In view of natural gas surplus, private gas production companies forced to pump it into USF to store it

Due to the reduction in natural gas consumption and the ban on its export, private gas production companies cannot fully realize the resource and are forced to pump it into underground storage facilities (USF).

The Gas Production Companies Association of Ukraine has said this to the Ukrainian News Agency.

"The full-scale invasion of Ukraine by Russia, and active hostilities led to the significant destruction of industrial enterprises, which were the main consumers of the resource of private miners. In the first months of the war, the drop in demand was almost 70%; today it is more than 50%. Accordingly, due to the reduction in gas consumption and ban on its export, independent enterprises cannot fully realize the resource and are forced to pump it into USF. Our calculations show that every third cubic meter of gas extracted by private companies is not realized," the message reads.

It is noted that the inability of companies to realize the extracted resource deprives them of the opportunity to invest in the sector, drill new wells, and increase the production of Ukrainian gas.

"Therefore, the association has repeatedly drawn attention to two acute issues that concern independent producers and which must be resolved as soon as possible. This is the opening of exports, even if it is partial, and the purchase of Ukrainian-produced gas. The parallel implementation of these two mechanisms will ensure the full functioning of the natural gas market with equal access for all participants, with transparent rules and a fair price, and will stimulate the development of the gas production sector," the message reads.

The association currently does not disclose information on gas production in the first quarter of 2023 by private gas production companies.

In 2022, Ukraine produced 18.5 billion cubic meters of gas: state companies - 14.3 billion cubic meters (77% share) and independent producers - 4.2 billion cubic meters (23%).

It is noted that some deposits were seized by the occupiers, and mining was not carried out there.

In addition, during the year, the sector's facilities repeatedly came under rocket fire and suffered devastating attacks.

"The industry, like all of Ukraine, was in extremely difficult conditions but continued to extract gas. After the autumn counteroffensive of the Armed Forces of Ukraine (AFU) and the liberation of the Kharkiv Region, miners began to actively resume operations in the de-occupied territories. Some private companies were able to increase daily production by 30-40%. In general, in the period from August to October, total daily production in Ukraine increased by 2.5%: UkrGasVydobuvannya increased indicators by 0.5%, Ukrnafta by 3.1%, and independent companies by 9.1%. According to the results of 2022, total gas production in Ukraine decreased, but the prompt response of enterprises to challenges and the quick restoration of work helped to reduce the negative impact of the war on the industry as much as possible," the message says.

As the Ukrainian News agency earlier reported, on April 26, the Naftogaz of Ukraine' national joint-stock company started purchasing gas from private gas production companies on the stock exchange.

At the end of December 2022, the Cabinet of Ministers extended the ban on the export of gas produced in Ukraine until 2023.