The European Union is considering shifting some of its strategic gas storage to Ukraine in an attempt to prevent an energy crisis this winter and beyond, despite the obvious concerns of the facilities being in an active war zone.
The EU is currently in the process of attempting to strike a deal with Ukraine to use its largely dormant gas storage facilities in order to expand its reserves before the peak demand winter months when Europe becomes increasingly at risk of shortages. The future of European energy supply is up in the air going beyond this winter as well, with it widely expected that the continent will have to do without Russian energy imports altogether by 2025 at the latest, German broadcaster NTV reports.
According to the broadcaster, the EU is zeroing in on a gas storage facility near the small Ukrainian village of Bilche, which is about 100km from the border with Poland.The facility, which is buried underground, is the largest of its kind in all of Europe, with a storage size of 17 billion cubic meters, which is significantly larger than Germany’s biggest storage facility, which can hold around 4 billion cubic meters of gas.
Ukraine’s total storage capacity amounts to around 31 billion cubic metres of gas and according to state-owned gas company Naftogaz, 10 billion cubic meters could be made available for EU storage. This could be extended to 15bcm , Naftogaz said, if Ukraine is able to retake some of its territory from Russia.
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The limited space in the EU, which has around 115 bcm capacity, means that the existing storage in the EU could be tapped out by as early as September, with the Association of European Transmission Operators for Gas (ENTSOG), noting that in total 74 per cent of storage is already used. In contrast, facilities in Ukraine are only at 20 per cent capacity.
Expanding storage into Ukraine would give the EU some breathing room should disruptions in the market, particularly with shipments from the United States or Gulf countries like Qatar, cause large price fluctuations or limits in supply. Ukraine would also stand to benefit, given that much of the revenue collected previously for transporting Russian energy to Europe has dried up, and storage fees could be charged.
Yet, one considerable problem remains, the war that continues to rage in the country. According to a report earlier this month from the Financial Times, the EU has been seeking to convince banks, such as the European Bank for Reconstruction and Development (EBRD), to provide insurance for the Ukrainian facilities.
However, despite the Bilche storage being underground and far away from the frontline of the war, lenders are still reticent to put their money on the line to insure something that could become a potential military target.
Should the bloc actually convince a bank to back the endeavour it would serve to deepen ties with Ukraine, which Brussels is seeking to incorporate into its ranks.
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