In addition to the normal seasonal price dynamics in natural gas markets, the coming 2023/2024 winter season poses an acute risk of natural gas price volatility in the European Union (EU) spot markets. This volatility is partially driven by reductions in Russian supplies during the last years, and it might become more acute under a prolonged cold winter and if demand is high in other global gas markets. This situation would reduce gas affordability for EU customers and might cause negative economic consequences for the EU member states.
Considering that European storage facilities—driven by Regulation (EU) 2022/1032[1]—have reached around 90 percent of their capacity as of August 23, 2023[2], the additional available gas storage facilities in Ukraine offer the EU an important option to ensure uninterrupted energy availability and mitigate price spikes in the spot market. Given the ongoing war, Ukraine’s authorities and state-owned gas operators have acknowledged the risks that European traders have perceived as obstacles to storing gas in Ukraine.
This public note seeks to bring additional assurance and clarity to European companies interested in using Ukrainian gas storage and transmission infrastructure during the 2023/2024 winter season by assessing whether stored gas intended for the EU is at risk due to full-scale Russia’s invasion of Ukraine against the gas infrastructure of Ukraine[3].
[1] Regulation (EU) 2022/1032 of the European Parliament and of the Council of 29 June 2022 amending Regulations (EU) 2017/1938 and (EC) No 715/2009 with regard to gas storage https://eur-lex.europa.eu/eli/reg/2022/1032/oj
[2] https://energy.ec.europa.eu/news/eu-reaches-90-gas-storage-target-ahead-winter-2023-08-18_en
[3] Verified and confirmed by the independent international auditor Simone Research Group (SRG), selected in agreement with all involved stakeholders and engaged by USAID ESP.