Prices of short-term natural gas supplies in the EU market jumped by 150% per day as a result of a technical accident in Austria. The release of gas occurred on one of the two underground storage facilities operating in this country (UGS). Italy, which is receiving gas from the neighboring belligerent Libya in an irregular manner, had to transfer its energy system to a state of emergency due to an accident in Austria. The Russian Trail Such an acute reaction of Rome to, in general, an ordinary Austrian technical accident is due to the aggravation of the war in Libya. What could result in the cessation of imports of gas from the south-eastern direction. The threat only increased after the Russian Federation, by secret agreement with one of the Libyan commanders, Colonel Hattar, at the beginning of this year began the covert emission of the Libyan dinar by the Russian mint to support one of the parties in the Libyan war. And last week, the Russian Federation with an eye to fomenting a war in Libya began negotiations with Egypt and Sudan about the cost of opening Russian military bases in these countries. Such foreign policy problems are painfully affecting the gas sector in Italy: Libya supplies it with about 10% of gas, another 20% comes from Algeria and marine LNG terminals. The remaining 50% of supplies fall on transit from Austria, where the Norwegian, British and Russian gas purchased by Europeans. Because of the accident, this transit to Italy was completely blocked. If, in such a situation, the import from Libya suddenly breaks off, the Italian market may plunge into a gas panic. How this turmoil can affect prices, has clearly demonstrated the current crisis. At the close of trading on Tuesday, short supply was quoted by the local gas exchange for $ 292 / thousand. cube. Immediately after the accident, the wholesale price of pipeline gas soared to $ 413 and continued to grow. A day later, the prices of the swap market overcame the psychological barrier of $ 500 / thousand. cu m. For understanding: so much gas cost in European retail in 2008-2009, during the last unsuccessful attempt of the Russian Federation to block gas supplies to Ukraine and the countries of Eastern Europe. Cheaper will not be Ukraine for several years provides 100% of its imports through reverse and swap supplies from Europe. A swap resource is surplus supplies under long-term contracts of European companies with the Russian Federation, Norway and the United Kingdom. At the lower seasonal peak of consumption, the long-term natural gas surplus in the EU accumulates in the storage facilities of Austria, Hungary, Poland, Slovakia and the Czech Republic. Their UGS is fed by short-term transaction hubs. According to which gas is supplied to Ukraine using substitution schemes or directly through front-line interconnects. The weakest link in this market is European UGS, whose capacities are chronically in short supply. For example, Austria, which has a nodal status for the continental gas trade, has only two UGS facilities. In Ukraine there are 12 such. Kiev for more than two years delayed with the admission of international corporations to the giant Ukrainian UGS, but since 2017 they have started to work in the customs warehouse. In many respects due to this step, more and more European companies start to store the pipeline gas purchased from Russian companies in Ukraine, and not in the EU. The increase in the storage capacity allowed to restrain the prices of the Ukrainian import market. In November, they showed a slight increase in the range of $ 224.9-239.5 / thousand. cube. But what about the import prices after the current accident? Modernization and repair of underground storage facilities is a capital-intensive and. Therefore, the reduction of gas prices for Ukraine will not be exactly. But how much they will grow - first of all depends on which of the gas corporations will be able to use the accident to increase the competitive pressure on their rivals. Ukrainian storage in great demand Tragic Austrian events at first glance may seem very beneficial for Ukraine, which has a dozen UGS. Moreover, our authorities by the autumn of 2017 decided to hire an investment broker to divide and evaluate the state's gas assets. Gas storages in these assets play no less important role than compressor stations and gas mains. No matter how the process started now, the Austrian accident will definitely play on the growth of their attractiveness. Indeed, unlike Austria and other European countries, Ukrainian UGS due to their number and capacity can duplicate each other, reducing the risks of disruptions in deliveries. However, everything is not so rosy. Now in Kiev, few people are able to predict what and when the reform of gas assets will be completed. For example, the schedule of this reform is tightly tied to the verdict of the Stockholm Arbitration for a multi-billion dispute between Naftogaz Ukrainy and Gazprom. Meanwhile, there is no doubt that Europe after the price shock due to the accident will necessarily audit the efforts that Brussels is taking to expand the sources of gas supplies to the EU. And this "strategic result of the accident" is capable of putting Kiev in a very uncomfortable position: it may turn out that Ukraine, which is already weakly integrated into Europe, still looks at Moscow, developing emergency plans. That is, it has a much smaller attitude toward a single European gas policy than it seems to many now. My hut is on the sly Now the EU's efforts are focused on four promising construction projects that are being implemented in the neighborhood with Ukraine, but without her participation. The first is the LNG terminal in Croatia. The second is the Eastring gas pipeline from Romania to Hungary, which is lobbied by the corporations of France, Italy and Slovakia. The third is the British-promoted South East Europe Pipeline (SEEP) pipeline, which will link Romania and Austria. Finally, the Balkan gas pipeline Tesla, in which Gazprom sees a logistic continuation of the Turkish Stream gas pipeline bypassing Ukraine. All these projects serve, in one way or another, long-term and common European interests. And the forces to participate in them find even the smallest and economically weak countries, like Macedonia or Albania. After all, their implementation will not only restrain the growth of prices in Europe, but also minimizes the consequences of accidents such as the Austrian. What steps could Ukraine take in the last few years in this direction? Almost no. And if you do not take into account the efforts to assess the value of the Ukrainian GTS, it may turn out that our country, which is so persistently demanding attention from Europe, cares only about its short-term interests. First, they plan to lease or sell part of their GTS in Kiev, and only then, perhaps, they will be able to deal with the common gas problems of the continent.

If the European Commission as a result of the accident takes on the revision and tightening of the European gas policy, it will inevitably face the reality of Ukrainian isolationism. In the least, it is noticeable in the development of the common energy networks in Europe. But in the gas issue, things often do not go beyond empty declarations. Andrei Starostin.

Original article: The growth of gas prices or a large-scale audit: what will be the explosion in Ukraine for Austria.