Ukraine was able to grow its natural gas production in 2024 as two state-run producers, Ukrgazvydobuvannya and Ukrnafta, continued exploration and development drilling despite war-related challenges, while the lack of incentives and export restrictions weighed on privately held gas players.
Kyiv-based energy consultancy ExPro said that natural gas output rose by 2.3% year-on-year to 19.12 billion cubic metres in 2024 after falling to 18.5 Bcm in 2022 as the sector was significantly impact by Russia’s invasion of the country that started in February 2022.
According to ExPro, the burden of last year’s gas production increase was shouldered by Ukrgazvydobuvannya and Ukrnafta, the two subsidiaries of state-owned gas producer and distributor Naftogaz.
Together, the duo produced about 15.7 Bcm of associated and natural gas in 2024 compared to 15 Bcm in the previous year.
In December, Ukrgazvydobuvannya commissioned another deep well, drilled to the depth of 5400 metres, that produced at the daily rate 150,000 cubic metres, according to Naftogaz.
However, gas production by a group of privately held gas producers fell again last year, declining by 8% to about 3.4 Bcm, ExPro said.
Privately held producers have repeatedly complained about the lack of government support and incentives to underpin their investments during the continuing war and the state prohibition to export gas to European markets, forcing them to sell their excess gas to Naftogaz.
With the transit of Russian gas from the east to the west of the country halting on 1 January following the expiry of the transit contract between the two countries, followed by rising tensions between Ukraine and Slovakia in the result of such stoppage, Kyiv becomes increasingly reliant on its own gas production to meet domestic demand.
Slovakia’s leverage
Slovakia controls the largest physical reverse flow connector to Ukraine, capable of delivering about 42 million cubic metres per day of gas at an uninterrupted rate from Europe to the war-torn country.
Previously, in case of supply shortage, Kyiv had an option to buy some Russian gas in transit from its owners in Europe under a so-called virtual reverse arrangement, which allowed Ukraine to withdraw purchased gas for its own needs while it was still inside the country’s pipeline network.
In several posts on his Facebook page, Slovakia’s Prime Minister, Robert Fico, has threatened to consider cutting electricity supplies to Ukraine and reducing aid to Ukrainian refugees unless Ukraine agrees to resume the transit of Russian gas.
Industry analysts in Kyiv have suggested that imposing restrictions on gas flows via the Slovak interconnector to Ukraine could be the next step that authorities in Bratislava might resort to in order to press Kyiv on the Russian gas transit issue.
Transparency disclosures by Slovak gas transmission operator Eustream show the country has not been in any rush during the first days of January to start gas deliveries via alternative routes to replace Russian gas supplies. Moreover, Slovakia has reduced imports of gas from Hungary by 21% to about 7.2 MMcmd in January versus December.
Meanwhile, Slovakia’s neighbours, the Czech Republic and Austria, since 1 January have fully substituted the missing Russian volumes by importing gas via connectors with Germany.
At the end of December, ahead of the Russian transit stoppage, Czech Industry Minister, Lukas Vlcek, assured his Slovak counterpart, Denisa Sakova, that the country is capable of providing Slovakia with gas transit and storage capacities to help it secure stable supplies, the ministry in Prague said.
Ukraine’s gas transmission operator TSOUA has showed extremely low inflows and outflows of gas from the country’s pipeline network after 1 January, with no activity on the country’s connector with Slovakia.
Privately held Ukraine’s gas player D.Trading in a statement said that the first liquefied natural gas cargo would be imported to Ukraine during January.
At the end of December, D.Trading said it bought about 100 million cubic metres of LNG that was delivered onboard the carrier Gaslog Savannah to the Revithoussa LNG terminal in Greece.
Source: Upstream
