GAS 27 March, 2019 10:00 am   

Ukraine invites to gas storage. The West is waiting

Ukraine invites to its gas storage. Western investors are waiting for developments, including Poles – writes Wojciech Jakóbik, editor-in-chief of informs that Ukrtransgaz has offered Europeans access to gas storage in Ukraine in order to create reserves in the event of a supply crisis from Russia. This offer is directed especially to customers from Hungary. Why?

Recently, Hungary signed an agreement with Gazprom which assumes that regardless of the fate of negotiations on the conditions of gas supplies through Ukraine after 2019 (when the Gazprom-Naftogaz transmission contract ends) conducted by the European Commission, Ukraine and Russia, in the country of Viktor Orban, reserves will be created to ensure security of supply in case of problems with deliveries through Ukrainian territory.

The Hungarian Ministry of Foreign Affairs disclosed information on this subject. Russia offers a package of other benefits, because it is a partner in the project for the expansion of the Paks nuclear power plant. Gazprom encourages the Hungarians to participate in the Turkish gas supply project called Turkish Stream, which may be pushed through during the European elections.

Currently, two-thirds of Hungary’s gas demand is being delivered via Ukraine (Beregowo point). About one fifth of gas comes from domestic extraction, and the rest comes from the hub in the Austrian Baumgarten. Ukrtransgaz stresses that about 60 percent of gas from the hub there also reaches it through Ukraine (point Uzhgorod).

Ukraine offers Hungary and other Europeans around 12 billion cubic meters of gas storage capacity with a maximum daily capacity of 260 million cubic meters. Ukrtransgaz compares the potential of the Ukraine-Hungary gas connection (68 million cubic meters per day) with the Austria-Hungary connection (15 million cubic meters). Ukrainians argue that it will be safer to continue to import gas through their country.

Gas storage in Ukraine is the largest in Europe. It consists of 11 buildings with a total storage capacity of 31 billion cubic meters. annually. Ukraine uses about 50-60 percent of its own capacity and encourages Western investors to invest in the rest. It would be a way to increase their profitability and maintain transmission through the Ukrainian territory despite the end of the Gazprom-Naftogaz transmission contract, after which the fate of supplies is not yet clear.

The political instability over the Dnieper may be a challenge for such investment. Until now, the Polish Gas-System has only been involved in expert cooperation with Ukrtransgaz, because it is waiting for developments in the presidential elections scheduled for March 31 and the further fate of the gas reform, which is also a problem.