Gas is an important part of energy in Ukraine. About 20 billion cubic meters of fossil gas is extracted each year, and since 2022 this has almost met demand, which in winter can reach 150 mcm a day. Ukraine has the largest gas storage in Europe.
Domestic production
Ukraine has been estimated to possess natural gas reserves of over 670 billion cubic meters (in 2022).
Domestic production peaked in 1975 at 68.1 billion cubic meters (bcm). Since then production gradually declined, stabilising in recent years at around 20 bcm.
Ukraine aimed to increase natural gas production in the Black Sea from 1 bcm in 2011 to 3 bcm in 2015. In 2012, Black Sea production reached 1.2 bcm and was predicted to rise to 1.65 bcm in 2013.
In 2012, Naftogaz and China Development Bank signed a deal to switch power and chemical production plants from natural gas to coal gasification technologies developed by China in order to reduce reliance on imported gas.
Over 70% of domestic gas production is extracted by UkrGasVydobuvannya,http://www.oecd.org/corporate/SOE-Reform-in-the-Hydrocarbons-Sector-in-Ukraine-ENG.pdf , OECD Report on SOE Reform in the Hydrocarbons Sector in Ukraine a subsidiary of the state-owned company Naftogaz. Private gas production companies in Ukraine are DTEK, Ukrnaftoburinnya, Burisma, Smart Energy, Poltava Petroleum Company, Geo Alliance Group, and KUB-GAS.http://agpu.org.ua/en/association/section-member_companies/ Associations of Gas Producers of Ukraine
During Soviet times, Ukraine produced a record of 68.7 bcm in 1976. At the time of independence in 1991, production was at 26.6 bcm, and fell in the 1990s to about 18 bcm. Since the mid-2000s, production stabilised between 20 and 21 bcm, but was damaged by Russian attacks.
Proven reserves +Ukrainian natural gas reserves (2019)10 фактів про видобуток українського газу — Економічна Правда, 5 вересня 2019 Region Millions m3 Kharkiv Oblast 317,630 Poltava Oblast 270,868 Lviv Oblast 72,272 Black Sea 37,506 Ivano-Frankivsk Oblast 30,556 Sumy Oblast 29,443 Autonomous Republic of Crimea 16,761 Dnipropetrovsk Oblast 13,079 Luhansk Oblast 12,591 Chernihiv Oblast 9,296 Chernivtsi Oblast 3,408 Zaporizhzhia Oblast 2,987 Zakarpattia Oblast 1,289 Volyn Oblast 1,022 Odesa Oblast 137 Donetsk Oblast 84 Azov Sea 14
Consumers Ukraine is a major natural gas consumer, being ranked thirteenth in the world and fifth in Europe. Consumption levels have fallen from 118 bcm in 1991 to less than 55 bcm in 2012, and from 50.4 bcm in 2013 to 29.8 bcm in 2019. Heavy industry is the largest consumer of natural gas in Ukraine (accounting for 40% of domestic consumption), followed by households (over 30%), and communal heating systems for government buildings and residential properties (20%).
Naftogaz stated in 2013 that only four Ukrainian Oblasts (provinces) made regular payments for natural gas.Only four regions regularly paying for gas in Ukraine – Naftogaz official, Interfax-Ukraine (17 December 2013)
Ukraine announced in 2014 that household natural gas prices would rise by 50% in order to receive an IMF $14–18 billion rescue package.
In the first seven months of 2014, gas consumption in Ukraine fell by 15%; this was amidst the Annexation of Crimea by the Russian Federation and the wider Russo-Ukrainian War.
Electricity generation
Imports Despite its own production of natural gas, Ukraine still had to import about 80% of its natural gas needs in 1999.Ukraine at the Crossroads: Economic Reforms in International Perspective by Axel Siedenberg (Editor), Lutz Hoffmann, Physica-Verlag Heidelberg, 1999, / (page 393) After 2008, the Ukrainian volume of imports of natural gas dropped. According to estimates from 2017, Ukraine domestically supplies 63.8% of its own gas consumption, whereas 36.2% is imported from other countries. Traditionally, Ukraine imported natural gas mainly from Turkmenistan and Russia (about two-thirds of its gas in 2012).Europe Review 2003/4: The Economic and Business Report, Kogan Page, 2004, / (page 384) Since November 2012, Ukraine has diversified its suppliers of imported natural gas.Naftogaz to buy 18 b cubic meters of gas from Gazprom in 2014, says Bakulin, Interfax-Ukraine (13 June 2013)Naftogaz Ukrainy buys 320-350 mcm of gas from Gazprom in May, says Stavytsky, Interfax-Ukraine (13 June 2013)German RWE ready to supply gas to Ukraine via Slovakia, Interfax-Ukraine (14 June 2013)Ukraine hopes for diversification of gas supply sources and emergence of new suppliers, Interfax-Ukraine (17 June 2013)Ukraine to continue diversification of energy supplies, says president, Interfax-Ukraine (30 August 2013) In January 2014, Ukrainian Energy and Coal Industry Minister Eduard Stavytsky stated that Ukraine (at that time) will buy only Russian natural gas "because it's currently the most profitable".
In June 2014, Russia halted its natural gas supplies to Ukraine because Ukraine refused to pay a debt to Gazprom of $4.5 billion that had arisen after Russia denounced the 2010 Kharkiv Pact in March 2014.State Duma approves denunciation of Russian-Ukrainian agreements on Black Sea Fleet, ITAR-TASS (31 March 2014)https://www.bloomberg.com/news/2014-04-03/russia-to-charge-ukraine-more-than-germany-as-gas-discounts-end.htmlUkraine crisis: Russia halts gas supplies to Kiev, BBC News (16 June 2014)Ukraine crisis: Russia halts gas supplies to Kiev, BBC News (16 June 2014)Russia Cuts Gas to Ukraine While Maintaining Flow to EU , Bloomberg News (16 June 2014) In June 2014, Ukraine increased imports of natural gas from Poland and Hungary. Ukraine has not bought gas directly from Russia since 2015, sourcing it instead from traders of the gas which is transported through Ukraine to be sold elsewhere in Europe. Winter consumption is usually supplied about equally from production and withdrawals from storage, but in early 2025 imports may have to be increased due to wartime damage to production and low storage levels.
