Swiss trader Axpo stockpiled gas in Ukraine before the war and is now closely monitoring the market, considering whether to start sending supplies there again.
Marco Saalfrank from Axpo says: “The return has to cover the risk you’re taking. If you have a very small return and the risks are big, it doesn’t make sense to go for this kind of business.
“We are [looking at] this risk-return and based on that we will decide if it makes sense or not.”
When the spread – meaning the difference between what gas costs now and what it can be sold for in winter – is large enough, they will likely go in, he says.
For commercial reasons, Saalfrank won’t disclose where that threshold is.
The European Commission has been working with Naftogaz for months on exploring how to remove barriers to storing gas there. Some are financial: it is working with lenders to provide some sort of state guarantee to energy firms to help lessen the risks posed by storing gas in Ukraine.
The difficulty of insuring against such risks means the companies that have already sent gas to Ukraine are willing to gamble and deem the potential returns to outweigh the risk.
Chernyshov says: “Starting especially in July, we felt a higher natural demand from the major traders to store gas in Ukraine, taking the business risk by themselves. It’s a good market-driven situation when the market is quite hot and the traders are willing to take those risks.”
Wednesday’s sudden jump in gas prices could dampen the interest in Ukraine as a storage hub for now, analysts say, but soon there will not be any capacity left in Europe so it’s likely to remain an attractive option.
For war-torn Ukraine, holding gas for European companies provides a growing stream of income. It will also feel reassured by the fact that the EU has a stake in protecting Ukrainian gas infrastructure.
Flows to Ukraine will likely keep growing, even as troops battle on the front line hundreds of miles away.
