MILAN/LONDON: Ukraine’s stored gas reserves are sufficient to help meet needs well into the winter should Russia cut supplies as authorities step up efforts to rebuild inventories.
To prepare for any potential disruption, Ukraine’s gas transit monopoly Ukrtransgas is packing 850 million cubic metres of gas per week into underground storage sites. Ukraine meets around half its gas demand through imports from Russia — the rest from domestic production — and it is an important transit route for Russian gas to the European Union.
Moscow cut supplies to Ukraine in the winters of 2006 and 2009 due to the unauthorised siphoning off of supplies intended for Europe, causing knock-on shortages across the continent. Data from Gas Infrastructure Europe (GIE) shows Ukraine now has close to 11 billion cubic metres (Bcm) of gas in storage and is building inventories at a rate of eight percent per week, mostly using Russian supply.
Ukraine’s annual gas consumption is around 55 Bcm, which means currently stored gas would meet about a fifth of that. Despite rapid buildup, Ukrainian stock levels of 34 percent full still lag the European average of 58.7 percent full. A mild winter, ample supplies and low demand across Europe have boosted stockpiles and forced down gas prices to multi-year lows, in a sign that markets have discounted the risk of a Russian supply cutoff.
European gas traders said concerns about Ukraine have faded over the past couple of weeks and any potential supply cut would be shortlived. “With headlines regarding the willingness of the Ukrainian President-elect Poroshenko to talk with Russia, UK gas prices started Monday morning with a drop to their lowest levels this year,” analyst Trevor Sikorski at consultancy Energy Aspects said. Reuters
