Fears that Europe will face shortages of natural gas over the coming boreal winter are at low levels, with the latest news that European energy companies are considering storing excess natural gas in Ukraine reflective of the softening situation.

Gas Infrastructure Europe, the association for European natural gas infrastructure, has estimated that storages within the EU are 99% full leading into winter, well past the target of 90% that was set by the European Commission. (The UK’s storages, albeit lower in capacity, are also at 95%.) Factors involved include hotter than usual air temperatures to date as well as continued energy efficiency gains made during last year’s winter.

The risks now of a shortage over the winter are low, although a long spell of very cold weather coupled with reduced supply for unexpected reasons could still mean supplies would be depleted towards the end of the winter. The positive position is in contrast to a warning from the International Energy Agency last year that European reserves may only be at two-thirds coming into this year’s winter.

Although some companies are paying LNG tankers to hold supplies offshore, using Ukraine as an alternative is also being considered because of cheap storage tariffs and the waiving of customs duties for three years. Up to 10 billion cubic metres of storage has been offered by Naftogaz, the Ukrainian state energy company, to Europe for storage. (Two billion cubic metres of European-owned gas is currently stored there.)  

The risk, of course, is that Russian attacks on Ukraine could destroy stores, though tanks are largely located underground in the west of the country, away from most Russian attacks.