In the face of energy crises, Europe is contemplating using Ukraine’s gas storage facilities to secure energy supplies, despite the country being a hotspot for conflicts.
The Bilche-Volytsko-Uherske storage facility, which can store four times the volume of the largest German facility, has surfaced as a key contender.
Although it may seem risky given Ukraine’s conflict-ridden status, supporters argue these facilities are safely distant from conflict zones, justifying the risk.
Ukrainian facilities, including Bilche-Volytsko-Uherske and others scattered across the country, form part of the continent’s largest underground cavern network capable of storing gas.
With EU storage facilities nearing capacity, Ukraine could offer a viable solution to prevent an energy glut.
German utility RWE AG advocates using Ukrainian storage, provided prices drop sufficiently to balance costs, and the EU provides a safety net against potential conflict-related losses.
The initiative aims to prevent the energy panic of the previous year that led to record prices and hefty state intervention.
While stocking gas in a country involved in active combat would normally be considered untenable, the ongoing deliberations underscore Europe’s limited options.
Utilizing Ukraine’s gas storage facilities could generate revenue for the country and strengthen its ties with the EU, standing as a symbolic defiance to Russia’s power plays through energy supply.
However, risk mitigation is crucial, and whether traders are willing to stockpile gas in Ukraine depends on prices and potential EU-backed assurances.
Talks regarding this are ongoing.
The looming challenge is time, as European storage sites are projected to reach capacity by early September, highlighting the need for swift decisions and actions.
With information from Bloomberg
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