The new head of Ukraine's largest energy company, Naftogaz, Oleksiy Chernyshov, announced his intention to achieve an ambitious goal in 2023 and, for the first time in Ukraine's history, refuse to import gas into the country. The top manager spoke about this in an interview with Bloomberg.
According to the top manager, Ukraine will be able to achieve the set task by increasing its own gas production. Chernyshov believes that it is enough for Naftogaz to increase production by 8%, and for private companies by 16%, given the ban on fuel exports, this should allow domestic production to cover domestic demand, and thus Ukraine will not import gas for the first time since 1991.
“Increasing domestic production is our strategic goal, and we must do it ourselves. This is not just a matter of business, it is a matter of Ukraine's survival and independence,” says the new head of Naftogaz.
However, the implementation of the plan depends on another factor – keeping the entire existing energy infrastructure intact, which is unlikely with ongoing active hostilities. At the moment, the consequences of the destructive actions of the Russian military have already led to the company's losses totaling $1 billion. The International Monetary Fund (IMF) is also skeptical about the company's plans, according to which Ukraine will have to purchase 5 billion cubic meters of gas in 2023. The head of Naftogaz, however, believes that such a scenario is possible in the worst case.
Chernyshov insists that Ukraine is systematically reducing gas consumption and increasing production – in recent months, the company has reduced imports, purchasing only half of what was planned. True, the reduction in supplies was caused by Russian attacks on the Ukrainian energy system, an increase in domestic production by private companies, as well as a reduction in consumption by the population. Chernyshov acknowledges that it will be difficult to implement the plan, so the company is still ready to import gas, according to the forecasts of a top manager, Ukraine will be able to get by with purchases of 2 billion cubic meters.
“But that's not our main plan. We want to rely on ourselves,” says the head of Naftogaz.
In addition to the plan to stop gas imports, Chernyshov said that the company is trying to negotiate with its creditors on debt restructuring in wartime conditions. Naftogaz had previously defaulted on its Eurobonds, then the government forbade the company to spend money on paying off obligations and demanded that the top manager achieve restructuring, but the company failed to do this before the deadline. At the moment, according to Chernyshov, the company continues to negotiate with creditors, he notes that Naftogaz is doing its best to maintain its reputation and hopes that they will be able to find a solution that is beneficial for everyone.
However, some Naftogaz bondholders have so far refused to make concessions and restructure the company's debts, demanding that part of the money be transferred to them immediately. Chernyshov explains this by the desire of speculators to get quick money. “There are bondholders with speculative ambitions because the price of bonds is low, and if they buy these bonds and put pressure on them, they will make money,” the top manager explains. The company's total debt on three issues of Eurobonds exceeds $1.5 billion, the company has been trying to restructure this debt since the summer.