Trafigura stored gas in Ukraine to export when prices rise

Even with war risks, traders and utilities were transferring gas from Moldova and the EU to store it in Ukraine before the heating season to take advantage of relatively-low storage fees and cheaper summer gas prices.

Trafigura stored some natural gas in Ukraine’s underground sites to re-export back to Europe when prices rise.

“Trafigura was one of the few companies to inject gas into Ukraine storage,” the trading house said in its financial report which was published on Friday. 

While Ukraine has said European traders have used its vast gas-storage sites this year, it has avoided naming the companies citing security reasons.

Even with war risks, traders and utilities were transferring gas from Moldova and the EU to store it in Ukraine before the heating season to take advantage of relatively-low storage fees and cheaper summer gas prices.

Ukraine offered foreign companies at least 10bn cubic meters of its underground storage facilities — roughly a third of the country’s capacity left from the Soviet era — and more than 3.2bn cubic metres of the fuel were stored in seven months through October, according to Ukraine’s grid.

That is 4.5 times more than in the same period in 2022.

It is small in comparison to the EU’s storage capacities which are about 100bn cubic metres and were 100% full by early November — well ahead of the region’s target.

Trafigura did not disclose its volumes, but added that it has also expanded gas operations in EU states close to Ukraine. Slovakia, Hungary, the Czech Republic, and Austria used to heavily rely on Russian gas before the war and some still receive the fuel even after supply cuts.

The trading house said European gas prices are still at risk of high volatility next year even though the market has calmed down significantly.

“Although 2023 brought a gradual softening of gas and power prices in Europe on the back of a mild winter, lower demand and increased LNG imports, we expect markets to remain turbulent and prone to spikes in 2024,” it said.

The commodity trading giant paid $5.9bn (€5.5bn) in annual dividends to its employee shareholders, more than triple a year earlier, after churning out another record profit in the 12 months through September. 

The soaring dividend — Trafigura’s biggest ever — is the latest proof of how the world’s largely privately owned commodity trading houses have continued to reap huge rewards from the market volatility triggered by Russia’s war in Ukraine. 

At Trafigura, the payout is shared among about 1,200 top traders and executives who own the company, which means they would each receive an average of nearly $5m each.

The results mark the third straight year of record profit for Trafigura, but cap a turbulent 12 months for the commodity giant. 

The company reorganised its top management in September and is still wading through the fallout of a massive alleged nickel fraud against it. 

The pressure ratcheted up further this week after Switzerland’s top prosecutor charged Trafigura over allegations of bribery in Angola, and the company also revealed a US Department of Justice investigation into “improper payments” allegedly made in Brazil.

Bloomberg