Ukraine Needs to Import More Gas as Russia’s Attacks Reduce Production

Ukraine plans to increase natural gas imports to 3.5 billion cubic meters in the next heating season following Russia’s attacks on critical infrastructure, which have significantly reduced its own production capacity, Bloomberg reported.

Due to Russian strikes on energy infrastructure in February 2024, Ukraine could face a drop in local production of up to 40%, Reuters wrote, citing its “senior industry source.” 

The global gas market remains unstable and prices are high, while Europe is looking to replenish its declining reserves.

According to Bloomberg, Ukraine’s intention to increase imports could add pressure on the European market.

The Ukrainian government estimates its gas importation needs for the next season at around 3.5 billion cubic meters, a representative of the energy sector familiar with the calculations told Bloomberg.

At the same time, actual volumes may either increase or decrease depending on various circumstances, an anonymous source told the media outlet.

“We are awaiting the final approval of the balance, which will determine the forecasted volumes of consumption, production, and gas imports,” acting CEO of Ukrainian leading gas company Naftogaz Roman Chumak told Bloomberg. 

How the full-scale war has affected Ukraine’s gas market

Since the beginning of Russia’s full-scale invasion in 2022, Ukraine has reduced its imports of fuel, as domestic consumption has declined due to migration, loss of industrial demand, and energy-saving efforts.

Due to destruction of electricity generation and transmission, Ukrainian businesses were forced to pay more for imported electricity from the European Union. These costs were also passed on to consumers, National Bank of Ukraine Deputy Governor Sergiy Nikolaychuk had previously told Kyiv Post. 

Russia’s strikes on gas infrastructure have reduced the country’s production capacity, while a cold winter has increased heating demand. As a result, the country’s reserves have dropped to low levels, forcing Ukraine to purchase natural gas from the EU, Bloomberg wrote.

Over the course of more than three years of Russia’s full-scale war, Ukraine’s gas production has dropped by 3.5% – to 19.1 billion cubic meters. Ukrainian private companies have reduced production by 32%, while state-owned companies experienced only a 6% drop.

The key reason is the gas export ban imposed in June 2022, extended into 2025, which private companies call unreasonable.

In February alone, Ukraine imported 560 million cubic meters of gas, according to data from the Gas Transmission System Operator of Ukraine. 

According to the data, Ukraine imported gas from Slovakia, Hungary, Poland, Romania and Moldova. Although the data does not disclose whether all volumes of gas were imported as a replacement for Ukrainian-produced gas, part of the imports may be transported further into European countries. 

Approximately 700 million cubic meters were purchased for the entire heating season in 2023, according to estimates by Denys Sakva, an energy analyst at Kyiv-based investment firm Dragon Capital, cited by Bloomberg. 

It also reported that the EU is now considering financing Slovakia and Hungary to store non-Russian natural gas in Ukrainian storage facilities next winter.

This could help Ukraine secure its own supplies from further Russian attacks through protection from EU countries.