Ukraine has so much natural gas in storage that it could export its own supplies to other European nations this winter, the country’s transmission system operator said this week.
Ukrtransgaz JSC, which manages the largest storage capacity available in Europe, said it entered October with about 28 billion cubic meters (Bcm) of natural gas in underground storage, 37% higher than last year’s levels and the highest amount in the last decade. The country’s facilities have the ability to hold about 30 Bcm.
Ukrtransgaz acting General Director Sergiy Pereloma said if market conditions are favorable, the company would export to European Union countries. Given current storage levels, he said, the country has enough gas for domestic consumption with enough left over to “obtain additional income from gas sales abroad.”
The European natural gas market has found refuge in Ukraine this year, as traders, suppliers and utilities increasingly utilized the country’s facilities in a way that helped balance supply and demand across the continent amid a supply glut. Europe has been flooded with natural gas supplies in recent years, namely liquefied natural gas (LNG) imports, which has accelerated storage injections across the continent. Two mild winters and the demand shock of Covid-19 only exacerbated the situation this summer and kept pressure on prices.
As injection season nears its end, underground storage levels across the rest of Europe are at about 95% of capacity compared to the five-year average of 88%. While the market is tightening in Europe and elsewhere as colder weather sets in, Ukrainian storage, along with production cuts from other countries and a high number of U.S. LNG cargo cancellations over the summer helped European storage from filling more rapidly.
Ukraine has also incentivized European traders in recent years to use its storage facilities with discounted transportation tariffs and exemptions from customs duties. As of Oct. 1, Ukrtransgaz said foreign traders had 9.7 Bcm of gas in storage under the customs regime, or more than four times higher than in the same period last year.
While Ukraine has long been a route for Russian gas to reach Europe, it has reduced its dependence on Russian imports in recent years and increased its interconnection with European countries, hastening its integration with the rest of the continent’s natural gas market.
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