— Usually, gas prices stabilize or drop in the spring. However, due to the military-political crisis in the Middle East, we are currently seeing the opposite trend. What challenges does this price increase bring?
— This crisis highlights several important things—both for Ukraine and for the entire energy community.
First and foremost, we see that LNG (liquefied natural gas) supplies, which were considered a relatively reliable and flexible source, are losing this advantage. In crisis situations, it might simply not function as expected.
Most importantly, this crisis will not be the last. In my opinion, similar shocks will recur. Overall, the entire world is entering an era of turbulence. Therefore, countries must develop defense mechanisms to mitigate such shocks. The market is beginning to gradually shift from spot purchases to long-term contracts. By the way, the European Commission (EC) understands this as well. Because spot trading is effectively "here and now" trading: a trader buys gas and directs it to wherever the price is higher, even if the delivery date is several months away. The European Union is trying to switch entirely to long-term contracts, but as I understand it, they won't succeed completely.
We are already observing this: some LNG tankers that were supposed to go to Europe are being redirected, for instance, to the Asian market, where prices have become higher. Consequently, Europe is forced to raise prices to "pull" these volumes back. The fact is that at least 45% of all natural gas supply contracts from the USA are concluded under the Free On Board (FOB) formula. This means the buyer of this gas determines where to take it for further sale. Naturally, they take it to where it is more expensive.
Yes, Europe is traditionally a premium market, but even that does not guarantee stability of supply.
— So we are no longer just talking about price, but about the physical availability of gas?
— Exactly. For example, if production volumes shrink or infrastructure is damaged—as reportedly happened at a facility in Qatar—it means not just more expensive gas, but a physical deficit.
Qatar provides about 8–9% of Europe's LNG imports. If these volumes drop out, a real resource shortage occurs. This is a complex issue. It all depends on what share of the infrastructure was damaged, how long it will take to restore, and, overall, how long this plant in Qatar will remain offline. We don't know for sure, but if a full "dry-out" of all 14 process lines has occurred, bringing them back online, even without damage, could take several months.
According to estimates by European institutions, in a worst-case scenario where a real natural gas shortage actually occurs, Europe, based on open sources, will have to cut consumption by 12–14%. For comparison: over four years, it has already reduced consumption by about 20%. But cutting another 14% in a short period of time is very painful.
For Ukraine, this primarily means the risk of a physical shortage of gas. If the resource does not reach Italy or other countries, it will not travel further along European routes and, consequently, will not reach us.
— What are the key conclusions to draw from this situation?
— First, we need to transition to long-term contracts. They do not offer an absolute guarantee, but they significantly increase the probability that gas will be delivered exactly where it was planned. Although even here there are nuances: there have been cases where suppliers tried to bypass contract terms due to a more lucrative spot market. But these are exceptions rather than the rule.
Second, a certain "renaissance" of pipeline gas is possible. Countries will start relying more heavily on network supplies again, as they are more predictable. This could also influence EU policy: while new pipelines were hardly considered before, attitudes may change now.
Third, in the short and medium term (10–15 years), gas will remain a critically important resource. Even in countries with rapid growth in renewable energy sources (RES), like China, traditional generation is developing in parallel, and coal power generation still remains in large volumes.
And fourth, reserves. Countries must have sufficient reserves of energy resources. This applies not only to oil but to a comprehensive approach to forming strategic reserves that will allow them to weather such crises without critical losses.
— Speaking of resilience tools—how important are minimum stocks of gas and oil products?
— It is critically important. Laws on minimum reserves have been working in a number of countries for a long time. For example, in Hungary—they have a well-developed system of gas storage facilities, and it is structured professionally, in my view. The European Union is also moving in this direction now, though the approach is slightly different—through requirements for filling storage facilities before the heating season.
However, the current situation is complicated: reserves in European UGS (underground gas storage) facilities dropped slightly below 30% before the injection period began. For comparison, it used to be around 45%. This means two things: first, a potential gas shortage, and second, additional demand for gas from Europe. Consequently, prices could go even higher. Right now, prices vary—from 70 to 160 euros per MWh.
— And how does Ukraine look in this context?
— To be honest, the situation looks relatively good at the moment. There are about 9.5–10 billion cubic meters of gas in underground storage. About 2 billion were injected during the first quarter. Naftogaz did a good job. I think the actual purchased volumes might be even slightly larger; perhaps part of the gas we already bought will "arrive" in Ukraine later—certain things are not public. But overall, we can say we prepared for the current situation. True, the war with Iran introduces its own adjustments.
