Ukraine gas storage levels dropped to a record low of just over 1 bcm of effective working gas left in the country’s vast underground storage sites.
Assuming similar withdrawals rates as last year, inventories could drop to 0.7 bcm by the end of the heating season, a level at which the withdrawal capacity is already restricted due to lower reservoir pressure levels.
Current stock levels in Ukraine are 2.5 bcm below their last year’s levels.
In addition, Ukraine’s domestic gas production facilities were heavily damaged by the latest Russian attacks.
According to first estimates, the country’s gas production dropped by near 40% and it could take several months to repair facilities and restore production.
Altogether, lower stock levels and lower domestic production means that Ukraine would need 4-5 bcm of additional imports from the European Union in order to fill up its storages to 13 bcm by the start of the heating season.
This would cost around €2-2.5 billion based on current forward curves.
Stronger EU piped gas exports will further tighten the European gas balance, but it would be an absolute necessity to ensure gas and energy supply security ahead of the 2024/25 heating season. This will ultimately require more solidarity and stronger LNG imports through the summer.
What is your view? How could Europe support Ukraine’s gas supply security and its gas procurement from European hubs?
Source: Greg MOLNAR
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