Ukraine’s domestic gas production capacity is sufficient to fully provide for the upcoming heating season
After the Russian military had renewed massive attacks on the energy infrastructure, Ukraine has lost over 9 GW of power generation capacity. As a consequence, the country has since May been continuously living in a regime of restrictions of power supply. Against this background, the role of natural gas as a source of energy both for the population and for electricity generation is growing as Ukraine has set a course towards the development of distributed generation and electricity generation with gas. That being the case, this new policy provides for an increase in the domestic production of gas and uninterrupted gas supply to consumers, which is a matter of national energy security. Naftogaz Group, the number-one gas producer in Ukraine, has been playing the central role in this effort. Ukrinform has found out how Naftogaz works to ensure energy security for each and all of the Ukrainians.
IT’S PRACTICABLE TO FULLY MEET THE DOMESTIC DEMAND FOR GAS
Ukraine was able to get through the past heating season relying on own resources only, having imported zero gas. This was made possible due to two factors. One was decreased consumption compared to the pre-war period, the other being increased domestic production of gas. Ahead of next winter, Naftogaz's plans are no less ambitious.
"We will get through the 2024/2025 heating season relying exclusively on domestically produced gas. This is Naftogaz's contribution to Ukraine's energy security," says Oleksiy Chernyshov, Chairman of the Board of Naftogaz of Ukraine NJSC.
These ambitious plans are resting on operational performance of the Naftogaz Group's companies. Thus, in the first half of this year, Naftogaz Group companies increased production of blue fuel by 8 percent - up to 7.3 billion cubic meters. Moreover, the achieved results are 2 percent ahead of the target.
How this was achieved
"We have drilled 45 new wells this year so far. Of these, 41 have been put into operation, including 14 that produce more than 100,000 cubic meters of gas every day," commented Serhii Lahno, the interim CEO of Ukrgazvydobuvannya.
The Company is able to grow gas production due to the use of state-of-the-art technologies and increasing the number of new wells it drills. Old wells have not been left out either: last year, Ukrgazvydobuvannya was able to increase production from old wells by 20 percent compared to 2021.
"We are constantly analyzing old wells, reviewing technical and geological risks, and carrying out comprehensive maintenance. And this makes it possible to reclaim even those wells that were being phased out. One such currently produces an extra 340,000 cubic meters of gas a day," says Serhii Lahno.
Naftogaz will work further towards boosting production of blue fuel
"State-owned gas production companies - Ukrgazvydobuvannya and Ukrnafta – are planning to produce a combined total of about 15 billion cubic meters of natural gas this year. This will be sufficient to fully meet the demand from the population and government subsidized consumers such as district heating utility companies, thermal power generation, as well public sector," Mr Chernyshov says.
Mykhailo Svishcho, an editor at the think tank outlet ExPro Gas&Oil, says state-owned companies have been active in drilling new wells and exploring new deposits of natural gas.
"In April of this year, Ukrgazvydobuvannya drilled over 40,000 meters, the maximum of what it drilled per month over all years of existence. For the first time in more than a decade, PJSC Ukrnafta has launched 3D seismic surveys. These measures by state-owned companies will definitely allow increasing gas production volumes and help ease the passage of the next winter heating season," comments ExPro Gas&Oil.
In addition to own production, Naftogaz Group purchases gas produced by private companies in Ukraine. According to the Association of Gas Production Companies, private companies cut production by 600 million cubic meters last year due to the hostilities in areas close to the fields and a drop in domestic demand for gas. So the private gas producers need support with demand generation for their product, and Naftogaz is ready and willing to offer them such support.
"The overall result depends on all gas production companies operating in Ukraine. Private gas producers have suffered losses due to the war, and they need additional investments. Naftogaz Group is ready to purchase the entire volume of gas the private sector will offer, the gas which is produced in Ukraine at a competitive price.
That said, purchases are taking place via the Ukrainian Energy Exchange, which guarantees the security and transparency of trading transactions.
Adrian Prokip, an expert for the "Energy" program at the Ukrainian Institute for the Future think tank, noted that, after the start of Russia’s all-out war in Ukraine, private gas production companies have lost their major consumer – the industrial sector. This has made Naftogaz into the top biggest buyer of privately produced gas in Ukraine.
STORAGE INJECTION SEASON STARTS IN THE SPRING
One of the main preparatory measures for a heating season is the accumulation of gas in underground storage facilities. This guarantees uninterrupted gas supply during the winter months, when the consumption of "blue fuel" increases dramatically. Traditionally, the storage injection season starts in mid-April and ends in October, just before the start of the heating season.
"This year, we started pumping gas into underground storage facilities at the beginning of April. We are planning to have 13.2 billion cubic meters of gas injected into underground storage facilities by the end of October," Chernyshov said, and continued that about 10 billion cubic meters of "blue fuel" has already been injected into underground gas storages so far this year.
"Our estimations suggest that Naftogaz will most likely be able to reach its gas storage target by November 1," Svishcho said.
