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Gas production in Ukraine decreased by 6% in 2022

06 January 2023

In 2022, according to preliminary calculations, Ukraine reduced natural gas production by 6% compared to 2021, in particular to 18.5 billion cub. m.

According to the ExPro consulting company, last year gas production reached the lowest value in the last 20 years.

“The main reason for the reduction in production is the full-scale war that Russia started in Ukraine at the end of February 2022. The occupation of part of Ukraine’s territory (especially Kharkiv Oblast) had harmful effects on gas production in these regions and near-front zones,” the company explained.

Last year, Ukrgasvydobuvannya JSC (UGV) remained the largest gas production company in the country. During the year, the company produced 13.2 billion cub. m. of gas, which is 3% less than last year.

In 2022, Ukrnafta PJSC reduced natural gas production by 7% to 1 billion cub. m. The main reason for the reduction in production is old fields and practically no investment in gas production.

According to the results of the year, private companies showed the biggest drop in production – to 4.3 billion cub. m., which is 15% less than last year.

As noted in ExPro, in connection with the war, the consumption of natural gas in the country fell significantly; it almost doubled in some months compared to last year. The sales market for private companies has narrowed considerably, and the exports of domestically produced gas remains prohibited. Taking this into account, companies accumulated reserves in underground storages – more than 1.2 billion cub. m. of gas as of the beginning of December.

In addition, from March to August, the rent for natural gas production in Ukraine was pegged to prices in European hubs, where gas was traded many times more expensive. Against the background of a sharp drop in income as well as difficulties with the sale of gas, private mining companies have practically stopped investing in gas production.

At the same time, since August, the basis for calculating the rent has been pegged to prices in the domestic market, which has allowed companies to stabilize the situation. It is expected that the companies will be able to increase gas production next year, although problems with its sale are still there.

As reported by Ukrainian Enenrgy, Naftogaz of Ukraine NJSC forecasted reduction of gas production volumes by 3-6% based on the results of 2022.

According to the results of 2021, Ukraine reduced natural gas production by 2.2%, or 440 million cub. m. – up to 19.79 billion cub. m. The annual natural gas production of Naftogaz of Ukraine NJSC in 2021 amounted to 13.67 billion cub. m. This is almost 3.97% less than in 2020. Private companies, on the contrary, increased gas production last year to a record 5 billion cub. m.

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