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Ukraine increases gas reserves 1.7% on week to 16.22 Bcm

Ukraine increased natural gas reserves in its underground gas storage facilities by 1.7%, or by about 264 million cubic meters, over the past seven days, data released by Gas Storage Europe over the weekend indicate.

Ukraine increased natural gas reserves in its underground gas storage facilities by 1.7%, or by about 264 million cubic meters, over the past seven days, data released by Gas Storage Europe over the weekend indicate.

The country accumulated 16.22 billion cubic meters of natural gas as of September 13, compared with 15.95 Bcm as of September 6, according to GSE, a non-profit Brussels-based organization that provides energy statistics to the EU.

Ukraine is facing difficulties in accumulating enough gas in the reserves this season after Russia, the country's main gas supplier, cut to zero supplies to the country June 16, citing price and debt payment disagreements.

The country is preparing to survive the upcoming winter without Russian gas supplies by counting on domestic gas production and imports of European gas.

Ukraine September 2 started massive imports of gas from Slovakia via Vojany-Uzhgorod pipeline. The pipeline is delivering up to 27 million cu m of gas per day, which is enough to cover 40% of the country's gas import demand, according to the state gas shipper UkrTransGaz.

Ukraine plans to store up to 17.2 Bcm of natural gas in its storage facilities by October 15 to offset increasing demand in the winter and to ensure steady Russian gas supplies to Europe, according to the energy and coal industry ministry.

Ukrainian gas storage facilities, which are capable of holding about 32 Bcm of gas annually, are currently filled at 50.8% of their total capacity, according to the GSE.


Ukraine storage injection rates were stable from the week earlier at 268 million cu m, with no impact from the reduction of imports from Poland, Bentek data shows.

Imports from Slovakia are currently at 95% of capacity and flows doubled to 182 million cu m from previous week, when the Vojany-Uzhgorod pipeline capacity was impacted by commissioning flow tests. Imports from Hungary and Poland were at 45 million cu m/week, just 2 million cu m down over the preceding week, as an increase from Hungarian flows did not fully compensate the 6 million cu m/week drop in receipts from Poland.

Regardless of an improved injection rate, the outlook for the Ukraine's inventories target at the beginning of the winter looks increasingly challenging without Russian deliveries. A Platts analysis shows Ukrainian storage inventories are likely to miss the 20 Bcm target at the beginning of the winter by using only reverse flows from Poland, Hungary and Slovakia, and it might only reach the 17.1-17.9 Bcm range.

In the absence of Russian imports, total supply before the beginning of the winter is expected between 3.1 Bcm and 3.3 Bcm. The current 17 Bcm/year entry capacity suggests Ukraine could import at most 1.95 Bcm from Hungary, Poland and Slovakia by mid-October.

Although, steady low 25% utilization rates in the import pipeline from Hungary suggest that 1.25 Bcm is a more realistic estimation of what can be imported by Ukraine from those EU countries by mid-October. In terms of domestic production, historical data suggest that it can be estimated at 1.8-2.0 Bcm cu m by mid-October.

On the demand side, measures to reduce consumption have not yet yielded a material change in demand compared to the previous year's range of 2.35-2.9 Bcm, with the major impact being an expected 0.4-0.8 Bcm drop in industrial demand due to the unrest in eastern Ukraine. This suggests the country could consume most of the gas it produces and imports from EU countries.

If Ukraine relies only on imports from EU countries, it could boost its stocks by no more than 1.7 Bcm to around 17.9 Bcm. This stocks estimate is also close to the average weekly increase of 180 million cu m in inventories observed since July 4. If kept constant over the five weeks preceding the beginning of winter, it would put the total storage inventories at 17.1 Bcm. For inventories to reach 20 Bcm by the beginning of the winter, the required volume would need to average 756 million cu m/week, or more than four times the amount observed in the last eleven weeks.

Ukraine and the EU authorities had considered 20 Bcm in storage as the minimum amount needed to ensure smooth transit of Russian gas through Ukraine to the EU this winter, while avoiding demand management measures. More recently, on September 4, Ukraine's energy and coal industry ministry said 17.2 Bcm would be enough.

However, a Platts analysis on September 13 showed that in a cold winter scenario, such as that of the winter of 2011-12 when consumption was 41.3 Bcm, up to 5.3 Bcm of end-user demand might be restricted or switched to other fuels.

--Fabio Reale, --Alexander Bor, --Edited by Jonathan Loades-Carter, Similar stories appear in European Power Daily See more information at
Published on:
September 15, 2014
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