Ever since the all-out Russian invasion, Ukraine has sought military, economic, and diplomatic help from across the world, and Western governments have pledged assistance “for as long as it takes.” The war has shattered the lives of Ukrainians and had a seismic effect on European societies and economies as they grapple with soaring energy costs.
But it would be wrong to see this as a one-way street. Ukraine has helped the West too, with everything from its renunciation of Vladimir Putin’s imperial ambitions, to live testing of weapons systems on the battlefield, to the extraordinary levels of destruction its armed forces have inflicted on Russia’s war machine. And there is more to come; take the example of how Ukraine can aid Europe’s gas storage problems.
The Kremlin’s curtailing of natural gas flows to the West placed European markets under immense stress. Prior to the February 24 all-out invasion, Russia was Europe’s largest supplier of natural gas — in 2021, European Union (EU) imported 155 billion cubic meters (bcm) of Russian gas, approximately 45% of the total.
Russia gradually decreased its supply to Europe and in March, when Putin demanded payments in Russian rubles, it immediately triggered a 30% surge in prices. This demand, aimed at “unfriendly countries”, was followed by a further weaponizing of supplies in late summer when the Kremlin announced cuts on both the Nord Stream 1 and Yamal-Europe pipelines: two vital supply routes to Europe.
In September, the old Nord Stream I and newer Nord Stream II pipelines were sabotaged by an unknown party. Many blamed the Kremlin. Whoever carried out the attack, it further highlighted the weakness caused by Europe’s dependence on external energy supplies.
When prices climbed after Russia drastically reduced gas supplies in August, Europe responded by filling its storage sites ahead of the heating season, placing additional pressure on the global Liquefied Natural Gas (LNG) market. Prices at the Dutch TTF skyrocketed to more than €340/MWh ($368) in late August — a 314% increase compared to pre-invasion levels.
Gas is bulky and hard to store, but it’s not impossible. Underground gas storage (UGS) has played a key role in safeguarding gas supply and prices in times of crisis. UGS sites allow countries to take advantage of the usually lower prices in the summer and stock up for winter when demand and prices are high. As Russia continues to use energy as a weapon, the importance of gas storage sites has grown, significantly.
The EU’s gas storage capacity totals about 1,100 TWh, amounting to approximately a quarter of its gas demand, but storage sites are unevenly distributed across the continent. Gas is stored in built (and capital-intensive) storage sites and in depleted gas fields. Most of Europe’s UGS capacity is in Western Europe, with 73% of the EU’s underground storage capacity concentrated in five member states: Germany, Italy, France, the Netherlands, and Austria, totaling around 810 TWh. The total volume of all storage facilities in Poland, the Czech Republic, Slovakia, and Hungary amounts to another 187 TWh.
Step forward Ukraine. During the Soviet era, the country was a major gas producer, and many of its old gas and oil fields have since been adopted for gas storage. Total capacity is roughly 312 TWh across 13 facilities. This amounts to 28% of the EU’s entire capacity. It offers an opportunity for Europe to address its vulnerability to external gas shocks, especially since most storage facilities are located in the west, close to the EU border.
Prior to February 24, Ukraine’s storage was used to balance supplies of Russian gas heading to European markets during the winter months. It seems unlikely that Russian supplies will resume at anything close to prior levels once the war ends; the impact of its broken promises to maintain gas exports has proved untrue. And if Europe needed reminding, past Russian hydrocarbon revenues have been used to build an invasion force
At the same time, the difficulties experienced by European gas markets in 2022 will not fade anytime soon. While the relatively warm fall in Europe has allowed Europe to access the necessary gas supplies, future years may be more difficult.
Firstly, Europe was able to use Russian gas imports last year to help fill its storage sites ahead of this winter and is unlikely to do so next time.
Secondly, LNG supply is limited – the International Energy Agency (IAEA) estimates Europe may experience a 30 bcm gas shortage in the 2023 heating season, especially as economic activity in China is expected to rise. To put the potential shortfall in perspective, in 2021 Spain alone consumed nearly 34 bcm of gas. Europe is likely to be able to outbid other LNG users, but this will come at a high price for governments and consumers.
Thirdly, new LNG import infrastructure and gas interconnectors to diversify supply will require time and resources.
And lastly, Europe might face a more severe winter in 2023/2024. Given all this, the opportunities around underground gas storage are becoming ever more important, both now and for the future.
European policymakers should explore Ukraine’s untapped storage potential. When Russia’s war of aggression ends, Ukraine has the capacity to become a leading European gas hub, and tapping into its UGS potential should be a priority during the country’s post-war reconstruction. Europe would mitigate its own supply issues, further reducing the need for Russian gas, while investing in the reconstruction and modernization of Ukraine.
Julian Wieczorkiewicz is a diplomat and an energy & climate security expert. He is also a CEPA Denton Fellow. The views expressed in this article are his own and do not reflect those of his employer.
Ivanna Kuz is a Program Officer with the Transatlantic Defense and Security Program at the Center for European Policy Analysis (CEPA) where she works on Ukraine, Black Sea security, NATO, and the future of European security.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.