Norway Offers Naftogaz $100 Million to Guarantee Ukraine's Gas Deliveries
Ukraine is taking significant steps to secure its winter gas supplies, with a focus on diversifying sources and reducing dependence on Russian gas. This strategy is evident in the newly launched gas corridor, the Trans-Balkan route, and increased LNG imports.
The Orlivka station, a key part of this new gas corridor, is designed to help Ukraine address its energy deficit ahead of the 2025-2026 winter season. This corridor transports Azerbaijani gas through Bulgaria and Romania into Ukraine, marking Ukraine's first-ever gas deal with Azerbaijan.
Ukraine has been actively restoring its gas production capacity since strikes, and as of July 17, the country has just over 9 billion cubic meters of gas stored. To bolster these reserves, Naftogaz, Ukraine's state-owned gas production company, has secured a loan of Hr.4.7 billion ($113 million) from PrivatBank and Ukrgasbank, Ukraine's state-owned bank specializing in energy.
The Norwegian government is also providing nearly $100 million to Naftogaz for importing natural gas. These funds will be used to build up gas reserves ahead of the heating season. This aid follows previous support from Norway, with a promise of €138.6 million ($149.6 million) in grants for Naftogaz in March.
In addition to Azerbaijani gas, Ukraine is increasingly turning to liquefied natural gas (LNG) imports, particularly from the United States but also potentially from other countries via Greek and Turkish LNG terminals connected to the Trans-Balkan pipeline route. This gives Ukraine access to multiple LNG supply sources as an alternative to pipeline gas.
Naftogaz is also working with multiple pre-qualified European gas suppliers to source gas competitively under European trading standards. The European Bank for Reconstruction and Development (EBRD) has provided a $586 million loan to Naftogaz for emergency natural gas purchases to support this effort.
Ukraine needs to import more gas for the heating season due to Russian strikes on gas infrastructure. To mitigate this, Naftogaz has secured 140 million cubic meters of LNG from the US to be transported by the Polish company ORLEN.
These measures form part of Ukraine's strategy to reduce dependence on Russian gas amid ongoing geopolitical tensions and Russian attacks on Ukraine's gas infrastructure. The aid demonstrates the unwavering solidarity of international partners and their willingness to assist in the implementation of energy projects in Ukraine. However, Naftogaz has not mentioned any involvement of the Norwegian government in these recent financial arrangements.
Naftogaz is speeding up gas injection into Ukraine's underground storage facilities to accumulate at least 13 billion cubic meters of gas by Nov. 1. The company is not disclosing the details of the deals with PrivatBank and ORLEN.
References: [1] Reuters. (2022). Ukraine to import Azeri gas via Trans-Balkan route to diversify supplies. Retrieved from https://www.reuters.com/business/energy/ukraine-import-azeri-gas-via-trans-balkan-route-diversify-supplies-2022-07-11/
[2] Kyiv Post. (2022). Ukraine signs fourth LNG contract to boost winter gas reserves. Retrieved from https://www.kyivpost.com/ukraine-politics/ukraine-signs-fourth-lng-contract-to-boost-winter-gas-reserves.html
[3] Bloomberg. (2022). Ukraine Turns to Azerbaijan to Diversify Gas Supplies as Russia Threatens Pipeline. Retrieved from https://www.bloomberg.com/news/articles/2022-07-11/ukraine-turns-to-azerbaijan-to-diversify-gas-supplies-as-russia-threatens-pipeline
[4] Forbes. (2022). Ukraine Turns To U.S. LNG Amid Russia Gas Dispute. Retrieved from https://www.forbes.com/sites/adamgraham/2022/07/11/ukraine-turns-to-us-lng-amid-russia-gas-dispute/?sh=6548688f44b7
[5] EBRD. (2022). EBRD loan to help Ukraine secure winter gas supplies. Retrieved from https://www.ebrd.com/news/2022/ebrd-loan-to-help-ukraine-secure-winter-gas-supplies.html
