The Czech government has seized unused gas storage capacity in a facility part-owned by Gazprom, the Russian gas giant, in order to boost the country’s gas reserves before the coming winter.
The Czech government has seized unused gas storage capacity in a facility part-owned by Gazprom, the Russian gas giant, in order to boost the country’s gas reserves before the coming winter.
A view inside the Damborice gas storage, Czech Republic. Credit: Moravia Gas Storage official website
Under an amendment made to the country’s Energy Act, signed into law in June, the state can seize unused gas capacities in gas storage facilities across the country.
EU member states have agreed to raise the usage of their gas storage facilities to 80% before the start of November. Czechia has currently filled 81% of its storage capacity but only 35.9% of the capacity in the Damborice gas storage facility part owned by Gazprom is currently full.
Damborice is operated by Moravian Gas Storage (MGS), a joint venture owned by Gazprom and MND which is part of the KKCG holding of companies of Czech billionaire Karel Komarek. Almost the entire capacity in the facility was leased to Gazprom.
The facility is one of the most modern underground gas storage facilities in Europe and its construction was commenced in 2013 following the establishment of Moravian Gas Storage. Its overall capacity is 448 million cubic meters, of which the Czech government has seized half, or 242 million cubic meters.
The new legislation stipulates that unused gas capacities need to be auctioned or the operators risk losing it. The Ministry of Finance said that no buyer took part in a recent auction organised by Moravian Gas Storage. Gazprom has warned European consumers that they face further gas price pain this winter as its own supplies to the continent remain heavily constrained and soaring summer temperatures continue to drive up energy demand.
Following the Russian invasion of Ukraine, KKCG has been in talks over the transfer of its shares in Moravian Gas Storage to the Czech state in attempt to improve its image. Komarek’s close links with Russia have become an embarassment to the gambling tycoon. Komarek has written an open letter criticising Russia’s invasion. According to KKCG’s website, MND is the fastest growing independent energy supplying company in Czechia.
