Govt includes acquisition of Ukrainian gas in Naftogaz ownership policy

MOSCOW. Aug 11 (Interfax) - NJSC Naftogaz of Ukraine will have to accumulate at least 19 billion cubic meters (bcm) of natural gas in its storage facilities for the upcoming heating season, including by purchasing gas produced in Ukraine.

The Ukrainian government's relevant directive, dated August 9, which amends Naftogaz of Ukraine's ownership policy, is available for viewing on the government's website, Ukrainian media outlets said.

Ukrainian Prime Minister Denys Shmyhal earlier this week told the Finance Ministry to work out a mechanism to spend the natural gas extraction rent proceeds received by the state on purchasing gas from domestic producers.

According to Andriy Zhupanin, the head of the subcommittee for gas, gas transport and gas supply policy of the Ukrainian Verkhovna Rada's energy committee, the government is drafting a directive that will compel Naftogaz to acquire certain set priority amounts of natural gas from domestic producers.

Zhupanin also cited the figures unveiled by Nafrogaz of Ukraine CEO Yuriy Vitrenko at a meeting of the parliament's energy and housing and utilities committee on July 28 that Naftogaz had acquired 600 million cubic meters (mcm) of imported gas between the beginning of the year and June 15, also buying 200 mcm of gas from Ukraine's privately owned gas producers (excluding Ukrnafta).

"The situation today is quite strange: gas that is produced in Ukraine is being pumped by companies into storage facilities as objectively there is nobody it can be sold to [gas export is banned in Ukraine], while Naftogas is buying gas abroad at the same time," Zhupanin said.

Vitrenko, for his part, said at the meeting of the Verkhovna Rada's energy committee that Naftogaz of Ukraine's financial plan, which was earlier submitted to the government, envisions the acquisition of 1.2 bcm of gas from privately owned Ukrainian gas producers before the end of 2022.

"We would like to buy gas from Ukrainian producers because we are guided by an understanding that we buy it at a far lower price than imported gas and, therefore, will seek smaller compensation from the state," Vitrenko said.

Since the beginning of 2022, Naftogaz has been purchasing imported gas at prices that on average are 1.5 times higher than the prices of domestic privately owned gas producers, he said.

At the same time, in order to be able to accumulate 19 bcm of gas by the start of the heating season, Naftogaz will have to import around 4 bcm-5 bcm for approximately $8 billion-$12 billion, Vitrenko said. Ukrainian privately owned gas producers, for their part, may offer around 3 bcm of gas, the price of which may be set at auctions depending on the amount of purchase and the level of competition.

There were 12.2 bcm of natural gas in Ukraine's underground storage facilities as of August 8.