Ukraine’s Gas Consumption Drops Amidst Russian Strikes, Increased Imports

Kyiv has seen a significant decrease in gas consumption this heating season, approximately 18%, largely due to damage to Ukrainian power plants caused by Russian retaliatory strikes. Even as this reduction in demand has led to cost savings, Ukraine is increasingly reliant on gas and electricity imports, financed through credit from EU countries, making this heating season potentially the most expensive yet.

Reduced Consumption and Increased Imports

The decrease in gas consumption is estimated at 2 billion cubic meters. Simultaneously, Ukraine has increased its gas imports to compensate for reduced domestic production and damage to its energy infrastructure. Imports have reached approximately 25 million cubic meters per day, exceeding withdrawals from storage facilities, which have dropped to 20 million cubic meters – a first since mid-December. This shift is attributed to both lower demand and access to credit-funded import contracts.

Financial Implications

From November 1 to February 15, Ukraine’s combined gas imports, withdrawals from storage, and domestic production totaled 8.9 billion cubic meters, compared to 10.9 billion cubic meters during the same period last season. This reduction in consumption has resulted in approximately $1 billion in cost savings.

However, Ukraine’s overall energy costs remain high. Kyiv has already imported 3.3 billion cubic meters of gas this season, adding to the 3.2 billion cubic meters purchased last year for storage, costing the country at least $3 billion financed by loans from EU countries. Electricity imports from EU countries between November and January reached 1.95 TWh, valued at at least $250 million.

Infrastructure Damage and Reconstruction Costs

Ukraine’s energy infrastructure has sustained substantial damage. The construction of a single new thermal power plant is estimated to cost between 450-600 million euros and will seize at least 3-4 years to complete, according to Alexander Kharchenko, director of the Ukrainian Center for Energy Research. Kharchenko emphasized the need for secure funding and equipment supply for the project, aiming for a modern, high-quality facility that can reliably provide heat and electricity.