Газ
Due to missile attacks on gas production infrastructure at the beginning of 2025, Ukraine faced significant difficulties in completing the 2024/2025 heating season. These events will also impact preparations for the next season. Having lost 40% of its domestic production, Ukraine needs to import at least 5 billion cubic meters of gas, but – above all – it is necessary to secure funding for these volumes.
In addition, since all of Europe will be replenishing its gas storage facilities with natural gas during the summer, prices will be significantly higher than last year. GMK Center has tried to analyze the current state of the Ukrainian gas market and whether there will be enough gas for industrial consumers.
As of early June, the fill level of UGS (underground gas storage) facilities was 22%, or 6.8 billion cubic meters (including buffer gas). Thus, the volume of active gas available for use now totals just over 2.0 billion cubic meters.
To have sufficient gas reserves before the heating season, it is necessary to import, according to various estimates, at least 4.0–5.5 billion cubic meters. So far, 2.9 billion cubic meters of imported gas have been contracted.
According to ExPro, in April of this year, 258 million cubic meters were injected into Ukrainian UGS facilities, and in May – about 1.1 billion cubic meters. Of the May volume, 45%, or about 500 million cubic meters, was imported, while the remaining 55% was Ukrainian-produced gas. Since the start of injection (April 17), a total of 1.4 billion cubic meters of gas have been injected into UGS facilities.
Estimates of the funding needed to purchase imported gas also vary widely, ranging from $1.8–3.0 billion. For its part, the National Bank of Ukraine (NBU) forecasts that the cost of gas imports this year will amount to up to $2.9 billion, part of which will be financed by international partners.
The price situation on the domestic market is characterized by rising prices. According to ExPro, gas prices in the Ukrainian market on May 26 reached 23,000 UAH/thousand cubic meters (including VAT) – the highest level since February 2023. Spot prices for gas on the domestic market have repeatedly surpassed European levels.
“In May, the Ukrainian market demonstrated a sharp increase in gas prices, which stands in stark contrast to the stable dynamics seen in April. While throughout the second month of spring, futures prices for the May resource grew very moderately – from 15,500 to 15,900 UAH per 1,000 cubic meters excluding VAT, that is, by less than 3%, in May, quotations for June surged by almost 30% – to over 20,000 UAH,” commented Artem Petrenko, executive director of the Association of Gas Production Companies of Ukraine (AGPU), to GMK Center.
According to him, the sharp price increase is explained by traders and industrial consumers ramping up purchases to stock up on resources. This triggered a chain reaction on the market. Furthermore, the market expects a significant deficit amid rising demand and increased consumption driven by seasonal factors. The behavior of European hubs also affected domestic prices: in May, quotations at the TTF gas hub in the Netherlands were increasing, which put pressure on Ukrainian indicators through the import parity.
However, the May data shows a still acceptable picture, as it actually takes into account the gas price for April. According to the Ministry of Economy, the actual selling price of gas in Ukraine in May 2025 fell by 3.9% to UAH 15.5 thousand per thousand cubic meters excluding VAT. Thus, the increase in the market price in May will definitely be reflected in the Ministry of Economy’s data in June.
Another relevant question is whether there will be enough gas in Europe, since Ukraine imports this resource specifically from the EU. According to GIE, as of June 5, European gas storage facilities were filled by more than 50% (53.7 billion cu m), compared to over 70% on the same date in 2024. After a challenging winter, the EU significantly lags in filling underground gas storage facilities, but there is still time, and the capacity of the gas infrastructure allows for reaching acceptable levels by winter (currently, the EU’s LNG regasification capacities are loaded a little over 50%).
Europe will have to offer competitive prices to attract enough LNG stocks during the summer and outpace Asian buyers. According to the latest data, Europe is currently winning over China in the competition for summer gas, as Chinese imports have remained weak for several months due to decreased economic activity and a tariff war with the US.
