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German state-owned gas trader considering storing natural gas in Ukraine again

by Nate Ostiller and The Kyiv Independent news desk April 10, 2024 11:28 PM 2 min read
A compressor station of the Ukrainian state-run energy company Naftogaz near the city of Kharkiv on Aug. 5, 2014. Photo for illustrative purposes. (Sergey Bobok/AFP via Getty Images)
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The German state-owned natural gas trader SEFE is considering the possibility of storing natural gas in Ukraine again, Bloomberg reported on April 10, citing comments from the company's chief commercial officer Frederic Barnaud.

Ukraine has been encouraging foreign traders to store gas in its vast underground gas storage (UGS) facilities, the majority of which are located in western Ukraine.

Before the full-scale invasion, Ukraine offered up to 10 billion cubic meters (bcm) of storage to foreign traders. After initial hesitancy in the first year of the invasion, foreign traders returned in 2023 motivated by competitive storage tariffs and rented 2.5 bcm of storage space last year.

Barnaud told Bloomberg that SEFE had most recently stored gas in Ukraine "a few months ago" but did not give a timeline on the proposed resumption of gas storage.

"There are some risks with Ukraine, particularly if gas gets stranded there because the top side of the storage gets damaged in attacks," Barnaud said to Bloomberg at the FT Commodities Global Summit in Switzerland.

"We are seeking to engage a little bit more than we normally would because Ukraine will be one of the key countries for energy in Europe post-war."

Ukraine is aiming to attract 4 bcm of gas from foreign traders this year, the state-run energy company Naftogaz announced in March.

The country’s UGS facilities have a capacity of 30 bcm, the largest in Europe.

Naftogaz CEO Oleksiy Chernyshov previously told the Kyiv Independent that its UGS facilities are largely safe because they are deep underground.

"We really want to work with Ukraine because it's a large market," said Barnaud.

"If we find ways to work together, to facilitate a better integration of Ukraine gas, as well as power to the European networks, we will do it."

Shmyhal: Ukraine aims to produce 15 billion cubic meters of gas in 2024
Ukraine’s state-owned oil and gas giant Naftogaz aims to produce 15 billion cubic meters of natural gas in 2024, Prime Minister Denys Shmyhal said at the meeting of the Cabinet of Ministers on March 1.
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