Ukraine’s Naftogaz Courts Gas Traders After Russian Attacks – Bloomberg

Naftogaz CEO
Oleksiy Chernyshov

Ukraine’s biggest energy company is looking to strike more deals with European gas traders to boost fuel storage this year, despite recent Russian attacks on its gas infrastructure.

So far, none of the foreign traders currently storing gas in Ukraine have walked back their decisions, said Oleksiy Chernyshov, chief executive officer of NJSC Naftogaz Ukrainy, in an interview in Kyiv. The company is continuing to service customers and fix equipment damaged in recent missile attacks.

Russia launched drones and missiles at Naftogaz’s facilities in the western region of Lviv three times since March 24, just before a Ukrainian delegation met gas traders in Vienna for negotiations. The attacks marked a shift after the Kremlin largely avoided targeting key gas infrastructure in the more than two years since its invasion. Chernyshov said he saw the attacks as an attempt to scare traders.

Ukraine has offered more than 10 billion cubic meters of its underground storage facilities to European traders — roughly a third of the country’s capacity — which is greater than any other on the continent, west of Russia.

The country’s energy regulator eased terms for storing gas starting June 1, Naftogaz said Tuesday in a statement. New rules include shorter booking intervals of months rather than a full year.

New terms are an important factor that impacts our attractiveness for foreign traders,” Chernyshov said.

Most units are located up to two kilometers below the ground, and are easily connected to the European Union’s grids thanks to Ukraine’s decades-long role as a transit route for Russian energy supplies. Chernyshov said above-ground facilities and workers remain vulnerable and would benefit from improved air defense.

Traders including Trafigura Group, Shell Plc and DXT Commodities SA looked to Ukraine last year as a place to put excess gas when storage sites in the EU were full. Naftogaz’s clients injected about 2.5 billion cubic meters of gas, which the company sees climbing to about 4 billion cubic meters in 2024.

The firm has held talks about storage this year with Germany’s RWE AG, Norway’s Equinor ASA, and France’s TotalEnergies SE and Engie SA, among others. There is still time to reach deals, Chernyshov said, as the biggest volumes typically come in August and September.