Storage sites on the continent, ranging from old salt caverns to huge overground tanks, are fuller-than-normal after two mild winters and the plunge in demand caused by the pandemic. The unprecedented glut means prices are languishing near record lows.

Ukraine's retired gas fields have emerged as an option for Europe to stockpile the fuel in the past few years after the introduction of a special customs regime that allows foreign traders to inject there. Reduced tariffs are offered to attract fuel from western Europe, BNN Bloomberg reports.

"Extra demand is required at such low prices as storage in northwest Europe is filling too quickly and a new route is necessary to take supplies out of the region," said Marco Saalfrank, head of continental Europe merchant trading at Swiss utility Axpo Holding AG. "Ukraine has important storage capacities for natural gas and we have been increasingly active in the country’s gas trading business."

Gas stored in Ukraine by foreign companies tripled so far in June to 2.8 billion cubic meters compared with the same period last year, storage and pipeline company Ukrtransgaz said on Friday. At the same time, European sites were 77% full on June 17 compared with an average 52% for this time of year.

Last year, only seven foreign companies used Ukraine as a storage option, compared with as many as 54 companies today, according to the operator.

Read alsoUkrainian gas stocks grow by 2.5% to over 19 bcm over week

"We have the lowest gas storage prices in Europe and very attractive transportation tariffs," CEO Sergiy Oleksienko said by email.

Ukraine has about 13 billion cubic meters of empty storage, or roughly 13% of Europe's total capacity. If traders use that space too, it means the threat of negative prices later in the summer may subside, said Elchin Mammadov, an analyst at Bloomberg Intelligence in London. Traders and analysts have been pondering that possibility ever since oil futures fell below zero in April.

Without the Ukraine option, Europe will run out of space before the summer ends if the subdued demand persists, he said. "We are expecting Europe to run out of spare storage capacity by about end of August to early September."

As the amount of gas shipped by Gazprom PJSC to Europe is in decline, Ukraine needs to attract fuel from the west to get storage income, he said.

"The aggregate cost of using Ukrainian storage, taking into account associated pipeline transportation fees between neighboring countries, is no higher than 3.16 euros per megawatt-hour, giving sufficient incentive to use this capacity," Wood Mackenzie Ltd. said in a report in April.

By comparison, European storage sold for between 3.5 euros ($3.93) and 6.5 euros per megawatt-hour in the most recent auction season.

"While European storage facilities are spread across many countries, with different conditions, the Ukrainian ones are under the same rules and have only one operator," said Andriy Olesiyuk, head of the gas desk at Ukraine's D. Trading. "There are advantages to store gas in Ukraine now."