Everything is according to plan: more than 12.8 billion cubic meters of gas are already in Ukrainian storage facilities
3 October 13:25
ANALYSIS FROM 
The cold snap of the past few days has reminded us better than any weather forecaster that winter is coming, and with it the start of the heating season. To what extent is Ukraine ready for it and will there be enough gas in the storage facilities?
95-97% – these are the figures that were used to estimate the fulfillment of the plan to accumulate gas in storage facilities before the start of the heating season by the Chairman of the Board of Naftogaz of Ukraine Sergiy Koretsky. He also emphasized that the accumulation of “blue fuel” continues as planned. As a reminder, there is still a whole month to meet and exceed the target, and the previously announced benchmark for injection is 13.2 billion cubic meters of gas.
To find out how much gas is currently in the underground storage facilities, see
“As of the beginning of October, we have more than 12.8 billion cubic meters of gas in storage. Accordingly, to reach the official target of 13.2, we have to pump 300-400 million. I think that at the current pace and the forecast for October, i.e. until the official off-take season starts, we are likely to pump more gas than planned. In September, the average daily injection amounted to almost 52 million cubic meters per day, which was almost 5% more than in August. This is due to the fact that we imported gas more actively in September than in August. And the weather, at least in the first half of September, was quite warm. In September, we pumped 1.55 billion cubic meters, which is slightly more than in August. If we compare the September volumes of this year and last year, the growth is significant – this September, we pumped 2.2 times more gas,” the expert noted.
By the way, back in mid-September, it became known that for the first time since the beginning of this year, gas injection volumes exceeded last year’s values for filling underground storage facilities, reaching more than 12 billion cubic meters. And as of early October, this excess is already almost 4 percent, or 450 billion cubic meters: last year it was more than 12.4 billion cubic meters, and now it is more than 12.8.
More does not always mean better
There are already statements that there is no need to stop there, as it would be worth creating a kind of “gas cushion” given the experience of the beginning of this year and the shelling that caused significant damage. There is talk of pumping 14 billion cubic meters of gas. How realistic is this target? Mykhailo Svyshcho answers.
“The more, the better, of course. But you need to understand that there are certain limitations. We are actively pumping now. But with this cold snap that has already arrived, with the fact that in October we traditionally start turning on certain regions, the heating season begins, the consumption options will only grow. And in this regard, injection options will decrease. 14 billion cubic meters is, of course, a good target. But I think we will not be able to achieve it this year. In my opinion, the realistic figure is 13.6-13.7 billion cubic meters under a good scenario, if the weather is not so cold that we need to turn on the heating. Therefore, the official start of the heating season will probably be postponed as long as possible,” the expert said.
According to him, there is another reason to think about whether we need to pump as much gas as possible now.
“If we pump a lot of gas and Russia strikes at the above-ground gas storage infrastructure, we will still have to import in the winter. Therefore, we need a balance: we pump as much as we can, up to a certain level, which should be enough for the winter, and continue to import during the winter to avoid these problems that may arise if the gas storage infrastructure is damaged,” believes Mykhailo Svyshcho.
Just last week, The Washington Post, citing the words of Naftogaz CEO Serhiy Koretsky, reminded everyone that due to Russian strikes that intensified in February of this year, Ukraine actually lost 42 percent of its daily gas production in two months. And this reminder sounded quite alarming, in particular given that there is no publicly available information on the volume of gas production recovery. Director of the Energy Research Center Oleksandr Kharchenko commented on this:
“Indeed, up to 40% of these systems were damaged. But since then, a significant part has been restored. I won’t name the exact percentage, but believe me, a very significant part has been restored,” the expert said.
Mykhailo Svyshcho, an analyst at ExPro agency who monitors the volume of gas pumped into the storage facilities, both domestic and imported, confirms that production is recovering rapidly. However, in September, more gas came from abroad than from domestic production.
“In fact, this is due to the fact that, firstly, imports increased by about 8% in September. And, secondly, our gas consumption increased in September compared to August. Accordingly, this consumption was covered by domestically produced gas. But in general, our production has not been declining in recent months, but has been gradually increasing,” the expert explains.
The money is there
The day before, it became known that Naftogaz signed what the company called a historic loan agreement with the European Investment Bank for 300 million. The funds will be used to purchase gas to build up long-term reserves. That is, to be able to finance gas purchases if necessary. Mykhailo Svyshcho continues.
“In fact, last month, after signing previous loan agreements, in particular with the European Bank for Reconstruction and Development for EUR 500 million, we already had, in fact, a closed need to finance imports in order to accumulate these 13.2 billion kilometers of gas in storage facilities before the start of the heating season. This new loan agreement will be aimed more at financing purchases that will be used to create additional reserves in storage facilities, and gas that will be imported at the end of this year or at the beginning of next year, that is, during the winter itself, to increase the reserves we have in storage facilities,” the expert emphasized.
This means that Naftogaz has and will have money to buy gas. But how will the company pay off such huge loans? Who will pay is another question. Analyst Mykhailo Svyshcho will try to answer it.
“This is actually such a good question, because now it is hardly talked about, but in any case, next year, in a year, when it is time to pay on these loans, it will be raised in any case. It should be borne in mind that Naftogaz currently buys gas in Europe for about $400 per thousand cubic meters, but sells it to the population at a much cheaper price, and not only to the population, but also to heat and power producers, and it cannot actually make money on it. And how it will pay back these funds is a difficult question. It could be partially solved by paying off the debts of the same heat producers to Naftogaz. Perhaps Naftogaz will make some profit from selling domestically produced gas, which is cheaper than the price at which it sells natural gas to them. It’s hard to say yet, but the amounts are quite large – this year they attracted a little over a billion euros in loans. And in the coming years, we will need to import. Therefore, we will probably have to allocate funds for both gas purchases and loan repayments,” the expert believes.
But this will happen later. In the meantime, Ukrainians can be reassured and “warmed” by the realization that we have gas in storage and money to replenish reserves if necessary.
Author: Sergiy Vasilevich
