The European Union had about 3.53 trillion cubic feet (100 billion cubic meters) of gas in storage this week, just six percent short of reaching capacity.
While this level shows the region is moving towards market stabilization, the EU has started sending gas to Ukraine for future re-export to the bloc to help secure supplies, the Energy Commissioner said on Thursday of the EU, Kadri Simson.
The 27-member group had already met its annual goal of replenishing gas storage facilities to at least 90 percent of capacity a month ago. On August 18, the EU’s Directorate General for Energy reported 3.28 trillion cubic feet (93 billion cubic meters) or 1,024 terawatt-hours (tWh) in store, 90.12 percent of the capacity
“This week, the level of storage across the EU is above 94 percent of capacity,” Simson said at a forum in Warsaw on Thursday, according to a transcript on the European Commission’s website. “Have about 100 bcm stored [billion cubic meters] sends an important signal to stabilize the markets.
“Additional volumes are now flowing into Ukraine and customers are already using Ukraine’s significant storage capacity.”
Simson added that he is working with Ukraine’s Energy Minister German Galushchenko “to facilitate further regulatory de-risking, to enable EU companies to fully exploit the potential of Ukraine’s large gas storage” .
The EU had used storage facilities in Ukraine for additional supply in 2020, as confirmed by Ukraine’s gas storage operator Ukrtransgaz JSC. The EU accounted for most of the 353.15 billion cubic feet (10 bcm) non-resident contribution to Ukraine’s 2020 injection of 999.41 billion cubic feet (28.3 bcm) that year, the highest level in last decade, Ukrtransgaz said in a press release. November 17, 2020.
That was before Russia invaded Ukraine in February 2022, but Simson told the forum in Poland that “gas can be re-exported again. [from Ukraine] in the EU even under stressful conditions”.
Eighty percent of Ukrtransgaz’s total storage capacity of 1.09 trillion cubic feet (30.95 bcm) is “close to the EU,” Ukrtransgaz said in a report to the agency EU-led Energy Community dated September 1, 2021. “Ukraine’s compliance with the requirements of the Third Energy Package demonstrated its intentions to integrate into the EU gas market and, in as a result, it developed the commercial interest of international actors,” he said in the report, referring to a set of EU rules adopted in 2009.
The non-governmental research organization Bruegel warned in July that at the pace of this year’s replenishment, EU storage facilities “will be full”. [as early as September] and winter demand will not have picked up yet.”
“This capacity limit could undermine the EU’s ability to transport gas from the gas-rich summer months to the potentially scarce winter months,” he reported on July 18, telling the EU to once again seek the spare capacity of Ukraine of 100 tWh.
“Historically developed to ensure stable flows from the Soviet Union to Europe, Ukraine’s storage facilities are large and located on the country’s western borders,” Bruegel said.
But he noted that “European traders might worry that Ukraine will not send gas to the EU in a very cold winter.” However, Ukraine’s desire to speed up EU accession should give the bloc confidence that the country will re-export gas when it needs it, Bruegel said.
Speaking at the Energy Security Beyond 2023 conference on Thursday, Simson warned that “volatility is still weighing on energy markets.”
“It is true that we are in a much more comfortable position, but now the EU is more dependent on LNG [liquefied natural gas] imports,” he said. “And that makes markets more wary of any potential supply disruption.”
Simson said gas prices in Europe had risen eight percent last week following news of a strike at LNG facilities in Australia. Workers at Chevron Australia Pty LNG facilities. Ltd. began their planned strike of at least three weeks on September 8 after the two sides failed to reach a bargaining agreement. The subsidiary of Chevron Corp. confirmed the start of so-called protracted industrial action at the Gorgon and Wheatstone facilities on Monday in an emailed statement to Rigzone, saying it was formally asking the Australian Fair Work Commission for the tribunal to exercise the ‘legal option of the government to enforce. their own working conditions.
“Beyond market volatility, we also need to factor in hot summers, cold winters, unplanned nuclear outages or limited hydropower supply,” Simson added. “All of this could lead to greater use of gas for electricity production here in Europe.”
“For now, however, the outlook is much better than last year and looks stable,” he assured, saying the EU is continuing its efforts to ensure security of supply and independence from Russian fossil fuels.
In addition to filling storage facilities, these include reducing demand, such as through “structural energy efficiency measures”, accelerating the deployment of renewable energy and boosting “relationships diplomatic” for the LNG trade, he said.
To contact the author, please email jov.onsat@rigzone.com
