Huge gas storage tank for CZK 2.5bn to be in south Moravia

Prague, March 20 (CTK) - Oil mining company Moravske naftove doly (MND) and Gazprom Germania Wednesday signed a contract for the construction of an underground gas storage tank for over Kc2.5bn in Damborice, southern Moravia, MND informed in a press release Wednesday.

Both companies will contribute to the project's costs in an equal way. Construction work will start next year and the gas storage tank is to start operation in the middle of 2016.

Its capacity will be 448 million cubic metres so it will be one of the largest and most modern gas storage facilities in the Czech Republic. The project is linked with the Czech Republic's energy strategy.

"The current capacity is around 30 percent of annual consumption and we would like to reach 40 percent," Industry and Trade Minister Martin Kuba told CTK in October.

MND opened a gas storage tank for Kc1bn in Uhrice, also in southern Moravia, at that time. Its capacity is 100 million cubic metres of gas. The new gas tank is to strengthen cooperation between MND and Gazprom.

To secure the safety of natural gas supplies to Europe, extension of storage capacities in underground tanks is of key importance, said Gazprom board vice-chairman Alexander Medvedev.

The companies plan further cooperation in the future, not only in the Czech Republic, but also in Russia and elsewhere in Europe.

MND Group focuses on oil mining and surveying, drilling and services, as well as storage of and trading in gas. Its sole shareholder is KKCG Oil & Gas B.V. whose assets are worth over Kc25bn and which is owned by financial and investment group KKCG of billionaire Karel Komarek.

Rival group RWE also invests into gas storage tanks. It launched operation of a new part of a gas storage facility in Tranovice, northern Moravia, in May 2012. The EU took part in the Kc2.2bn investment.

By building new gas storage tanks, Czech companies react to a potential halt to gas supplies from Russia. Companies Ceska naftarska and GSCeP also prepare gas storage tanks near Breclav in southern Moravia and in Rozna in the Vysocina region.