European traders store gas in Ukraine
European gas traders have begun storing natural gas in Ukraine to take advantage of lower prices and available capacity there, regardless of the risks from the ongoing war, three traders and company officials said, Reuters reports.
Following Russia’s invasion of Ukraine, begun in February last year, the European Union (EU) has sought high levels of gas storage to compensate for reduced Russian supply, especially during the peak demand winter months.
The bloc is expected to reach a target of filling its storage facilities to 90% full by Nov. 1.
Traders said there was commercial logic in storage in Ukraine, in addition to on EU soil, to take advantage of cheaper prices now versus for future delivery.
Gas for September delivery is priced at 30 euros ($32.96) per MWh compared with forward prices for first quarter of 2024 at 49 euros, according to prices from the TTF Dutch gas futures market.
Gas for storage in Ukraine can be purchased anywhere and pumped using real or virtual flows in pipelines from Hungary, Poland and Slovakia.
Nominations have risen for the pipeline that transports Russian gas from Ukraine to Slovakia at the Velke Kapusany border for flows into Ukraine - virtual reverse flows. They have been up to 10 mcm per day since July.
Physical flows from Slovakia into Ukraine also started in August through the Budince point with daily volumes of around 17 mcm.
