More in June than in May: the rate of gas injection into Ukrainian storage facilities is growing
2 July 18:39
Ukrainian storage facilities are filling up with gas. “Filling up slowly” – that’s what pessimists will say. “Filling up dynamically” – this is the assessment of realists. It is probably not time for optimistic statements. Although they are sometimes heard. How Ukraine is stockpiling gas for the next heating season, found out
Speaking in parliament a few days ago, Energy Minister Herman Galushchenko did not seem pessimistic when he said that Ukraine would definitely be provided with gas in the amount necessary to get through the heating season. This was the minister’s response to those who are now saying that there will be no gas and that Ukrainians will freeze at night in winter. The official also outlined some benchmarks.
“This year we have and will import much more gas compared to previous periods. The minimum volume of imported gas that we plan to pump into the storage facilities this year is at least 4.6 billion cubic meters,” said Herman Halushchenko.
He also said that 2.9 billion cubic meters of imported gas have already been contracted and these contracts have been financially confirmed.
How much gas in storage should guarantee warmth in winter
While the overall minimum target of 4.6 billion cubic meters has been set for gas imports, the volume of reserves – how much gas should be accumulated in storage facilities as of November 1 – has not yet been officially announced.
For example, DiXi Group names three benchmarks for three scenarios. The optimistic scenario envisages the accumulation of up to 15 billion cubic meters of gas in underground storage facilities by November 1. This promises winter readiness even in the face of external challenges. The medium scenario envisages reaching a level of 13 bcm. This will cover basic needs, but leaves less room for maneuver in the event of a crisis. The pessimistic scenario envisages accumulation of only 11-12 bcm.
As you know, last year, 12.92 billion cubic meters of gas were accumulated in Ukrainian underground storage facilities by November 1, the start of the withdrawal season. In fact, this benchmark remains the basic one for many.
How the storages are filled with gas
According to the ExPro agency, as of July 1, natural gas reserves in Ukrainian underground storage facilities amounted to 8.15 billion cubic meters. And the dynamics of gas injection is positive. The argument in favor of this assessment is that in June, the storage facilities were replenished with more gas than in May. The detailed information was provided by Mykhailo Svyshcho, an analyst at ExPro.
“In May, 1.1 billion cubic meters of gas were pumped into the storages, and in June, 1.35 billion cubic meters more – by 23%. If we compare June this year with June last year, it is 1.8 times more gas injection. That is, the dynamics are really positive and we see an increase in injection volumes every month. For example, if we take the data for the last month, then 1.35 billion cubic meters injected in June is the highest value since August 2023,” the expert states.
Mykhailo Svyshcho also explained what the June gas injection volume of 1.35 billion cubic meters consists of. That is, how much gas in the storage facilities was provided by domestic production and how much was imported.
“If we take June as a whole, it is approximately 540 million imports and 810 million domestic production. That is, we have an increase in domestic production and this is due to two reasons. First, production is really recovering after the enemy winter attacks. Secondly, the fact that in June, compared to May, consumption volumes decreased. Accordingly, more domestic production could be used for injection into underground storage facilities,” the expert noted.
Positive dynamics is also recorded in terms of gas imports. In June, more gas was supplied to the storage facilities than in May.
“In May, almost 500 million cubic meters were pumped, in June – 540 million. In principle, based on the figure of 13 billion cubic meters of gas that should be in storage as of November 1, we need to import about 2.3 billion cubic meters of gas in July-October. This is somewhere around 580 million cubic meters per month. That is, in principle, these import volumes, which were reached in June, i.e. 18-19 million cubic meters per day, are enough. Moreover, since July, we have seen that import volumes have already increased. For example, on July 1, daily gas imports were already around 27 million cubic meters, which is a significant increase of 9 million cubic meters per day compared to the average daily figure for June. This means that if this pace continues, more gas can be pumped in,” the expert summarized.
Mykhailo Svyshcho also advocates diversification of approaches to gas supply in winter, when part of the gas sufficient for the heating season is pumped into storage facilities and at the same time certain volumes are contracted for the winter so that additional gas can be imported during the heating season. In other words, in a full-scale war, when there is a risk of shelling of gas storage facilities and possible interruptions in gas withdrawal, it is better to have different options: domestic production, withdrawal from storage facilities, and imports.
Gas supply routes are also diversifying
In June, as in May, the main routes for gas supplies from abroad were through Hungary, Poland, and Slovakia. Most of the gas was supplied from Hungary – 56% of total imports, 24% from Poland, and 20% from Slovakia. But in July, according to Mykhailo Svyshcho, an analyst at ExPro, the situation may change.
“We can already see that in July, imports from the Trans-Balkan direction, i.e. a new route, started. Although the volumes are still insignificant – 160 thousand cubic meters per day. But, in principle, the fact that a new route has appeared and is being tested is already good. And if the supply mechanism is worked out, we will always be able to use this route more actively if necessary. Similarly, the role of the Polish direction has been growing since July. Let me remind you that in June, Ukraine and Poland agreed to almost double the guaranteed transportation capacity to 12.4 million cubic meters, up from 6.4 million cubic meters per day. We have already seen that imports in this area have increased to more than 8 million cubic meters. That is, it is already more than we could theoretically afford before,” the expert notes.
And that’s not all the news. In June, it became known that Naftogaz became the first company in Central and Eastern Europe to use the Danish-Polish transit corridor for spot orders for supplies to Ukraine. This was reported by the consulting company ICIS (Independent Commodity Intelligence Services), citing data from local traders. Mykhailo Svyshcho explained what kind of route it is.
“This is the Baltic Pipe gas supply route. It comes more from Norway, from Norwegian fields to Poland. The Polish company Orlen has its own field – it acquired a license to develop it in Norway. Accordingly, it transports natural gas through this pipeline. There are some unused capacities there that allow us to receive this gas through Denmark, through Poland and for other countries. I understand that Naftogaz also used this route to work out a mechanism for receiving gas from Norway, a country that is now the largest supplier of natural gas in Europe and one of the largest suppliers in the world,” the expert emphasized.
According to the ExPro agency, the European market remains well supplied with both pipeline gas, primarily from Norway, and LNG. Prices in Europe are also currently at an acceptable level, both for suppliers and consumers. According to Svyshcho, the fact that prices on the Ukrainian domestic market have exceeded those on European markets in the last few weeks allows not only Naftogaz to import gas, as it was in the past months, but also private companies. And in June, the first deliveries of small volumes of gas already took place. In July, private imports are expected to increase.
That is, we can say that gas is available and that current prices allow not only the state-owned Naftogaz to import it, but also to fill underground gas storage facilities.
Author: Sergiy Vasilevich
