Ukraine LNG Newcomer Aims to Boost Supplies as Transit Deal Ends

DTEK, recognized as Ukraine's largest private energy company, is stepping into the liquefied natural gas (LNG) market with ambitious plans. The company aims to import two to three LNG cargoes every month into Europe, marking a significant expansion in its new trading operations.

Recently, DTEK's trading division, known as D.Trading, successfully acquired its first LNG shipment for Ukraine. This delivery involved American liquefied natural gas being sent to an import terminal in Greece. The company intends to gradually increase these shipments, with a primary focus on sourcing fuel from U.S. suppliers.

The entry of DTEK into the LNG market comes at a critical time as Europe braces itself for the conclusion of pipeline gas deliveries from Russia through Ukraine. The existing transit agreement between Ukraine and Russia is nearing its end, and there is little expectation for its renewal.

According to DTEK’s Chief Executive Officer, Dmytro Sakharuk, the timing of their first delivery is significant. "We believe it’s symbolic because it came in December, just a day or two before the termination of transit, which is very important for Europe, for Ukraine," Sakharuk explained. He emphasized that the priority remains clear: ensuring a continuous supply of gas to Europe during this pivotal juncture.

In an innovative approach, D.Trading is not physically transporting LNG directly to Ukraine due to the absence of an import terminal. Instead, they will utilize existing terminals in European countries to facilitate the LNG deliveries. These supplies will then be sold to partners based in Greece, Bulgaria, or Hungary. The company has also devised a strategy to manage the gas flow into Ukraine through swap arrangements utilizing the European gas infrastructure.

"If you have positions in storages in Greece, Bulgaria, Hungary, and Ukraine, you can execute these swaps effectively," Sakharuk added. This plan enables DTEK to meet gas demand in Ukraine while serving its European partners.

With a view towards the future, D.Trading is focusing on establishing a reliable supply chain for LNG from the U.S. to Ukraine over the next two to three years. Furthermore, there are aspirations to expand their trading capabilities on a global scale. Recently, DTEK appointed James O’Brien to spearhead their LNG trading efforts, with plans for additional recruitment in order to strengthen the team.

Sakharuk noted, "Without LNG in the portfolio, you could not be a real player on the gas market in Europe anymore. That’s why we started this business half a year ago." This move illustrates DTEK's commitment to adapting to the evolving energy landscape and securing its position as a key player in the European gas market.

Ukraine, LNG, DTEK