However, the main challenge lies ahead—price and finances. Naftogaz has limited resources, debts are accumulating, and the question of what price to supply gas to the population under the PSO (Public Service Obligation) framework is becoming increasingly acute. It seems to me that closer to September, this will become a critical problem that cannot be postponed. If the import price rises, finding financing will be very difficult—even taking external assistance into account.
— Can we offset this with our own domestic production and injection?
— Partially, yes. Theoretically, we could inject up to a billion cubic meters per month during the season. But the problem lies elsewhere—constant strikes on production. Infrastructure in the Kharkiv and Poltava regions is regularly under shelling. It is impossible to protect it completely. There are gas losses due to damage, and there are expensive emergency repairs. This all impacts both the volumes and the financial results of the companies.
— How quickly can such infrastructure be restored after strikes?
— The wells themselves recover relatively quickly. However, as a rule, strikes are aimed at gas treatment units. These are more vulnerable points containing expensive and scarce equipment. If such a unit is knocked out, the operation of several wells stops immediately. This is obviously the logic behind these attacks.
And if the war continues, these strikes, unfortunately, will go on. Furthermore, in autumn, the risks could even increase, with a focus on critical infrastructure nodes. But I would prefer not to discuss this in greater detail publicly.
— Fair enough. What solutions do you see for increasing the resilience of Ukraine's gas sector?
— We have already worked out relevant proposals. There is a vision of what needs to be done before the 2026–2027 heating season. This is a complex set of solutions—ranging from the TSO (Transmission System Operator) to distribution network operators and, in general, methods and technologies of natural gas supply.
In particular, it is worth developing not only large underground storage facilities in the west or center of the country but also implementing more decentralized solutions—regional capabilities for gas accumulation. Technically, this is possible.
— You mentioned Hungary. Elections and relations with Hungary's political elite are often strained. But if we compare them—how much better or worse is their system compared to Ukraine's?
— If we look back at history, it was once the Soviet Union that set the standards—particularly in building large-diameter main pipelines (e.g., 1420 mm). Ukraine held very strong positions. Later, the level leveled out more or less. Ukraine has a professional TSO and qualified personnel—the system is managed at a proper level. Hungary has a typical European level: slightly better in some places, slightly worse in others, but generally comparable.
— What about from a commercial standpoint—contracts, trading, market operations?
— Here, Hungary is ahead, in my view. For example, the American company Chevron directly concluded a long-term contract with the Hungarian company MVM for natural gas supplies from the USA. Our companies, if I am not mistaken, are still purchasing American gas "in alliance" with European companies. Regarding Chevron, this is a telling case: a major international company works directly with a regional player, rather than solely through global wholesale markets. Therefore, Ukraine should align with best European practices—developing its own trading capabilities.
— Returning to the topic of pipeline gas: is the resumption of Russian transit through Ukraine possible after the active phase of the war ends?
— This is a difficult question. The decision to terminate or resume transit is, strictly speaking, a political one, taking into account geopolitics, negotiations, security, and economic aspects. But at the same time, there are technical and energy dimensions. The task of experts and profile bodies is to clearly calculate all risks (technological, market, infrastructural) and report them to the political leadership.
As for the future—there are indeed mixed sentiments in Europe. At the government level—from what I read—there is skepticism about resuming purchases of Russian gas, but at the level of individual industries and traders who previously depended heavily on it, I think such ideas are being discussed.
I am not a proponent of returning to this model. But assuming such a political decision is made in the EU, Ukraine should be ready for competition—primarily with routes like Nord Stream. And in that case, the logic is simple: if transit does resume, it is better for it to run through the Ukrainian GTS. This would give us an additional resource—for instance, in the form of a tariff surcharge for the reconstruction of the country.
— Looking strategically: can Ukraine become a gas exporter itself in the future?
— If we talk about potential—it exists. According to experts, Ukraine has significant reserves. It is often said that we hold the second-largest resource base in Europe. The problem is that these reserves are located at great depths. However, modern drilling technologies allow us to work with this. Furthermore, there were plans to develop new fields, particularly in the west of the country. If we look at the medium- and long-term perspective (10–15 years), the potential for partial exports genuinely exists.
— But how can this be reconciled with the current financial situation in the sector? Is there a way out of the debt trap?
— I wouldn't talk about specific debt restructuring mechanisms in detail—that is a separate, massive topic. But there is another important issue—pricing. Currently, there is a restriction: during the war, gas prices for the population cannot be increased. And this is understandable from a social perspective. However, we need to distinguish between different consumption modes.
