Naftogaz deems reserves of 15.1 bcm of gas in Ukraine's underground storage by Nov 1 as sufficient

Formation of Ukrainian gas inventories in underground storage totaling 15.1 billion cubic meters (bcm) by November 1 is sufficient and injection of a greater amount would impose a substantial financial burden on Naftogaz Ukrainy, company head Andriy Kobolev said.

"We have computations that model demand and temperatures... The three important figures: this is the volume of gas on October 15 (the initial plan was 14.5 bcm; we have revised that to 15.1 bcm taking into account current imports), on January 1 (13.1 bcm) and at the end of the season (8 bcm). Six bcm is the minimum below which it would be unwise to allow inventories in underground storage to drop. Therefore, 8 bcm at the end of the season would mean we have a substantial reserve," Kobolev said in an interview with ZN.UA.

Kobolev said the government's initiative to raise the amount of gas in underground storage to 17 bcm by November 1 was unwarranted and would create substantial risks for Naftogaz.

"In order to buy that amount of gas before the beginning of the season, given limited import capacity that is fully utilized, we would have to turn to the Russians. There is no other option. To the Russians, who have de facto refused to sell us gas after refusing to a sign a supplementary agreement with us. Does someone want to transfer $500 million to Gazprom and see whether they supply us gas or not? I do not recommend that anyone try it, given the entire amount of accumulated problems," he said.

It was reported earlier that the Ukrainian Cabinet of Ministers, in an instruction dated August 31, 2016, ordered preparation of a schedule for injecting natural gas into underground storage stipulating 17 bcm in inventories as of November 1, 2016. The schedule was to be drawn up and approved by the Energy and Coal Industry Ministry, Economic Development and Trade Ministry, Finance Ministry and Naftogaz Ukrainy by September 15.