European traders fear Russian strikes on Ukraine's underground gas storage facilities – FT
European traders are concerned about potential Russian strikes on underground gas storage facilities (UGS) in Ukraine, as the injection rate is currently ten times lower than last year, reports the Financial Times.
According to the Argus agency, foreign companies pumped only 15.4 million cubic meters into storage facilities in Ukraine in June and 51.9 million cubic meters in July. In 2023, these figures stood at 102.7 million cubic meters and 586.6 million cubic meters, respectively.
Last year, the pumping period lasted until October inclusive, and the peak fell on August and September.
Last year, Ukraine offered European traders about 10 billion cubic meters of vacant storage space, and they injected about 2.5 billion cubic meters.
Gas tanks are located deep underground, which protects them from impacts. But traders are deterred by strikes on ground infrastructure.
"The main problem is not the loss of gas, but the inability to raise it when there is a desire and need," explained Marco Saalfrank, head of continental Europe merchant trading at the Axpo energy group.
At the same time, Ukraine's Naftogaz assured that there are no problems with gas injection and extraction, storage facilities are operating normally, despite several missile strikes in March-April.
"Of course, attacks have certain consequences, but our company Ukrtransgaz is constantly engaged in the restoration and repair of damaged facilities. In addition, we are working on their additional protection," said Oleksiy Chernyshov, Chairman of the Board of Naftogaz of Ukraine, in an interview with LIGA.net.
He hopes lower gas prices in August will make pumping more attractive to traders. In September and October, European warehouses will be full, while there will be plenty of free space in Ukraine.
As of the first 10 days of August 2024, European underground storage facilities are 86% full.
However, Argus believes that without some additional incentives, European companies are unlikely to massively use Ukrainian UGS facilities this year.
The gas injection season in Ukraine in 2024 began on April 1. The pace of injection is faster than last year.
The average injection level of gas storages at the beginning of the heating seasons from 2011 to 2019, inclusive, reached 17.9 billion cubic meters, and the minimum was at 14.5 billion cubic meters in 2016. In 2024, it may be a record low. In 2020, at the beginning of the withdrawal season, a 10-year record of 28.3 billion cubic meters were accumulated in Ukrainian UGS facilities.