Europe’s huge underground asset
Ukraine’s vast storage facilities are not just an asset for the country itself, but rather for the entire continent.
The storage system is the world’s third biggest by capacity – behind only the United States and Russia – can store over 30 bcm. Not only is it the largest storage system in Europe, just by itself Ukraine accounts for more than a fifth of Europe’s total capacity.
This not only ensures the country’s energy security but also enables to offer storage capacity to EU customers – and Europe is certainly benefitting from that capacity.
At present, the underground storage is around 90% full, around 28.3 bcm, over a third of which or 10 bcm comes from customers coming from 21 countries, including the United States, Great Britain and France.
Impressively, this represents an almost fourfold increase compared to 2019, when foreign companies stored 2.5 bcm of their gas in Ukraine.
International interest has mostly been driven by a combination of compelling commercial offering, and particular conditions. As energy prices dropped this spring – driven down by a warmer winter and a coronavirus-induced economic slowdown – Europe’s storage capacity reached record highs.
Indeed, as of April 18, 2020, the continent’s storage facilities were 58% full – the highest ever recorded level for mid-April, according to Gas Infrastructure Europe, an industry association. Meanwhile, with gas volumes also historically high, Ukraine became an appealing place to keep additional reserves, with close to 15 bcm of capacity at the time.
But favourable conditions are only part of the story. “We made a lot of effort to become attractive and clear to our clients,” noted Sergiy Pereloma, Acting General Director of SSO of Ukraine.
As part of its improved list of services, the operator now publishes free capacity available for injection or withdrawal on a daily basis and applies best practice KYC (Know your customer) compliance procedures.
Combination of customs warehouse mode and short-haul transmission, which are mentioned above, enabled SSO of Ukraine to exploit the situation on the European gas market.
A spokesperson for Vitol’s is confident that Ukrainian UGS have seen success in 2020 due to internal changes (coming closed to the EU rules etc) as well as commercially attractive conditions: «the benefit of investment in the development of Ukrainian storage facilities and the introduction of short haul tariffs have created significant advantages for the SSO of Ukraine”.