Ukraine seeks billions to buy gas as Russian attacks leave domestic production short

Although Ukraine managed to slightly increase domestic natural gas production last year, the situation has changed in recent months. The country continues to face Russian attacks on its energy infrastructure, which are also affecting gas supplies. Domestic production is currently insufficient to meet all demand, so Ukraine must import natural gas as well. According to the country’s central bank, Ukraine will need to spend almost $3 billion on gas imports this year.

Low gas storage levels and damage to production infrastructure from Russian missile and drone attacks are forcing Ukraine to import gas. According to Reuters, Russian attacks during last winter and this spring knocked out at least 40% of Ukraine’s gas production capacity. Some of the damaged production facilities have returned to operation, but domestic production is still insufficient to meet all demand.

According to Ukraine’s central bank, gas production in the country should increase in the coming years. However, it is unlikely to reach a level that would ensure independence from imports in the next few years. This year alone, the country will need to import $2.9 billion worth of gas, the bank said.

“Production is expected to recover gradually over the forecast horizon, but not enough to fully meet the domestic needs of the economy—industry, public services and households,” the bank said in its report, according to Reuters.

The central bank expects spending on gas imports to fall significantly in the coming years. For next year, the bank forecasts costs of $1.1 billion, less than half this year’s total. In 2027, spending on gas imports is expected to fall to $400 million, a fraction of the amount forecast for this year.

“Some gas imports are expected to be partly financed by support from international partners,” the bank added.

According to Reuters, Ukraine’s state-owned Naftogaz said it was in talks with the government and international institutions about ways to secure financing for gas purchases. The company did not specify how much gas it would need, but according to the former head of the country’s gas transmission system operator, the amount could reach 70 TWh.