Europe’s Utility Companies Store Gas in Case of Russian Cut

15.04.2014 -

European utility companies are filling up gas storage sites to prepare for a potential Russian supply cut to Ukraine, the news agency Reuters reports. Russia says it is now owed more than $2 billion and may have to demand advance payment for any future deliveries.

Mainly through state-controlled gas exporter Gazprom, Russia supplies around a third of Europe's gas demand, some 40% of which currently transits Ukraine.

Although the European Commission, the EU executive, has called on Russia to respect its gas commitments and urged Ukraine to respect its transit agreements, there have been several emergency meetings in Brussels to prepare for disruptions.

While supplies are seen to be adequate for the summer, the Commission is discussing with Ukraine the possibility for companies in the EU to store gas in Ukraine for next winter," a  source within the Commission is quoted as saying.

Reuters said its data shows that France, Germany and Italy, the countries with the biggest gas stock capacities, have all stepped up storage injections in recent weeks, and several major utilities, such as Germany's RWE and France's GDF Suez, are reported to be in talks with Ukraine on possible gas deliveries from their storage sites.

A mild winter across most of Europe has left inventories unusually full for this time of year, and a warm beginning to spring has lowered demand further.

At the same time, healthy gas supplies from Norway and an increase in liquefied natural gas (LNG) imports have created oversupply,

Kurt Bock, CEO of German chemical giant BASF, has dismissed the possibility of Europe being cut off from Russian gas. "Russia needs customers, it needs income and we need gas," he said in an interview with the German daily newspaper Süddeutsche Zeitung. 

BASF has a long-standing partnership with Gazprom, and has agreed to swap subsidiary Wintershall's gas trading and storage business for larger share of gas fields in Siberia owned by the Russian group. The swaps are expected to take place in mid-2014.