities, and storage facilities were 92.3% full. This is an all-time high for this date.
Given the record fullness of European storage already in August, Europe is paying attention to Ukraine and its UGS, which can become a real alternative for Europe, offering sufficient storage volumes (up to 10 bcm for foreign companies) and attractive tariffs.
UGS in Ukraine comprises 12 gas storage facilities spread throughout several Ukrainian regions. Western Ukraine is home to five significant gas storage facilities, including Bilce-Volytsko-Ugerske, the largest UGS in Europe. They store more than 25 bcm in total, which is 80% of all Ukrainian UGS. Ukraine offers European companies the capacity of the western Ukrainian cluster of UGS.
By the start of the upcoming heating season, Ukraine wants to have 14.7 bcm of natural gas stored. This volume will allow the heating season to pass without interruption in any scenario, even if Russian gas transit is completely shut down.
Natural gas reserves in Ukrainian underground gas storages exceeded 14 bcm on August 28, according to ExPro calculations. This was also confirmed by the head of Naftogaz of Ukraine Oleksiy Chernyshov on the air of the telethon.
Storages are 45.3% full. Compared to last year, 8.1% or 1.05 bcm more gas are stored in storage facilities.
The volumes of gas injected into Ukrainian UGS in August remain high - 51-71 mcm per day, on some days reaching the highest levels since September 2020. The increase in the volume of gas injection is primarily caused by the active import of gas by both Ukrainian and foreign companies.
In 28 days of August, over 1.7 bcm of natural gas were injected into the Ukrainian UGS, of which almost 1 bcm went to the "customs warehouse". Thus, more than half of the gas injected into UGS in August came from abroad. Since the start of this year's gas injection season (April 15), more than 4.8 bcm of natural gas have been injected into UGS of Ukraine.
According to ExPro estimates, as of mid-August, Naftogaz Group stores more than half of the gas in Ukrainian UGS. Private producers have about 1.5-1.6 bcm of natural gas in UGS.
Natural gas reserves in the "customs warehouse" of Ukrainian UGS are also important. As of August 28, reserves in the "customs warehouse" reached almost 1.87 bcm of natural gas, which is the highest level since November 2021.
The increase in the volume of natural gas in the "customs warehouse" is primarily due to foreign companies that began injecting gas into Ukraine, despite the full-scale war. As of mid-August, according to ExPro estimates, about 30 companies store gas in the "customs warehouse" (both Ukrainian and foreign).
The Moldovan state company Energocom stores the most gas, which actively injects natural gas into the "customs warehouse", creating its own reserves for the winter. As of mid-August, the company had almost 390 mcm of gas in storage, having injected about 240 mcm over the past two months. By August 28, the company had accumulated more than 450 mcm of gas in storage.
Other companies that store significant volumes of gas in the "customs warehouse" include ERU Group, D.Trading, EP Commodities, Trafigura, Vitol, Shell, Gunvor, and others.
According to ExPro forecasts, gas reserves in the "customs warehouse" of Ukrainian gas storage facilities may exceed 2 bcm as early as September 1. With the beginning of September, gas injection into Ukrainian gas storage facilities may increase, as European gas storage facilities continue to be filled. However, much will depend on natural gas prices in European hubs.
At the same time, the total gas reserves in Ukrainian storages at the beginning of September may amount to 14.19 bcm. The government's goal of reaching 14.7 bcm before the beginning of the heating season will be fulfilled in September. Thus, by the beginning of winter, the reserves in Ukrainian UGS may exceed 16 bcm.
Read more about the companies that store natural gas in Ukrainian gas storage facilities, in particular in the "customs warehouse", in ExPro publications (ExPro Daily Gas, ExPro Gas&Oil Weekly, and ExPro Gas&Oil Monthly). You can subscribe by emailing [email protected] or calling +38 097 824-12-63