Ukraine has extended its ban on gas export to Europe, fearing independent producers will export its output for higher international prices.
Ukraine’s energy minister Herman Halushchenko said the availability of gas from independent sources was crucial to domestic power generation because coal production was affected by the war with Russia.
With its increased reliance on gas, Ukraine’s gas storage levels continue to deplete. At the beginning of April DTEK, Ukraine’s largest private utility, estimated that the country had an estimated 8.5 billion cubic meters (bcm) of gas in its underground storage. However, data from non-profit trade body Gas Infrastructure Europe suggests that another 4.6bcm can be extracted to the surface from storage reservoirs, maintained as a buffer to provide working pressure.
Depletion of Ukrainian gas reserves
In 2020, Ukraine reported 26bcm of gas in storage, and the volume has steadily decreased since. In 2023, DTEK has contributed about 900 million cubic meters of gas into storage instead of selling it at discounted domestic gas prices. State-run gas producer Naftogaz Ukraini supplied gas to all households in Ukraine at a fixed price of $210 per 1000 cubic meters (cbm) throughout the winter.
In 2021, DTEK reported a 12% growth in gas production, pushing it over 2bcm and making it the second largest producer in Ukraine. In retaliation, Russia’s state-run oil and gas giant Gazprom cut its gas transit volumes to Europe via Ukraine. These fell by 27% between April and October, reaching 23.2bcm in 2021. In 2022, again by another 60% to 9.5bcm.
Since January 2023, Gazprom has sent 40 million cubic meters of gas per day to Europe via Ukraine. This sits around two times lower than the minimal daily average of 109 million cbm in December 2019.
In September 2022, Naftogaz said it was working to increase natural gas production and could supply gas to Europe for next year’s heating season. Naftogaz’s chief executive Yuri Vitrenko told Reuters it could expand production by 10%-30% ahead of winter. However, critics maintained scepticism given Ukraine’s depleting gas reserves and the country’s ban on gas export.
On Monday, Naftogaz declared it had started pumping gas into Ukraine’s underground storage facilities for the winter of 2023-24.