SEFE concerned as Russia targets gas storage tanks in Ukraine

SEFE concerned as Russia targets gas storage tanks in Ukraine
Russia has launched missiles against some of Urkaine's gas storage tanks, but as most are buried deep underground the risk of an explosion is considered to be minimal. / bne IntelliNews
By bne IntelliNews April 19, 2024

German gas trader SEFE has expressed concern over recent Russian attacks targeting Ukraine's largest underground storage facility with a capacity of 30bcm.

In the latest escalation of attacks on energy infrastructure, Russia targeted gas storage tanks in Ukraine last week, raising concerns about potential disruptions to Europe's energy supply. Among the affected facilities is one of Europe's largest underground gas storage facilities, owned by Ukrainian oil and gas giant Naftogaz, with a capacity of 30bcm.

The attacks on the gas storage facilities, which are crucial for ensuring a stable supply of natural gas to Europe, have raised alarm bells among foreign traders, including German state-owned natural gas trader SEFE. Formerly known as Gazprom Germania until it was nationalised, SEFE expressed concern about the risks associated with resuming injections into Ukraine's underground storage facilities, particularly in light of the recent attacks.

"Resuming injections into Ukraine’s underground facilities may entail risks, particularly if gas gets stranded there because the top side of the storage gets damaged in attacks," warned SEFE’s chief commercial officer Frederic Barnaud in remarks to Bloomberg.

While the extent of the damage to Naftogaz's storage facilities remains unclear, the company has not provided any official comment on the matter. However, the significance of these facilities cannot be understated, with foreign traders renting 2.5bcm of storage space last year alone.

The attacks on energy infrastructure in Ukraine come at a critical time, with traders preparing to resume injections into the storage facilities. The potential for further attacks raises concerns about the safety and security of Europe's energy supply, particularly as there seems to be no end in sight to the war.

A successful attack on the storage facilities could spark a major environmental disaster, in addition to the human toll, and wreak havoc on Europe’s energy markets.

Ukraine’s gas storage tanks