EU gas tanks close to full, traders switch to Ukraine storage

European gas storage tanks were 87.7% full as of August 6, well ahead of the schedule that demands they reach 90% by November 1, according to GIE, leading traders to switch to storing more gas in Ukraine’s underused tanks. (chart)

Prices of gas are determined by the immediate demand for gas and the amount of physical storage space available. As the EU gas tanks fill up early and the weather is still mild, future prices on the TTF hub fell by 1.7% to €29.97 per MWh, or $350 per thousand cubic metre, according to data from the ICE exchange UBN reports.

Prices have fallen from last year’s all-time highs but remain some two- to three-times above the five-year pre-war historical averages that has led to a deindustrialisation in some European countries.

Despite the war risks, European gas traders have started storing natural gas in Ukraine to take advantage of lower prices and Ukraine’s vast underused gas storage facilities. While Germany’s gas tanks, at 23bcm the largest in the EU, are 89.6% full as of August 6, Ukraine’s tanks are only 26.6% full, according to GIE.

Ukraine's storage facilities, which are owned by the state gas company Naftogaz, have a total capacity of 31bn cubic metres (bcm) in 11 underground storage facilities, the biggest of which is Bilche-Volytsko-Uherske on the Polish and Slovakian borders far from the fighting and can hold 17bcm by itself. Ukraine's large gas storage capacity is surpassed only by the US and Russia and is due to its former role as a major transit country for Russian gas to Europe.

The Czech EPH group told Reuters that its decision to use Ukrainian storage was also a sign of confidence in the country. In turn, Ukrtransgaz stated the positive dynamics of gas injection by foreign traders into Ukraine gas storage. Slovakia's state-owned SPP said it is considering using Ukrainian storage facilities, as Slovakian storage facilities are already 90% full.