Analytics

Gas threat: how Ukraine can survive the next heating season

ANALYSIS

The abnormally warm winter helped Ukrainians get through the heating season, although there is a minimal amount of natural gas in storage. And now we need to prepare for the next heating season and pump at least a minimum amount of fuel into the storage facilities. Komersant ukrainskyi analyzed how much gas Ukraine needs, where to get it and how it will affect consumers.

As of today, about 5 billion cubic meters of gas remain in our underground storage facilities. In February, we had to urgently import up to 0.5 billion cubic meters of the required 0.8 billion cubic meters. Naftogaz managed to get through this winter, but the next heating season is under threat. To survive 2025-2026, Ukraine needs to purchase at least 4 billion cubic meters of gas, and preferably up to 6 billion. This requires a substantial amount of money, which at current prices on European exchanges is between $2 and $3 billion, and the budget does not have such money. In addition, gas production in Ukraine has fallen by about 40% since the beginning of the year after the missile strikes. Before the attacks, Ukraine was producing about 52 million cubic meters of gas per day. This year, the problems have only increased.

According to economic experts, the natural gas injection season lasts until November. “Last year, we pumped 14.8 billion cubic meters, but then there was a lot left over from the previous year. And in 2023, we pumped 16 billion cubic meters, of which 3 billion was gas from international companies, although we also used it. The role of these 3 billion cubic meters of gas was very important – it created additional pressure in the system. In fact, in the winter of 2023-2024, gas consumption amounted to 19.8 bcm. This was enough to get us through 2022, but there was still a reserve of 9 bcm in the storage facilities.

We need no less gas than last year

Today, gas storage facilities have record low gas reserves. This is a fact. But the thing is that last year we pumped about 15 billion cubic meters, which is very little. And given that the transit of Russian gas has stopped since 2025, the pressure has dropped and it is difficult to withdraw the remaining reserves.

“Storage reserves have dropped to 5.5 billion cubic meters. And this is despite the fact that in January, large enterprises that consume a lot of gas, such as fertilizer plants, practically did not work. But since there is no pressure, we have to end the heating season for district heating ahead of schedule. I think that we should have 4.5 billion cubic meters of buffer gas left, which should not be pumped in. Although by 2013, according to the parameters, there should have been 6.5 billion cubic meters of buffer gas, but the parameters were reduced,”

– energy expert Yuriy Korolchuk tells .

“If we count on a warm winter, we need to pump 16 billion cubic meters for the next season. We have about 5 billion left, and another 5 billion cubic meters of gas can be pumped by our own production. That is, we need to buy and deliver at least 5 billion cubic meters somewhere and for something. There is information that Norway is providing an additional NOK1 billion ($95 million) to finance gas imports to Ukraine. A number of other allies have allocated money. But this is not enough. After all, by mid-October, Ukraine needs to have at least 13 billion cubic meters of gas in stock. But if traders save 2-3 billion more, it will be great. Pressure will play a huge role, emphasizes Yuriy Korolchuk.

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Gas tariffs may jump

According to experts, today Ukrainians are being led to believe that because of Russian shelling of the gas production industry and distribution stations, it would be a good idea to raise tariffs. Although there is no justification for this.

“When electricity tariffs were raised, we were told that this money was needed to restore the energy sector. However, there was no connection between the tariffs and the restoration of power plants, despite the fact that TPPs and CHPs were mostly intact at that time. But today everything is going to the point where it is about to be announced that gas tariffs need to be raised, and the gas industry needs to be restored. Although gas production is still going on, it has dropped slightly, but not critically – we produce 48 million cubic meters,”

– said Korolchuk.

Economic expert Oleh Popenko believes that an increase in gas tariffs is a very real prospect, given that the average price of gas is already at $500 per 1000 cubic meters. It has already become more expensive to purchase. And this financial burden needs to be passed on to someone.

“I do not rule out that a decision will be made to raise the price of gas for households and district heating companies. I know for sure that Naftogaz made calculations and studied how this would change the situation. They were considering a price of UAH 10-11 per cubic meter. I personally do not see any point in raising tariffs. Compared to last year and the volumes we need, if we buy gas at $500, then, taking into account the balance, it will cost $470 per 1,000 cubic meters for everyone except households and district heating companies. It’s even cheaper than the purchase price,”

– explains Oleg Popenko.

According to the expert, any increase in tariffs will lead to an increase in debts of ordinary consumers. And no one will benefit from this.

Gas production and consumption in figures

Since 2014, Ukraine has been systematically reducing its consumption of natural gas. This is not surprising, given the loss of territory, population, and industry.

In 2013, Ukraine consumed 50.4 billion cubic meters of gas (19.1 billion by industry and 27 billion by households), in 2014 – 42.6 billion cubic meters (14.4 billion by industry and 24.2 billion by households), and in 2015 – 33.8 billion cubic meters (11.2 billion by industry and 18.9 billion by households).

In 2013-2015, gas production amounted to 21.4 billion, 20.5 billion and 19.9 billion cubic meters. The share of private companies increased.

In 2016, Ukraine produced 20.1 billion cubic meters of gas (4.2 billion by private companies), in 2017 – 20.5 billion cubic meters (4.1 billion by private companies), in 2018 – 21 billion cubic meters (4.4 billion by private companies), in 2019 – 20.7 billion cubic meters (4.6 billion by private companies), in 2020 – 20.2 billion cubic meters (4.9 billion by private companies), in 2021 – 19.8 billion cubic meters (private companies produced a record 5 billion).

But already in 2019, 29.9 billion cubic meters of gas were consumed (8.1 billion by industry and 14.1 billion by households), and in 2021 – 28.7 billion.

In the first year of the full-scale war, gas production in Ukraine decreased to 18.5 billion cubic meters, of which 4.3 billion were produced by private companies. Gas consumption by households and industry fell to 19.5 billion cubic meters in 2022.

Author: Alla Dunina