Ukraine kick-starts process to be able to store strategic EU gas stocks

Ukraine has started a new certification process that will allow gas storage operator UkrTransGaz to store strategic EU gas stocks in its vast underground storage sites, it said Jan. 25.

Ukraine has significant gas storage capacity of 31 Bcm, which has been mostly underutilized in recent years.

As a result, Ukraine has offered foreign companies the option of storing gas in Ukraine that can be reimported into the EU when needed.

On Jan. 24, Ukraine's state energy regulator NCRECP approved the procedure for the certification of UkrTransGaz, which can now submit a formal request.

"Successful certification will give UkrTransGaz the right to store not only gas of private foreign companies, but also strategic gas reserves of EU member states in Ukrainian gas storage facilities for the first time," UkrTransGaz said in a statement.

No later than 60 days after receiving the request, NCRECP will make a preliminary decision on the certification of UkrTransGaz and inform the secretariat of the Energy Community.

The Energy Community plays a similar role to the European Commission for non-EU member states that have signed up to apply EU energy market rules under the Energy Community Treaty, which includes Ukraine.

Within 25 days of the preliminary decision by the NCRECP, the secretariat of the Energy Community will give its conclusion before the NCRECP issues its final ruling.

UkrTransGaz said it appreciated the quick work on the certification, including the adoption by parliament of the relevant draft law.

"We are now preparing to start the direct certification procedure of UkrTransGaz," it said.

Record high gas prices last summer limited Ukraine's ability to import gas, hampering efforts to fill storage.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price at a record Eur319.98/MWh Aug. 26.

Prices have weakened since on the back of healthy storage across the EU and demand curtailments with Platts assessing the TTF month-ahead price Jan. 25 at Eur55.98/MWh.

Ukrainian officials acknowledged that the current winter would be one the most difficult in Ukraine's history, with gas in storage having reached only 14.7 Bcm ahead of the peak demand heating season, well short of its target of 19 Bcm.

Domestic production has also been impacted by Russia's invasion and continued attacks on upstream infrastructure.