There is basic consumption—for heating small houses, apartments, and cooking. And then there are significantly larger volumes—large houses, commercial or semi-commercial needs that can currently "pass through" domestic consumption. And here, a compromise approach is possible.
— What kind of approach?
— A differentiated tariff model. It was already applied by Naftogaz in the past. The idea is to establish several levels of annual consumption: hypothetically, up to a certain volume—a social price, and everything above that—at a higher tariff. For example, if a household consumes up to a certain annual limit, it pays the subsidized price. But if the volumes are significantly larger, a different price applies to the additional gas. This allows preserving social protection for the majority of the population while slightly easing the financial pressure on the sector.
Because right now a paradox arises: the state essentially subsidizes both basic needs and consumption in very large houses, which becomes a matter of fairness. That is, there should be several tiers of consumption. Those who use gas minimally—say, for the kitchen or for heating small homes—should pay the minimum price. Meanwhile, wealthier consumers should make a greater contribution to supporting energy security and pay more for gas.
— Another question regarding additional gas imports. We often talk about the USA, Norway, and Azerbaijan. Recently, there were contacts by the President in the Middle East. Which new routes for Ukraine look the most realistic right now?
— One option that has been considered for a long time is supply via Turkey and the Balkans. We are not exactly talking about the so-called "Vertical Corridor" (I think there will be very little gas for Ukraine there this autumn), but rather a south-to-north route: Turkey – Balkans – Romania – Ukraine.
Back in 2020, we assessed the potential: Azerbaijan supplies approximately 10–12 billion cubic meters of gas per year to Europe. Under certain conditions, 5 billion cubic meters could be directed toward Ukraine.
— Under what conditions is this possible?
— For example, in the case of mutually beneficial cooperation. On the Ukrainian side, this could involve supplies of solar panels or batteries. Even though we need them ourselves, a certain symbiosis is possible. The idea is that Azerbaijan could replace part of its domestic natural gas needs with renewable energy, thereby freeing up to 5 billion cubic meters for export.
— So effectively, it's a swap: we help with generation, they help with gas?
— Exactly. Such estimates were voiced last year as well. Theoretically, this would allow forming a resource of about 5 billion cubic meters for supply via the Balkan direction. There are issues with infrastructure and coordination, but they are resolvable.
— If we turn to other directions—specifically the Polish one. There was a story involving the Ukraine–Poland interconnector, which went unexpanded for a long time. Why did that happen?
— It is a long story. And it's worth emphasizing: my position is subjective, not the absolute truth. Initially, there was no resistance. I personally participated in negotiations in Poland alongside a Naftogaz delegation, where we justified the need for a new interconnector. The project was designed, working documentation was ready, state expertise was passed, and land was even allocated. But then the process stopped.
— Has the situation changed now?
— In my opinion, radically. Now it is needed not only by Ukraine. Following reductions, and after 2027 a complete ban on Russian gas supplies, many European countries (primarily in Central Europe) are looking for alternative routes. We have a massive gas transmission system built back in the Soviet era, which historically transported gas to Central Europe, including Northern Italy and Bavaria. So a logical question arises: why not use it "for other gas"?
— Meaning for importing, say, American LNG via Poland?
— Exactly. And not just American—it could be Norwegian, Qatari, or any other gas.
— Is even Qatari gas via the Baltic competitive?
— We calculated this route—it can be competitive. Production costs there are the lowest. Currently, the situation is unstable, particularly due to security factors. But the market adapts: following shocks, participants become more cautious and diversify supplies, especially since Qatar usually sells its gas with a strict destination clause linked to the delivery point.
— And how does the role of neighboring countries, like Hungary, look in this configuration?
— Here, it is important to distinguish between the political stance of the leadership and the behavior of the business community. Business acts pragmatically: if there is an economic benefit, it operates. For instance, back in 2025, significant volumes of gas entered Ukraine precisely via the Hungarian direction. The same goes for electricity.
They made money on transit and viewed it as a normal practice. Whether it was Russian gas or not is a different question. But the fact remains that they supplied it.
— So virtually a whole hub is taking shape?
— Exactly. This configuration includes Slovakia, Hungary, the Czech Republic, possibly Austria, southern Germany (Bavaria in particular), and northern Italy. That is, the countries where Russian gas was previously supplied through our system. The idea is simple: the entry point changes. Gas enters, for example, via Polish LNG terminals, moves through the pipe into Ukrainian storage facilities, and is then distributed from there to consumers in Central Europe.
— You mentioned underground gas storage facilities. How profitable is the "inject in summer—sell in winter" model right now?
