A new loan from a European bank will help Ukraine increase natural gas production

Ukraine’s largest natural gas producer, Naftogaz, has secured a loan from the European Bank for Reconstruction and Development to modernise its drilling equipment after a series of attacks on production infrastructure. The upgrades will enable Ukraine to increase natural gas production.

Last autumn, energy company Naftogaz was producing approximately 83% of Ukraine’s daily natural gas output.

“Ukraine currently produces approximately 53 million cubic metres of gas per day. Naftogaz accounts for 43 to 44 million cubic metres of this volume. That is a 7-8% increase compared with last year,”Interfax quoted Oleksiy Chernyshov as saying at the Forbes Energy of Business forum.

However, a series of Russian missile strikes at the beginning of this year severely damaged the company’s production facilities, reducing output by as much as 40%.

The company will now receive a loan of 36.4 million euros from the European Bank for Reconstruction and Development to modernise its drilling equipment, it said on Monday. The loan will be used to purchase new mobile drilling rigs with lifting capacities of 125 and 180 tonnes, Reuters reports.

“Modernisation will allow us to work on deeper and more technically challenging wells, while also accelerating the resumption of production at existing sites, ensuring a stable gas supply for Ukraine,” said Naftogaz CEO Serhiy Koretskyi.

Naftogaz produced 14.7 billion cubic metres of natural gas last year. Despite this, Ukraine was forced to increase gas withdrawals from storage this winter and spring and increase imports after Russian missile strikes damaged production facilities in the east of the country.

Last month, former head of Ukraine’s gas transit operator Serhiy Makogon said in response that the country would need to import up to 6.3 billion cubic metres of gas for the 2025/26 winter season, as reserves had fallen to a record low. He added that Ukraine would need up to 3 billion dollars to buy gas.