Ukraine Stocks up on Russian Gas as Supply Contract Expires

Ukrainian and European traders are accumulating additional reserves of natural gas ahead of next winter to prepare for any potential supply disruptions amid a looming stand-off with Russia, S&P Global Platts reports.

Ukraine is a key supply route for Russian natural gas to Europe, delivering about 25% of Europe’s total annual gas needs. However, Russia is building a number of gas pipelines, including Nord Stream 2, which will bypass Ukraine on the way to Europe.

The companies’ current 10-year agreement expires at the end the year, with a new deal not signed. The next round of negotiations between Ukraine and Russia is scheduled for later this month, and will be joined by the European Commission, which has expressed concerns about slow pace of talks.

The head of state energy company Naftogaz, Andriy Kobolev, said Ukraine will accumulate 20 Bcm of gas ahead of next winter, up from the 17 Bcm it usually has in underground storage facilities for the start of the heating season.

“It is important to have heat in Ukrainian homes even if Gazprom is going to trigger another crisis,” Kobolev said Thursday, according to Unian. “European traders are also creating additional reserves.”

Kobolev’s statements come days after Russian President Vladimir Putin commented in Beijing on the unwelcome scenario for Ukraine should Naftogaz and Gazprom fail to sign a new gas transit agreement.

Also, Gazprom and Naftogaz are at odds over which standards to apply in negotiating and signing the transit agreement.

Kobolev said Ukraine was able to import gas from Europe at competitive prices, and that European traders should start buying Russian gas on the Ukrainian-Russian border to ensure safe shipments of gas across Ukraine to Europe.