— In recent years, the spread—that is, the difference between winter and summer gas prices—was indeed small. But if we compare the summer of 2025 and January 2026, a difference has already emerged—roughly a few euros per megawatt-hour. It isn't much, but there is a positive trend. Given the current risks, particularly in the Middle East, we can expect this spread to grow, meaning storing gas in the summer will be profitable.
— So interest in Ukrainian storage facilities could intensify again?
— That is a completely realistic scenario.
— How much gas can Ukraine technically import currently using existing routes?
— If we look at cumulative capacities—up to approximately 60 million cubic meters per day. But there are two key factors here. The first is the availability of the gas itself on the market. The second is transmission tariffs. The main direction in terms of potential volumes is Slovakia. About 42–45 million cubic meters per day can be imported through it, but again—everything hinges on price and resource availability. As far as I know, the Slovak side is currently considering a tariff increase, and this could become an issue for Ukraine.
— Which directions are actually working most actively right now?
— Based on the first quarter, we can see that the Polish direction came out on top, followed by the Hungarian one, and only then the Slovak route. As for the "Vertical Corridor," we shouldn't over-rely on it. Part of the gas, for instance, might remain in Italy, considering that process lines in Qatar—from which gas was supplied to Italy among others—are damaged.
Overall, Ukraine needs to "bring in" an additional 4–4.5 billion cubic meters of gas—whether by importing it or buying it additionally. These are different things: the gas might already be contracted but not yet delivered.
— How resilient is this entire system under the conditions of the war in the Middle East?
— Under normal conditions—without war and without panic demand—the system would operate stably. But even if the conflict in the Middle East ends quickly, the consequences will linger for a long time. There will be no rapid return to the "pre-war" market—not only because of physical destruction but due to shifting market behavior.
For example, damage to LNG infrastructure means years of recovery. Even after hostilities end, technical startup takes time: cooling equipment down, testing, reaching operating modes. This can take months. Meaning that even in a best-case scenario, full restoration of supplies could drag on until the heating season or longer.
A simple return to the state prior to the war in the Middle East is impossible, even psychologically. European analysts are unanimous: the market has changed forever. Participants will be more cautious, diversify risks more extensively, and construct new supply models.
EnerhoBiznes Dossier
Leonid Unihovskyi, Director General of Naftogazbudinformatika LLC.
Born in 1948 in Kyiv. From 1966 to 1971, he pursued higher education at the Moscow Institute of Petrochemical and Gas Industry named after Academician Ivan Gubkin (MINKh&GP), after which he completed his postgraduate studies. In 1986, he defended his doctoral dissertation and received the degree of Doctor of Technical Sciences.
In the 1970s and 1980s, he combined teaching activities at a higher education institution with scientific work: starting from 1974, he held the position of research fellow at the Kyiv Branch of the All-Union Scientific Research Design and Technological Institute of New Equipment, Technology, and Management in the Construction of Oil and Gas Industry Enterprises. Since 1990, he has been the Director General of the Naftogazbudinformatika association (since 2003—Naftogazbudinformatika LLC).
The organization's cooperation with gas distribution network operators (oblgases) began in 1996: at the invitation of Mykhailo Matsialko, the then-director of the Ukrainian Gas Corporation Ukrgaz, the company took part in establishing the State Holding Company Ukrgaz. In 1998, together with Taras Freiuk and Zynovii Vyshyvaniuk, he participated in founding the Gaz Ukrainy trading house as a subsidiary structure of Naftogaz of Ukraine.
In 2001–2003, specialists from Naftogazbudinformatika LLC, jointly with employees of Naftogaz, developed methodological materials for determining regulatory production and technological losses and expenditures (VTV) of natural gas during its distribution by gas distribution network operators. In 2018–2019, as part of a consortium commissioned by the World Bank, the company prepared proposals on applying benchmarking methodology for gas distribution operators.
In 1998, pursuant to a decree by President of Ukraine L.D. Kuchma, he joined a working group to justify the creation of the National Joint Stock Company Naftogaz of Ukraine, which was established that same year. In 2012, jointly with the German gas trader RWE, they initiated the first reverse flow of natural gas into Ukraine through the western border.
Throughout 2020–2023, commissioned by RGC and in partnership with a consortium of institutes of the National Academy of Sciences of Ukraine, he conducted research into the challenges of transporting hydrogen and hydrogen mixtures with natural gas through distribution pipelines.
He is a laureate of the State Prize of Ukraine in the Field of Science and Technology for his participation in creating the construction management system for the Urengoy–Pomary–Uzhhorod main gas pipeline. He is the author of over 100 scientific publications and 26 patents.
