European Union is considering storing natural gas in Ukraine, despite risks associated with ongoing military conflict, Bloomberg reports Read Full Article at RT.com
The bloc’s gas storage is nearing capacity, but gas companies are reportedly worried about conflict-related risks
The European Union is considering storing some its natural gas in Ukraine, despite the risks associated with the ongoing military conflict in the country, Bloomberg reported on Monday, citing traders and officials.
The bloc is now stockpiling fuel to prepare for the upcoming winter. Its own gas storage is already more than 70% full and according to various estimates is expected to hit its capacity by late August. Storing extra fuel in Ukraine could prevent a glut in the coming months, Bloomberg explains.
Before the start of the conflict in Ukraine, the EU received most of its natural gas via the Nord Stream pipeline from Russia. Last year the sanctions against Moscow led to a dramatic reduction in supplies and a frenzied stockpiling, which drove prices up to all-time highs of $3,600 per one thousand cubic meters in August. Natural gas prices have since fallen roughly tenfold, with the fuel currently trading at around $330 per one thousand cubic meters.
Ukraine has a large gas transit network as it has served for decades as a transit route for Russian energy to Europe, and its storage capacity stands at 31 billion cubic meters, the largest in Europe. The CEO of Ukraine’s state-owned energy company Naftogaz, Oleksiy Chernyshov, offered a third of the country’s gas storage, or ten billion cubic meters, to the EU in March.
According to Bloomberg, the European authorities are considering using the Bilche-Volytsko-Uherske storage facility, located in western Ukraine about 100 kilometres from the border with Poland. The facility can stockpile more than four times as much gas as the largest site in Germany, the outlet writes.
Traders and gas companies are reportedly worried, however, about the risks associated with the ongoing conflict. As the insurance industry steers clear of Ukraine, the EU will have to provide guarantees to the gas companies that they will not lose money, said Rachel Morison, Bloomberg’s energy reporter in London. No details have been revealed so far about what kind of guarantees the EU could offer.
Europe still receives some Russian gas via Ukraine and Turkey. Last September deliveries to the EU via Nord Stream were stopped altogether after the system’s two pipelines, which run along the Baltic seabed, were damaged in a sabotage attack. Several probes into the explosions are underway. The Wall Street Journal claimed last week that officials in Germany suspect that the undersea pipelines were blown up by Ukrainian saboteurs who may have used Poland as an operational base.
Europe has compensated for the significant decline in Russia’s supplies by dramatically increasing imports of liquefied natural gas, particularly from the US. Purchases from Norway and Algeria were also increased.
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