Ukraine cuts tariffs in bid to incentivise gas storage

Ukraine has cut tariffs for gas storage services and introduced new incentives for long-term capacity bookings as Kyiv seeks to accelerate stockpiling ahead of a winter.

The National Commission for the Regulation of Energy and Utilities (NERC) said on May 26 that it had approved a package of measures aimed at strengthening the country’s gas storage system and encouraging greater use of its vast underground storage facilities.

“In preparation for the next heating season, and in order to create favourable conditions for the formation of reserves necessary for the stable passage of the winter period, the regulator reduced the tariff for gas storage services,” NERC said in a statement.

The new tariffs will take effect from June 1. Ukraine has the largest gas storage tanks in Europe capable of holding 31bcm of gas – larger than Germany’s, the second largest in Europe, with a capacity of 24bcm.

Since the transit of Russian gas to Europe largely came to an end in 2022, European companies have been reluctant to make use of the Ukraine storage facilities. At the start of the 2024-25 winter season, foreign traders held roughly 2-3bcm of gas in Ukrainian storage. During the peak pre-war years, foreign companies sometimes stored up to 10bcm in Ukraine.

Typically, Ukraine’s Naftogaz aims to have some 13bcm of gas available in storage for use ahead of the heating season for domestic use. Currently, Ukraine had approximately 10.7bcm of gas in storage as of May 25, 2026, according to data compiled by S&P Global Commodity Insights, but of that 4-5bcm is technical gas that cannot be withdrawn.

The regulator also introduced new discount coefficients for annual capacity bookings, saying the changes were designed to encourage longer-term commitments from market participants and improve planning for storage operators.

“The adopted decisions form a new model of functioning of the gas storage operator and create the prerequisites for long-term planning of activities, maintaining the proper technical condition of the infrastructure and its further development,” the regulator said.

The move comes as Ukraine races to rebuild gas inventories depleted by heavy winter consumption and repeated Russian strikes on domestic gas production facilities. Since the start of the full-scale invasion in 2022, Moscow has increasingly targeted energy infrastructure, forcing Ukraine to rely more heavily on imports and emergency repairs to maintain supply security.

Ukraine’s underground gas storage was inherited largely from the Soviet era, and has long been viewed as a strategic asset for both Ukraine and the wider European gas market.

In April, Ukrainian Energy Minister Denys Shmyhal said the government aimed to accumulate approximately 14.6bcm of gas in storage before the next heating season, while identifying 13.2bcm as the minimum level required to ensure stable winter supply.

“We understand that we continue to live in war conditions,” Shmyhal said. Last winter Russian President Vladimir Putin attempted to freeze Ukraine into submission by targeting power and heating infrastructure. Bankova is expecting a similar campaign this year once the mercury begins to fall.

“The next winter will take place under the same difficult circumstances as the current one. Therefore, given the situation, the forecast can be adjusted in accordance with the security situation,” he added.

Separate data from Gas Infrastructure Europe showed working gas inventories at 67 terawatt hours, equivalent to around 6.3bcm, as of May 25.

The challenge facing Ukraine has been compounded by higher European gas prices this year as Europe slides into a gas crisis – a combination of the big freeze last winter that saw higher levels of consumption than anticipated and a shortage of LNG on the international market caused by the Iran war. Ukraine is expected to rely heavily on imports during the summer injection season after Russian attacks reduced domestic production capacity.

Shmyhal said on April 9 that securing imported supplies, injecting gas during periods of “lowest market prices” and diversifying import routes would be central to preparations for next winter.

Following military strikes by the US and Israel against Iran earlier this year, benchmark Dutch TTF gas prices surged sharply. Platts, part of S&P Global (SPGI), assessed the month-ahead TTF contract at €61.94 per megawatt hour on March 19, up from €31.40/MWh on February 27. Prices had eased to €47.28/MWh by May 26.

The tariff reductions are also likely to be watched closely by European traders. In recent years, Ukraine has promoted its vast storage network as a potential hub for regional gas storage, particularly as EU countries seek additional flexibility following the loss of most Russian pipeline gas supplies.

With winter less than six months away and the threat of further attacks on energy infrastructure remaining high, Kyiv is increasingly relying on a combination of imports, storage incentives and international support to ensure adequate supplies for the coming heating season.