European gas is getting more expensive: $2.9 billion probably isn’t enough for Ukraine
26 May 10:54
European natural gas prices continued to rise following the announcement of unplanned capacity cuts at Norway’s giant Troll gas field, "Komersant Ukrainian" reports citing Bloomberg.
Benchmark futures rose by 2.2% on Monday, extending a four-week streak of gains. Traders have recently become increasingly concerned about the availability of fuel resources amid a large-scale maintenance season in Norway and the risks of rising demand in other gas-consuming regions with which Europe competes for supplies.
Problems with filling storage facilities
Europe is under pressure to replenish its vast underground gas storage facilities after last winter left them more depleted than usual. Unexpected outages or demand surges have complicated the continent’s efforts to attract more gas flows.
Although gas injection into storage facilities is currently continuing, prices remain volatile in response to news of supply disruptions. More than half of the April drop has already been recovered.
Norway as a key supplier
Norway has become a major gas supplier for Europe since Russia’s full-scale invasion of Ukraine. But Norway’s Troll field is suffering from problems with external power supply, which began last week. At the same time, scheduled maintenance work continues at the Nyhamna gas processing plant and the Aasta Hansen field.
Price dynamics
Dutch futures for the next month, which are the European benchmark for gas prices, rose by 1.2% to 36.90 euros per megawatt-hour as of 9:06 am in Amsterdam.
Experts note that the current situation emphasizes the vulnerability of the European energy market and the importance of diversifying gas supply sources to ensure the continent’s energy security in the face of geopolitical tensions.
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Ukraine’s gas needs
In early November 2024, gas reserves in Ukrainian storage facilities amounted to 12.92 billion cubic meters. According to ExPro, in order to reach similar volumes this year, Ukraine needs to pump 6.3 billion cubic meters of natural gas into storage facilities in June-October. Part of these volumes will be covered by domestic production, but about 3-3.5 billion cubic meters will need to be imported.
Currently, underground gas storage facilities are 19.4% full. Compared to the previous year, the storage facilities hold 31.7% or 2.79 bcm less gas. Injection volumes amount to 26-28 million cubic meters, and these volumes are higher compared to May last year.
As of the beginning of May 2025, Ukraine imported 1.12 billion cubic meters of natural gas. This is almost ten times more than in the same period in 2024, when only 118 million cubic meters were imported.
The main reason for the increase in imports was the urgent need for resources after Russia’s massive missile attacks in February 2025. The shelling severely damaged gas production infrastructure in eastern Ukraine. According to industry experts, this led to a temporary decline in production by at least 40%. In February, Ukraine imported a record 512 million cubic meters of gas, the highest since September 2023.
Geography of supply
Imports are carried out from three main directions:
- Hungary – 669 mcm (almost 60% of total imports);
- Slovakia – 261 mcm (23%);
- Poland – 190 million cubic meters (17%).
This confirms the effectiveness of reverse flows, which have become critically important after the termination of direct supplies from Russia.
Who imports gas
About 80% of imports are provided by the state-owned Naftogaz Group. The company makes purchases to build up reserves in underground storage facilities and stabilize the market in times of war. Another 20% of gas is imported by private traders, who then sell the resource through Ukrtransgaz’s auctions at the Ukrainian Energy Exchange.
Procurement financing
The National Bank of Ukraine estimates that in 2025 the state will need approximately $2.9 billion to purchase the required volume of gas. Ukraine hopes to raise part of this amount from international partners. “Naftogaz is already negotiating to raise €1 billion to purchase more than 2 billion cubic meters of fuel for the 2025/2026 heating season.
What about Ukrainian gas production?
Despite the war, last year Ukrgasvydobuvannya ensured the implementation of the production program: 83 wells were put into operation. As a result, in 2024, the production volume of Naftogaz Group companies reached the highest level since 2017 – 14.6 bcm.
Ukrgasvydobuvannya also implemented more than 30 projects to modernize the ground infrastructure, which provided additional production of more than 300 million cubic meters (137% more compared to 2021 and 3% more than in 2023).
However, during 2024-2025, 34 Ukrgasvydobuvannya facilities were attacked by the enemy. The most devastating attack was in February 2025, which caused significant damage to state gas production, with losses of almost 50% of the volume.
Experts estimate that about 2.7 billion m3 of gas will be pumped into gas storage facilities at the expense of own production in preparation for the new heating season.
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