European gas storage: backhaul helps open the Ukrainian safety valve

With the increasing likelihood of European gas storage hitting ‘tank tops’ by the end of summer 2020, Ukrainian storage facilities could ease the European storage shortage. A combination of substantial storage capacity, discounted tariffs for transporting gas to the storage facilities, the storage of gas in a ‘customs warehouse’ free of customs duties, and the increase in Ukrainian import capacity through the addition of backhaul (virtual reverse) capacity are facilitating the injection of gas into Ukrainian storage by European companies and traders. This comment examines the different factors involved, and the amount of gas that is likely to be stored in Ukraine in summer 2020. In doing so, we conclude that not only will Ukrainian storage ease some of the pressure on the European market in Q3 2020, but it is also likely to hasten the integration of Ukraine with the European gas market.

By: Simon Pirani , Jack Sharples