Prices of import Disputes over gas prices have led to several economic conflicts with Russia since 1990.Country profile: Ukraine, BBC News After 2004, Russia began to steadily raise the price of its natural gas exports to Ukraine, aiming to bring prices in line with the rates paid by other European states. Until 2005, Ukraine was charged $50 per 1,000 m³; the price rose to $426 per 1,000 m³ in 2012. In January 2013, Ukraine paid $430 per 1,000 m³.Ukraine set to sign landmark $10 billion shale gas deal with Shell, Reuters (24 January 2013)Shell for shale: Ukraine signs major deal , Euronews (25 January 2013)UPDATE 1-Ukraine signs landmark $10 bln shale gas deal with Shell, Reuters (24 January 2013)
These rapid price increases raised Ukraine's annual cost of gas imports from less than $4 billion in 2005 to $14 billion in 2011 and 2012. Natural gas is Ukraine's biggest import at present and is the main cause of the country's structural trade deficit.
In the 17 December 2013 Ukrainian–Russian action plan, it was agreed that the cost of Russian natural gas supplied to Ukraine would be lowered to $268 per 1,000 cubic metres from a price of more than $400 in December 2013.Russia cuts Ukraine gas price by a third, BBC News (17 December 2013)Ukraine to issue Eurobonds; Russia will purchase $15 bln, says Russian finance minister, Interfax-Ukraine (17 December 2013)
During the Russo-Ukrainian War, which started in February 2014 with the Russian military invasion of Crimea, severe tensions extended to the gas sector. The EU commissioner for energy, Günther Oettinger, was called in to broker a deal securing supplies to Ukraine and transit to the EU. The package signed in October 2014 included Russian supplies of gas to Ukraine from November 2014 through March 2015, conditional on the payment of undisputed Ukrainian gas debt ($3 billion). The price for November and December 2014 was set at $378 per thousand cubic meters, to be adjusted in January. Deliveries were to be prepaid.Russia-Ukraine gas deal secures EU winter supply, BBC (31 October 2014) During that winter, Ukrainian monopoly Naftogaz was able to import limited quantities of gas from the EU (reverse flow from Slovakia, Poland, and Hungary) at Central European hub prices, around $250 per thousand cubic meters.
In 2014, due to a severe drop in the oil market price (the price halved between the middle and end of the year), Gazprom had to reduce the oil-linked gas price. In January 2014, Naftogaz and Russia's Gazprom signed a supplement to the Russian-Ukrainian gas contract, setting the price of natural gas for Ukraine in the first quarter of 2014 at $268.5 per 1,000 cubic meters.Naftogaz, Gazprom sign supplement to gas contract, set gas price for Ukraine in Q1, 2014 at $268.5 per 1,000 cubic meters - Stavytsky, Interfax-Ukraine (9 January 2014)
Reverse flow After the end of gas purchases from the Russian Federation in November 2015, Ukraine started to purchase natural gas from Poland, Slovakia, and Hungary, and is planning a provisional pipeline from Romania through Moldova. There was no physical reverse flow, but a virtual reverse flow (also known as "netting"). Ukraine bought natural gas from international gas traders as part of the volumes that Gazprom sent westwards through Ukraine.
Transmission
The natural gas transmission system of Ukraine is a complex of pipelines for import and transit of gas in Ukraine. It is one of the largest gas transmission systems in the world. The system is linked with the systems of Poland, Romania, Moldova, Hungary and Slovakia, and was formerly linked with the natural gas transmission systems of Russia and Belarus. The system is owned by Government of Ukraine and operated by Gas Transmission System Operator of Ukraine. Some local transmission lines together with distribution sets are owned by regional gas companies.
Technical description
The natural gas transmission system of Ukraine consists of of pipelines, including of trunk pipelines and of branch pipelines. In addition, the system includes 72 compressor stations with 702 compressors, having a total capacity of 5,442.9 MW, and 13 underground gas storage facilities with an active storage capacity of .
As of 2024 1 million cubic metres can be imported from the Trans-Balkan pipeline through the Orlivka gas metering and compressor station, and this is expected to increase to 7 million in 2025.
As of 2009, the system had import capacity of and export capacity of per year.
Before 2012, gas entered to Ukraine only from entry points on borders with Russia and Belarus. Most of the gas transit went to Slovakia and further to other countries in Central and Western Europe. Smaller amount of natural gas was transported to Hungary, Poland, Romania, and Moldova. In 2012–2014, some entry/exit points with Poland, Hungary, and Slovakia were modified to also allow the gas flow to be reversed from these countries back into Ukraine.
The value of the Ukrainian transmission system is estimated at US$9–25 billion. In 2004, the Ukrainian Centre for Economic and Political Studies estimated its value at $12–13 billion.
Underground gas storages Ukraine has 12 gas storage facilities operated by Ukrtransgaz. Five of these are located in Western Ukraine, two in Central Ukraine and five in Eastern Ukraine. In addition one gas storage, the Hlibivske storage facility, operated by Chornomornaftogaz, is located in Crimea and currently is not controlled by Ukraine authorities. The largest storage is Bilche–Volytsko–Ugerske in Western Ukraine having more than half of the Ukrainian total storage capacity.
Rehabilitation and modernization