Ukraine's Gas Sector in 2025: Challenges and Prospects

The beginning of 2025 has proven to be extremely difficult for Ukraine’s gas industry: intensive missile and drone attacks have caused significant damage to extraction and transit infrastructure, and the contract for the transit of Russian gas through Ukraine has not been extended. Under such conditions, the sector must urgently seek new ways to stabilize and develop.

Challenges

1. Infrastructure destruction and decline in production

In February 2025, massive attacks disabled about half of Ukrgazvydobuvannya’s production capacity. In total, over 30 key facilities were damaged in 2024–2025, leading to a critical decline in domestic production and the urgent need for restoration.

2. Termination of Russian gas transit

On January 1, 2025, the Gazprom transit contract through the Ukrainian gas transmission system expired – the supply of Russian gas to the EU via Ukraine was completely halted. This deprived the country of a traditional source of transit revenue and additional income for Ukrtransgaz.

3. Resource shortage and import necessity

Due to the drop in domestic production, Ukraine will have to import about 4–4.5 billion cubic meters of natural gas to meet the needs of the heating season and industry. This creates significant financial pressure on Naftogaz’s budget and the national economy as a whole.

Prospects

1. Diversification of LNG supplies

To reduce dependence on specific routes, Ukraine is increasing the purchase of liquefied natural gas (LNG) from the United States and other countries through terminals in Poland, Lithuania, Germany, and Greece. This allows for rapid storage replenishment and ensures uninterrupted supply.

2. Modernization of transit corridors

Ukraine, in cooperation with Poland’s Gaz-System, is implementing projects to expand the capacity of the Poland–Ukraine gas pipeline. Modernizing the metering station in Hermanowice will increase daily capacity by several million cubic meters, enabling more flexible resource redistribution in the region.

3. International financial support

The European Bank for Reconstruction and Development is providing Ukraine with hundreds of millions of euros in loans to build strategic gas reserves, while the Norwegian government and other donors are offering grants under state guarantees. Additionally, investments from the EBRD and government are being directed toward developing gas generation and restoring damaged infrastructure.

Despite significant losses due to the war and the end of Russian gas transit, Ukraine’s gas sector is demonstrating adaptability and resilience. LNG supply diversification, transit corridor modernization, and international support lay the groundwork for the gradual recovery and strengthening of Ukraine’s energy security in 2025.

Prepared by Alphagaz