Ukraine Storage Holds 2.4bn m³ More, Y-o-Y

Ukraine's storage holds 2.4bn m³ more gas than it did this time last year, with a total 13.54bn m³ distributed across its facilities, Europe's largest outside Russia. In June it injected 2.2bn m³. But state operator Naftogaz Ukrainy said July 3 that there should be about 20bn m³ in store by the start of the heating season, meaning it needs to keep injections up at this rate until the end of September. Fortunately for Europe, gas is plentiful and front-month hub prices are at ten-year lows, according to Rystad Energy.

Some of the gas in store is owned by third parties, although Naftogaz Ukrainy has not said how much. Ukraine can hold about 32bn m³ in storage. Its own gas demand is about 32bn m³/yr, a third of which is imported from European Union countries and Norway. 

There is the fear of interruptions to deliveries of Russian gas from the start of next year, which was when Gazprom's new export route Nord Stream 2 was supposed to start operating. The Russian gas monopoly's transit contract with Ukraine expires at the end of this year, allowing for the possibility of a vacuum. Naftogaz has said it will sell capacity under the European gas network code rules from January 1.

In the past, the European Commission has co-ordinated agreement between Russia and Ukraine but this year has seen a new president elected in Ukraine and parliamentary elections are due in the autumn; and a new EC is not yet formed. This leaves very little time for a formal arrangement to be in place.

Ukraine is still seeking compensation from Gazprom for the violation of their transit agreement. Gazprom has refused to pay the $2.6bn as it says the Stockholm arbitration award was 'asymmetrical'.