On July 17, the Verkhovna Rada of Ukraine approved the candidacy of Svitlana Grinchuk for the position of head of the Ministry of Energy. And the very next day, she held her first working meeting, which was dedicated to the “hot” problem - preparation for the new heating season in the fourth year of a full-scale war. The main issue of this meeting was providing the country with natural gas, which, due to the attacks of the Russian army on the production infrastructure, has turned into an extremely scarce resource.

“Ukrainian Energy” figured out what is currently happening with the accumulation of gas in underground storage facilities, what risks analysts predict in preparing for the next winter, and what expectations the market has for the new head of the Ministry of Energy.

Priority topic

As reported by the Ministry of Energy, the first working meeting, chaired by Svitlana Grinchuk, was devoted to “the prospects for the accumulation of natural gas reserves in Ukrainian storage facilities and plans for the development of domestic gas production.” So it is logical that its participants were representatives of the management of the national joint-stock company Naftogaz of Ukraine, which controls the key production assets of the industry: Chairman of the Board of the state holding Serhiy Koretsky, Commercial Director Serhiy Fedorenko, Chairman of the Supervisory Board Anthony Marino and Supervisory Board member Nataliya Boyko.

“Preparation for the heating season is our priority. The main goal is to ensure sufficient gas resources for all consumers,” explained Svitlana Grinchuk.

For his part, Serhiy Koretsky spoke about the situation with the financing of gas purchases. He said that with the support of the government, the state holding is completing negotiations with financial institutions on the allocation of funds to pay for imports “in the necessary volume”. This should “allow us to implement measures to prepare for the autumn-winter period in a timely manner”.

The meeting also discussed operational cooperation between the ministry and Naftogaz for the “implementation of a number of important projects” related to gas production.

Market arithmetic

In conditions of martial law, government officials do not officially disclose details about the current state of the energy sector. However, experts have repeatedly stressed that this year, for the first time since the start of the full-scale war, the Ukrainian gas market has become deficient in terms of the total volume of available resources. The problems arose as a result of numerous Russian attacks on the capacities of gas-producing companies, which forced them to reduce production, as well as due to the growth of domestic demand for gas in the electricity generation segment.

According to preliminary estimates by the Ministry of Energy, Ukraine should import at least 4.6 billion cubic meters of natural gas, which is approximately 40% of the expected needs in the winter period. Of this volume, as of the end of June, Naftogaz had contracted and secured financing for 2.9 billion cubic meters of gas from foreign suppliers.

In general, by the beginning of the next heating season (i.e., by November 1), Ukraine needs to accumulate at least 13 billion cubic meters of natural gas in underground storage facilities (UGFs) so that there are no problems with a shortage of resources in the winter.

As of July 17, according to ExPro statistics, UGF stocks exceeded 9 billion cubic meters. The storage facilities are 29.2% full. This volume is 13.9% or 1.45 billion cubic meters less than last year. “This year’s stocks remain the lowest in at least the last 12 years, but the gap from last year is narrowing. Thus, for the first time since the beginning of this year’s injection season, the gap from last year has fallen below 15%,” the agency said in a statement.

At the same time, its analysts note that gas injection volumes remain significantly higher than last year. Thus, since the beginning of July, over 940 million cubic meters of natural gas have been pumped into Ukrainian underground storage facilities - this is almost twice as much as in the same period last year. And in total, in July, the storage facilities are expected to be replenished with over 1.7 billion cubic meters of blue fuel, which will be the largest monthly volume of pumping in two years, since August 2023.

Despite the restrictions, mostly related to the shortage of free resources on external markets, since the beginning of this year's gas pumping season (April 17), over 3.5 billion cubic meters of natural gas have already been pumped into Ukrainian storage facilities - this is one and a half times more than last year. Despite the fact that last year the pumping season began earlier - on March 31. According to ExPro estimates, by the beginning of August, the total reserves in Ukrainian underground storage facilities will reach 10 billion cubic meters, which will consist of the resources of not only Ukrainian companies, but also non-residents.

Critical forecasts

But even with the current rapid pace of gas accumulation in storage, experts predict that Ukraine risks starting the next heating season with “critically low reserves.” “Ukraine could accumulate approximately 8.5 billion cubic meters of gas by November 1, which is 29% of capacity. This volume would be considered critically low,” notes Yuriy Onishkiv, a gas market analyst at LSEG (London Stock Exchange Group).

