Page 52 - Ukraine OUTLOOK 2024

7.0 Energy & Power
Ukraine has not been dependent on Russian gas for years, importing what it needs from partners in the West instead.
Ukraine produces around 20bn cubic metres of gas from its two gas basins in the east and west of the country that goes a long way to covering the circa 35 bcm of gas demand per year. However, the war has reduced demand after industrial production collapsed, taking off the pressure further.
Ukraine also has modest oil production, which also goes some way to covering its domestic demand, but not completely.
A shortage of coal for Ukraine’s power stations is a much more serious problem. The majority of Ukraine’s most productive coal mines are now in the war zone and Ukraine was forced to import Russian coal via middle men, but here too, the fall in demand from the war has eased the pressure.
In addition to oil and gas Ukraine has five nuclear power stations, including the Zaporizhzhia nuclear power plant (ZNPP), the biggest in Europe, that collectively go a long way to covering most of Ukraine’s power needs, although it is also dependent on Russia for the supply of uranium.
Ukraine had been talking about investing into the oil and gas sector for years but made little progress. It has, however, attracted about $5bn of investment into its renewable power sector, which now accounts for 25% of all power production. Now relations with Russia are irrevocably broken, the motivation to move ahead with these energy diversification plans has got a new urgency.
State company Ukrgazvydobuvannya plans to drill a record number of wells by the end of 2023. This may be more than 90 wells, which is twice as many as 2022 (42 wells), the most in 20 years, according to the head company, Oleg Tolmachev.
The state-owned oil company Ukrnafta has doubled its financial performance. Ukrnafta, a state natural gas extraction company, generated UAH95bn ($2.6bn) in revenue during the first year of operation under state control in 2023. Previously it was controlled by oligarch Ihor Kolomoisky, but nationalised at the start of the war.
According to the head of the company, the increase was not related to the rise in oil prices but was achieved due to transparent market work without Kolomoisky’s “intermediaries.” Ukrnafta made a net profit of UAH14.1bn in January-June 2023, company director Serhiy Koretsky said on Facebook on November 14 morning – more than the previous ten years combined, when the company had billions in losses. In 2023 the company plans to pay UAH27bn in taxes, including about UAH5bn in income tax. In 2023 alone, the company will transfer 400% more funds to the state budget than was the average during
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