Analysts at Morgan Stanley believe that gas prices in the EU will rise by approximately 10% over the summer, in the context of efforts by all European countries to fill their storage facilities. The closer it gets to autumn, the more prices are expected to increase. Additionally, there is a risk that Naftogaz may decide to purchase large volumes on the European market, which would drive prices up. Another negative factor for higher gas prices in the EU and Ukraine could be mutual attacks on gas infrastructure in Iran and Israel.
In terms of EU gas consumption (313 billion cu m in 2024), imports to Ukraine (5 billion cu m) are not critical for Europe. Therefore, if the EU succeeds in filling its underground gas storage facilities, there should not be critical difficulties with supplies for Ukraine (though the price will likely be higher than in 2024).
Under martial law, Ukraine does not disclose much data due to its sensitivity (this applies to both the volume and structure of gas consumption). However, there is some information available in open sources that gives a general idea of the situation. While gas consumption in Ukraine amounted to 28.7 billion cubic meters in pre-war 2021, it will be 19.5 and 19.8 billion cubic meters in 2022-2023, respectively. The decline in gas consumption since the start of the war has been 31-32%.
Before the war, industry consumed about 27% of the country’s total volume. In 2021, natural gas consumption by industry amounted to 8.5 billion cubic meters, which is approximately 0.6 billion cubic meters less than in 2020. The main buyers were ferrous metallurgy, construction materials production, mining, and food industries.
At the beginning of the full-scale aggression, many industrial enterprises stopped or significantly reduced production, in particular due to damage or destruction of assets as a result of shelling, and some were lost due to the occupation of territories. This had a significant impact on gas consumption, which fell by 60% compared to 2022. Against this backdrop, gas consumption by the population and for heating and power generation did not decline as dramatically.
“Information concerning natural gas consumption volumes by industry during the war is classified for obvious reasons. Analysis by the Association shows that during the first year of full-scale aggression, demand from industry fell by just under 50%, although in the first months of 2022, the drop reached 70%. In 2023, consumption decreased a little further, partly due to the implementation of energy efficiency measures. In 2024, demand rose slightly-by our estimates, by 300–500 million cubic meters compared to 2023 figures. This year, we expect industrial natural gas consumption to remain at 2024 levels,” analysts at the Association of Gas Suppliers of Ukraine (AGKU) note.
One of the largest gas consumers before the war was the metallurgical sector, which accounted for about 22% of industrial consumption, or 6% of total consumption in the country. According to the Ukrainian Association of Enterprises “Ukrmetallurgprom”, the dynamics of gas consumption by metallurgical enterprises of Ukraine before the war was as follows:
Currently, “Ukrmetallurgprom” no longer aggregates these figures. Taking into account the loss of assets in Mariupol and reduced production volumes due to the war, the reduction in gas consumption in the sector can be estimated at no less than 70%. In particular, in 2023, Metinvest reduced gas consumption to 11.9 PJ compared to 43.1 PJ in pre-war 2021.
Moreover, the decrease in consumption in the sector is partly associated with the introduction of energy efficiency measures to save gas. In particular, AMKR’s Natural Gas saving initiatives:
“The company has planned a number of projects to replace purchased natural gas with secondary gases generated during coke and pig iron production. These projects focus on both upgrading the equipment for cleaning coke oven and blast furnace gases from harmful impurities, as well as repairing and developing infrastructure for transporting these gases from generation points to consumers. Implementation of this program will increase the proportion of secondary gases used in technological processes, which in turn will reduce natural gas consumption volumes,” ArcelorMittal Kryvyi Rih told GMK Center in their comments.
After interruptions in electricity supply, Ukrainian companies are widely implementing distributed generation – gas piston and gas turbine units. Recall that in the summer of last year, President Volodymyr Zelensky announced the construction and commissioning of 1 GW of distributed gas generation. In reality, by the end of 2024, only 14 new small units with a total capacity of 33 MW had been connected, as well as three larger units – each of 20–25 MW, with a total capacity of 71 MW. In total, as of the beginning of 2025, NPC “Ukrenergo” has issued technical conditions for connecting more than 1.2 GW of distributed generation capacity. The plans to introduce 1 GW of distributed generation have essentially been postponed to 2025, and currently many companies are in the project implementation phase.
