Ukraine Storage Stocks Still High

Ukraine has been working its way relatively slowly through its storage reserves in the first five months of the heating season, consuming 6.4bn m³ from its underground gas storage facilities, state monopoly Naftogaz Ukrainy said March 3.

This is 0.6bn m³ or 9% less than during the first five months of the heating season 2015-2016 and 2.2bn m³ or 25% less than during the corresponding period of the heating season 2014-2015. As of the end of February 2017, Ukraine had over 8.3bn m³ of gas in its UGS facilities against the forecast 8.0bn m³, it said.

Industrial demand has fallen, so while domestic production has been static, overall peak demand for gas is less than formerly, leading to lower injections into storage in autumn over the past few years.

"With these reserves, we will safely pass the rest of the heating season, even if the temperature drops to -20°C in March. Due to the proper gas procurement planning, Naftogaz has been securely supplying the fuel to Ukrainian consumers and transmitting gas to the EU flawlessly, for the third winter in succession,” said Andriy Kobolyev, Naftogaz CEO. 

The daily withdrawal from the Ukrainian UGS facilities amounted to 21-26mn m³ by the beginning of March. The required technical minimum volume of gas in Ukraine's UGS facilities is estimated at 4.7bn m³. The lowest historical reserves of gas at the end of the heating season were recorded at below 6.0bn m³ in April 2013.

Ukraine is looking for third party storage bookings from the European Union in particular, with one company, French Engie, signing a storage and transport deal with the Ukrainian company. Engie is already a supplier of gas to Ukraine, although the gas is Russian in origin.

Ukraine imported a total 11.1bn m³ last year, and for the first time none of it was bought from Gazprom, which announced record sales to Europe of 178.3bn m³ in 2016. Most of that 11.1bn m³ was bought by Naftogaz, with 1.9bn m³ going to private companies including some producers.

William Powell