Gazprom expands a network of underground gas storages in Europe

Growth of delivery of the Russian gas is observed in Europe against the background of gas prices reduction. If in 2014 export of Gazprom to foreign countries made 146.6 billion cubic meters, in 2015 it was already 159.4 billion cubic meters. In the first quarter of 2016 delivery of the Russian gas to foreign countries increased on 28.6%. Gazprom expands a network of underground gas storages to be closer to consumers.

Underground gas storages play an important role in ensuring reliability of gas supply. As a rule, final recipients of natural gas are strongly removed from the regions of gas production and it is impossible to react flexibly to seasonal fluctuations of demand when transporting raw materials for long distances. At the same time creation of certain reserves of gas in close proximity to sales markets gives a chance to satisfy any inquiries of consumers in the operational mode. It is extremely important for suppliers of natural gas, after all demand for its subject is liable to considerable fluctuations. So, from July to September it is usually the lowest, and in January-March, on the contrary, reaches the peak. Within a year the maximum current yield of gas exceeds minimum more than three times. In intervals between these periods, both serious falling and significant growth in consumption of energy carriers are possible. Let’s note also that in days of sharp winter cold snaps a gas transmission system working at full capacity is not always capable to provide strongly increased needs of certain regions for natural gas. And there is no wonder — demand for gas for heating can increase at this time more than in 10 times. It is satisfied with the additional volumes which are taken from underground gas storages.

Thus, underground gas storages are used as effective tools which provide flexibility of operations in the market. Interest in them in the world is very great last years. First of all capacity of gas pipelines through which the raw materials are delivered to the regions of consumption, is calculated proceeding from an average annual level of the planned sales. Gas is transported on pipelines approximately in the same volume during the whole year — work of gas mains would be unprofitable if their loading was not a constant and changed of a month by a month depending on demand for natural gas.
Capacities of underground gas storages in foreign countries are necessary to Gazprom in the long-term plan therefore it is favorable to corporation to be their owner for two reasons. First, Gazprom can at any time guarantee using them at its discretion, in particular, allows reacting more flexibly to changes of the market during the periods of peak demand. Secondly, after the investments made in creation of underground gas storages pay off, maintenance costs of this storage will equal to the operational expenses. And in case of rent Gazprom should pay high commercial tariff for underground storage within 20-40 years.

For the first time Gazprom Group received own capacities of underground storage of gas in Europe in the frames of joint venture with German Wintershall — WINGAS. Let’s remind that in 1992 this joint venture, in which a share of Russian side made 35%, began construction of underground gas storage Rehden on the basis of the exhausted gas field in Lower Saxony (the license for it belonged to Wintershall). The storage was put into operation next year and by 2000 it turned into the largest underground gas storage not only in Germany but also in all Western Europe. Its power reached 4.2 billion cubic meters of active gas. By this time the raw materials volumes in storage reserved by Gazprom Group made 800 million cubic meters. In 2007 the Russian side increased participation in authorized capital of WINGAS to 50% minus one share, and its capacities in underground gas storage Rehden in parallel grew to 1 billion cubic meters of gas. Now WINGAS belongs to Gazprom for 100%. However, in 2012 for observance of norms of the Third power package WINGAS allocated the capacities of underground gas storages in the separate company — Astora. At the end of 2015 it also passed into the ownership of Gazprom. Power of underground gas storage Rehden makes 4.4 billion cubic meters. Besides, Astora is engaged now in creation of underground gas storage Jemgum in salt deposits with capacity 1 billion cubic meters of gas in Saxony (Germany).

Gazprom entered the European market of underground storage in 2005 independently, if, of course, not to consider rent of capacities of underground gas storage in Austria and Germany at OMV and Verbundnetz Gas respectively. Gazprom, WINGAS and the Austrian oil and gas company RAG (owns concession on the exhausted gas Haidach field in the northwest of Austria) created a joint venture for construction and operation of a new underground gas storage. In 2007 the first stage of the project was completed — capacities on 1.2 billion cubic meters of active gas were put into operation. The second stage ended in 2011 then volumes of storage increased to 2.4 billion cubic meters and underground gas storage Haidach became the largest in Austria. Haidach is in close proximity to the German-Austrian border. It is connected to a gas transmission network of Germany that allows using its capacities for implementation of deliveries to both German and Austrian consumers and through swap operations to deliver gas to Italy, Czech Republic, Slovakia and France. Now the power of underground gas storage Haidach reached 2.98 billion cubic meters, thereof about 2 billion cubic meters account for a share of Gazprom.

In the spring of 2008 the cooperation agreement in area of creation of underground gas storage in the territory of Germany was signed with the German Verbundnetz Gas. In May, 2009 the partners founded JV Erdgasspeicher Peissen GmbH on a parity basis for construction of Katharina storage on the basis of structure of Peissen with a power up to 600 million cubic meters of gas. It is a salt cavity. This underground gas storage will reach design capacity only by 2025. At the end of 2014 the third cavity of underground gas storage Katharina was placed in operation. As a result, its power reached 170 million cubic meters.

Besides, in the summer of 2009 JSC Gazprom Export signed an agreement with the consortium composed of the Dutch Energie Beheer Nederland (EBN) and Dyas, Petro-Canada and TAQA Energy (affiliated structure of the national energy company the United Arab Emirates TAQA of the emirate Abu Dhabi) created for creation of underground gas storage Bergermeer in Holland. According to the document the Russian side undertook to deliver 4.7 billion cubic meters of buffer gas instead of what it acquired a right of access to underground gas storages. This storage holds strategically important position in the European market as it is in the center of a gas hub of TTF and, respectively, has an entry into the energy markets of not only Holland but also Germany, Great Britain, France and Belgium. Bergermeer provides reliability of supply of gas from Russia on Nord Stream. At the beginning of 2015 Bergermeer was put into commercial operation. Its net volume makes 4.1 billion cubic meters of gas, 1.9 billion cubic meters account to a share of Gazprom.

On the Balkans Gazprom was engaged in creation of underground gas storage on the basis of the exhausted gas Banatski Dvor field in Serbia. The license for this structure belonged to the state Srbijagas. In the fall of 2009 Gazprom signed the agreement on implementation of this project with the Serbian company. In November, 2011 underground gas storage Banatski Dvor was put into operation. The active volume of storage makes 450 million cubic meters of gas. A share of the Russian side makes 51%.
In the fall of 2013 there was information that the MND Company of Czech billionaire Karl Komarek leased to Gazprom a gas storage which is under construction in South Moravia for 15 years for 290 million euros. Gazprom within 15 years will be able to use 90% of volume of storage in Damborzhitsakh which is to be put in operation in 2016. The volume of gas storage in South Moravia makes 448 million cubic meters. Gazprom reserved for itself 403 million cubic meters.