Metallurgical companies have joined this trend as well. For example, at the “Kametstal” steelworks, the first gas piston power plant among Metinvest Group businesses, with a capacity of 10 MW (compared to the plant’s total demand of 150 MW), has already been commissioned. To produce one megawatt of electricity, the facility on average consumes 250 cubic meters of gas. In total, Metinvest plans to launch gas piston plants at its mining and processing plants, and the next stage will be the construction of nearly 40 MW of solar generation. By 2030, the company aims to cover up to half of its needs with in-house generation.
The introduction of distributed generation is creating new demand for gas, which will impact the country’s gas balance.
“The demand for natural gas to produce a nominal 1 GW depends primarily on how long the units operate at full capacity. For example, if they generate only electricity and run continuously, they will consume about 2–2.1 billion cubic meters of natural gas annually. If a unit operates only during peak hours throughout the year, the resource requirement automatically decreases by half – to 1 billion cubic meters. Using the facility as a backup power source, assuming the engine runs no more than one-third of the year, the gas demand is estimated at 700 million cubic meters,” analysts at the Association of Gas Producers of Ukraine (AGPU) explain.
However, there are currently no prerequisites for a significant increase in gas demand by industrial enterprises, particularly due to rising gas prices, the implementation of energy efficiency measures, and weak economic growth.
Ukrainian businesses should remember the state’s strategy regarding priorities in the supply of energy resources. Until recently, during electricity shortages, priority was given to supplying households, social facilities, and critical infrastructure, while supplies to industry were restricted.
“The volumes of available gas for industry are limited: the state maintains a social priority by accumulating resources primarily for the regulated sector, and the amount of gas that was traditionally allocated to the commercial sector has decreased. This means that even with stable demand, the balance will tend toward a deficit, which will stimulate growth,” notes Artem Petrenko.
The price situation on the domestic gas market will continue to be unfavorable for industrial consumers. There are no prerequisites for a significant decrease in gas prices in Ukraine. At the same time, the price will fluctuate depending on the situation on the EU gas market, the level of demand and consumption, as well as the level of security risks.
Any increase in domestic gas prices negatively affects the prospects of energy-intensive industries, since any increase in production costs reduces competitiveness and opportunities to expand output. In particular, this also concerns the metallurgical sector, where before the war gas accounted for about 15% of production costs (excluding electric arc furnace capacities). Last year, Metinvest’s energy costs (electricity, gas, and fuels) rose by 10% year-on-year – to $749 million. The same situation is observed for other companies in the sector.
“The price of gas in Ukraine has increased by 50% over the past two months. Speaking about 2024 and up through May 2025, the price has gone up by approximately 15%,” say representatives at ArcelorMittal Kryvyi Rih.
It is worth noting that the increase in natural gas prices is an additional burden for industry, which is already suffering from high electricity and logistics costs, labor shortages, high security risks, and more. In addition to all this, the gas transmission tariff increased in 2025 by four times at once – from 124.16 to 502.50 UAH per thousand cubic meters.
“Unfortunately, the trend of rising tariffs for energy resources supplied by natural monopolies continues. This worsens the negative results for our company, which has already been loss-making for three years. Compared to last year’s price levels, we have already lost more than 500 million UAH,” emphasize representatives at ArcelorMittal Kryvyi Rih.
Not all enterprises will be able to pass on the increase in production costs to consumers, especially if prices are set in the international market. The decline in competitiveness of Ukrainian exporters, in particular due to the rise in gas prices, will harm Ukraine’s economy overall, which has been and remains export-oriented. Under such conditions, rational state regulation becomes especially important, as it can affect some of the factors determining the cost of Ukrainian products.
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