Ukrainian Gas Market: Discovering Investment Potential and Opportunities. Report by PwC

25/ 07/ 2018

PwC has issued the report on natural gas market trends in Ukraine. The report conclusions show that the Ukrainian gas sector, which is currently undergoing a transformation, creates opportunities for new players and is attractive enough to investors in the long run. At the same time, it requires a balanced and thoughtful entry strategy.

The report provides the analysis of the current state of the natural gas market in Ukraine and outlines the main trends in the key segments of the market, from production to end consumption. Particular attention is paid to the state regulation of the industry (namely the framework of public service obligations) and opportunities for the creation of an Eastern European gas hub in Ukraine.

Key report facts & figures:

  • Despite the fact that the level of natural gas consumption in Ukraine decreases year over year (32 bcm in 2017), only 65% of the needs are covered with local production.
  • Ukraine has enough natural gas reserves (No.2 in Europe) to completely replace its imports, and therefore the Government expects to increase domestic production from 20 to 28 bcm by 2020.
  • Over the past few years, Ukraine has completely switched to natural gas imports from European direction. At the same time, for 2013-2017, the gas imports has been reduced by 50% – from 28 to 14 bcm. The segment has been opened for competition – in 2017 there were more than 60 importers of natural gas, and the leading European companies started their operations in Ukraine.
  • Ukrainian gas transmission system is one of the most powerful in the world and is the main route of Russian gas transit to the EU countries. Considering the risks associated with the construction of gas pipelines bypassing Ukraine and the expiration of transit contract, the preservation of gas transit through the territory of Ukraine (which currently provides about 3% of GDP) is the issue of national security.
  • The capacity of the Ukrainian underground gas storage facilities is the largest in Europe, but currently it is underutilized. Taking into account the available infrastructure, Ukraine could be a natural candidate for an Eastern European Gas Hub.

The full version of the report can be requested at: https://www.pwc.com/ua/en/survey/2018/ukrainian-gas-market.html

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