Ukraine’s gas storage sites have been targeted by Kremlin missiles. This is already having serious consequences for European business and consumers.
Russia launched another murderous barrage of drones and missiles in the early hours of 11 April, hitting two important gas storage facilities close to the Polish border and wiping out nearly all of Ukraine’s coal-based electricity generating capacity.
The effect on the markets was immediate. European gas prices increased 10% compared to the previous day.
Europe benefits from Ukraine’s gas storage, but the embattled country must defend them alone. Although Western countries have supplied air defense missiles to the government in Kyiv, ministers say it’s not nearly enough given the current barrage.
Ukraine is short of missiles and having to make tough choices on what to defend with the systems it has, President Zelenskyy said on April 6. Allies have been asked to send some of the 100 Patriot missile batteries they own.
“Allies understand the urgency,” NATO Secretary General Jens Stoltenberg said on April 4 and promised allies would scour their stocks for additional systems and spares, but so far, to no effect.
Many of the targeted facilities are close to Ukraine’s western border and could conceivably be protected by batteries based on NATO territory. Or air defense units could be deployed as part of a humanitarian mission. Despite French President Macron’s suggestion of troop deployments in dire circumstances, no public discussion is underway.
The crisis is occurring regardless. Last month, another dawn attack hit a gas storage site, as well as other critical parts of the electricity infrastructure, plunging millions of Ukrainians into the cold and dark. The city of Kyiv’s largest power station was completely wrecked.
Sound familiar? It isn’t. The storage sites were previously spared. These newly targeted facilities are important to Ukraine and to the numerous European gas companies which use them. They form an important element of the continent’s gas network.
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As of 1 April, there were around 750 million cubic meters of gas held by European companies in Ukrainian storage, whose monetary value is over €200m ($213m) at current prices.
But their importance goes beyond that. They have also provided a safety valve to European companies in the last five years. Ukraine’s storage facilities are bigger than those of any European Union (EU) country and amount to about 28% of EU needs.
In 2020, when gas demand crashed because of COVID-related restrictions and no global markets could absorb the excess gas supplies, Ukrainian storage sites mopped up as much as 10bn cubic meters. That is enough to supply gas to a medium-sized country for a full year.
Ukraine’s large underground storage facilities also aid global producers – because they have somewhere to store it — and give European consumers a safety net since it can be accessed in time of need.
That became clear in 2022 when conditions changed, and demand surged as supplies fell – largely because of Russia’s deliberate curtailment of exports to Europe. Ukraine’s storage facilities once again stepped in.
The storage system benefits two countries hostile to Ukraine’s war — Hungary and Slovakia — as well as large companies from Austria, France, Germany, Italy, Moldova, Poland, Romania, Switzerland and many more.
Since the start of the war, Ukraine has been struggling to guarantee single-handedly the protection of gas supplies that are meant to keep warm consumers all over Europe.
It’s questionable how long this can continue.
Ukraine’s energy infrastructure is hanging by a thread, and if Russia continues its attacks, there will be serious doubts about its ability to face another winter. And without Ukrainian gas storage, the cold months will also be extremely difficult for European consumers, who may be deprived of access to secure supplies.
The longer Western partners hesitate to send the air defenses that Ukraine needs, the more the interests of Europeans will be at risk.
These risks are not some theoretical issue. They are real and are already manifested either through increased prices, as those seen immediately after the 11 April attack, or through increased supply risks that could lead to another energy crisis. All this at a time when European governments are relying on falling energy prices to reduce inflation and aid consumers battling severe cost of living pressures.
Since the Russian-induced energy crisis of 2022, most European countries have invested billions in building new terminals but very little in expanding their storage capacity, pinning their hopes on Ukraine to provide the security they needed.
Not for the first time, Europe seems sleepy and unaware of what might lie around the corner. We must all hope it doesn’t meet another energy disaster.
Aura Sabadus is a senior energy journalist writing for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. She is also a Non-resident Senior Fellow with the Democratic Resilience Program at the Center for European Policy Analysis (CEPA).
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.
Europe’s Edge
CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America.
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Source link : https://cepa.org/article/europe-slumbers-at-ukraines-dying-of-the-lights/
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Publish date : 2024-04-12 03:00:00
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