At the same time, the country is trying to increase domestic production. At the end of June, Naftogaz announced the launch of a new well with a capacity of 0.38 million cubic meters of gas per day. But, as expert Serhiy Makogon, former head of the state-owned Gas Transportation System Operator of Ukraine, noted, the growth rate is slow: the gap between domestic gas production and demand remains at about 2 billion cubic meters. According to the results of 2024, more than 19.12 billion cubic meters of gas were produced in Ukraine, and consumption amounted to approximately 22 billion cubic meters.

“Expected gas consumption according to the results of 2025 is 21.5 billion cubic meters. While production will be only 17–17.5 billion cubic meters. Attacks on gas facilities have led to losses of 25% to 40% of production. This significantly reduces the country's ability to provide itself with gas from domestic sources and increases dependence on imports... The commercial portfolio is in deficit by 40%" - these data were announced by Volodymyr Lysenko, commercial director of Tepla Energetichna Kompaniya LLC, during the Energy Club discussion.

The Ministry of Energy, which is responsible for state policy in the industry, prefers not to disclose forecast calculations of the gas balance for 2025, citing wartime security restrictions.

In the short term, Yuriy Onyshkiv warns, a prolonged cold snap or military risks (for example, missile strikes on gas infrastructure facilities) could quickly deplete winter reserves.

"This is worrying," says Tamas Pletser, an analyst at the investment company Erste Investment. He believes that Ukraine should import at least 5 billion cubic meters of gas to cover its needs during the next winter. “Current storage volumes are very low, so during peak demand periods, supplies may be limited,” the analyst said.

According to Volodymyr Omelchenko, director of energy and infrastructure programs at the Razumkov Center, in order to confidently pass the next heating season, Ukraine needs to have 13.5 billion cubic meters in UGS by October 20. “My forecast is 12-12.5 billion cubic meters with further purchases during the winter, depending on weather conditions. That is, at the moment, a catastrophic scenario for filling UGS seems unlikely, but the government needs to find about 1 billion euros more to form the necessary reserves. This forecast does not take into account the impact of the military factor,” the expert noted.

In this regard, it is also critically important to develop alternative energy sources to compensate for the likely shortage of gas for electricity production in the winter. In addition, as Yuriy Onyshkiv noted, Ukraine will be forced to increase electricity imports from the EU.

The fact that the situation with preparations for the next winter and gas accumulation is difficult is evidenced by the special attention paid to this issue at the highest political level. On Sunday, July 20, President of Ukraine Volodymyr Zelenskyy spoke about the report of the head of Naftogaz Serhiy Koretsky on “preparation for the new heating season and agreements with partners in Europe and with international financial organizations, which are necessary for the stability of Ukraine”.

Challenges for the ministry

As the head of the Ministry of Energy, Svitlana Hrynchuk will have to oversee not only the gas industry, but also resolve a number of issues related to other sectors.

Expert Volodymyr Omelchenko highlighted several basic priorities in her work, which are important for the sustainable development of the sector. Firstly, this is ensuring market coupling - strengthening the integration of the Ukrainian electricity and natural gas market with the markets of neighboring EU countries for effective exchange of flows and optimal use of infrastructure. Secondly, this is improving the quality of corporate governance in state-owned energy companies (such as Naftogaz, Energoatom, Gas Transmission System Operator of Ukraine, Ukrenergo) based on the principles of the OECD - the Organization for Economic Cooperation and Development, where Ukraine has had the official status of a candidate country for accession since 2022. Thirdly, this is demonopolization and combating unfair competition in the gas, electricity and petroleum products markets.

Another point among the key areas of the Ministry of Energy's work, Volodymyr Omelchenko highlighted the acceleration of the development of decentralized generation based on renewable energy sources - wind, sun, biomethane, as well as the development of energy storage systems (battery energy storage system, BESS) and gas cogeneration, which involves the simultaneous production of electricity and heat from natural gas. These technologies are able to increase the stability of energy supply to consumers. And from the point of view of strategic energy security, the expert pointed out the need to promote the general decarbonization of the sector, small modular reactor projects instead of large traditional nuclear power plants, and the application of sanctions on the transit of Russian oil through the territory of Ukraine, which involves the complete cessation of its transportation to the markets of EU countries via the southern branch of the Druzhba oil pipeline.

According to Volodymyr Omelchenko, the only thing that can prevent the head of the Ministry of Energy from “making significant progress” in these areas is the peculiarities of the Ukrainian system of public administration, which for the most part remains ineffective, as it is being reformed at a slow pace.

Svitlana Dolinchuk, specially for “Ukrainian Energy”