"As part of preparations for the heating season, Naftogaz plans to amass 13.2 billion cubic meters of Ukrainian-produced gas. First of all, we are talking about the gas produced by Naftogaz Group’s companies - Ukrgazvydobuvannya and Ukrnafta. Proceeding from the fact that figures of production at these companies are currently exceeding the operating plan, Naftogaz will be able to achieve its target for gas in storage before November 1”, Mykhailo Svishcho notes.
Prokip agrees that this target will be able to be achieved by the start of the heating season.
With sufficient gas reserves in place, consumers will have a guaranteed source of energy for their winter needs. And, yes, Naftogaz is ready to supply fuel for electricity generation as well.
"We understand that we have to support stability in the country and are ready to use our resources to provide for electricity and heat generation where it is currently possible. This is our obligation to the state and to Ukrainian citizens," commented CEO of Naftogaz Oleksiy Chernyshov.
"In the past two years, about 2.5 billion cubic meters of gas was used for electricity generation. Currently, however, a part of the natural gas generation capacity has been destroyed by Russian attacks," said Adrian Prokip.
WHAT ABOUT GAS DISTRIBUTION NETWORKS?
Gas distribution networks are integral to the overall gas infrastructure. Thanks to their constant work, blue fuel reaches Ukrainian households and businesses. Keeping these networks operational is an important segment of the work carried out by Gas Distribution Networks of Ukraine (Gas Networks) LLC, a constituent company of the Naftogaz Group.
"We supply gas to more than 12 million households in Ukraine, and Gas Networks is doing everything necessary to ensure that fuel is supplied without interruption at any time of the year," Chernyshov emphasized.
Mr Chernyshov noted that temporary local interruptions in gas supply are possible where distribution networks are being under repair. But as soon as the work is finished, gas will again flow to households.
"Our gas distribution infrastructure is underloaded, it is inefficient, but there are no prerequisites for this to affect the security of gas supply during the heating season," Prokip believes.
Having said that, the expert noted that there are questions with the locations that constantly suffer from Russian shelling attacks.
"Every day, our workers wearing bulletproof vests and helmets get to damaged sites to localize and repair the impact. Sometimes they have to halt repair works and wait for the shelling to stop," commented Roman Yakovlev, head of the Sumy Gas Operation Department at the Sumy regional branch of Gas Networks.
So far in 2024 alone, 149 gas distribution network sites in Sumy Oblast have been damaged due to combat actions.
Yakovlev says that in March, more than 2,500 consumers were left without gas supply due to the shelling of a near-the-border gas distribution pipeline. "However, this took the gas workers a little more than a day to restore gas supply," he added.
Naftogaz is also ready to provide its infrastructure for the prompt connection of new gas generation capacities, in particular, at the thermal power plants under the Group's management.
"The connection of new gas generation units, although taking quite a bit of time, does not require additional significant modification of the system itself," - believes Svishcho. He noted that the connection of new capacities will increase the use of gas for electricity generation, but will not have a significant impact on the overall balance of the market.
"Firstly, demand for gas from thermal power plants and combined heat and power plants (TPPs/CHPPs) has decreased in the wake of massive Russian attacks and the destruction of infrastructure. Secondly, the stocks of gas amassed ahead of the heating season should be sufficient to cover these additional needs," the analyst believes.
Mr Prokip, for his part, points out that the networks currently have free capacity to connect gas turbine and gas piston plants. "In each city, it is necessary to look individually at the available capacities. But we once distributed 100 billion cubic meters of gas, so there are no problems on the horizon," the expert emphasized.
NATURAL GAS WILL REMAIN AN IMPORTANT SOURCE OF ENERGY FOR UKRAINIANS IN THE WINTER SEASON
Despite the war risks, Naftogaz Group’s constituent companies meticulously perform their respective parts of work: Ukrgazvydobuvannya and Ukrnafta - increasing gas production, Ukrtransgaz – performing storage injection functions, and Gas Networks – providing prompt maintenance for the gas distribution infrastructure, even in frontline locations.
"The Naftogaz Group team works in cohesion to ensure that each Ukrainian citizen has access to natural gas, a guaranteed source of energy in the winter season. We fulfill our social responsibilities by providing gas for heating and generation. And we are ready to contribute to the development of distributed gas generation”, Naftogaz CEO emphasized.
In a situation of a dramatic shortage of power generation capacities in the energy system, natural gas becomes an extremely important source of energy for the Ukrainians, whether it is just for cooking, or for the heat and power generation. And a guarantee that Ukrainians will have this source of energy available in the winter months is in the increase of the domestic gas production by state-owned companies and the sustained injection of the blue fuel into our underground storages. These processes do not stop for a moment.
Thanks to active well drilling and research projects, which have improved Naftogaz Group’s performance results for the second consecutive year now, there is confidence that there will be enough fuel not only for the current needs, but also for the development of distributed gas generation - which, in turn, will help improve the situation with electricity supply in the country.
The grown network of distribution systems has enough capacity to connect dozens, hundreds of gas piston and gas turbine installations across the country.
In the general uncertainty in a country at war, one certainty still exists: It is definite that Ukraine will have gas for the winter.
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