Underground Gas Storage Facilities in Ukraine: Current State and Future Prospects

Abstract

The article considers the system of underground gas storage in Ukraine, the history of its development, the characteristics of regional gas storage complexes, and the current state and role of the gas group enterprises in the domestic gas market. The study also proves the significant role of Ukrainian UGS facilities in ensuring the energy security of Europe. However, their position in the European gas market depends significantly not only on the demand for gas storage services from foreign companies but also on the awareness at the state level of the importance of collective energy security manifested in energy policy regulations. To process forecasts for the development of the European gas market, an assessment of the environment of the gas storage operator of Ukraine was carried out using PESTEL and SWOT analysis. As a result, pessimistic, realistic, and optimistic scenarios for using underground gas storage facilities in Ukraine have been formed.

Full text

Citation: Iwaszczuk, N.; Zapukhliak,
I.; Iwaszczuk, A.; Dzoba, O.;
Romashko, O. Underground Gas
Storage Facilities in Ukraine: Current
State and Future Prospects. Energies
2022,15, 6604. https://doi.org/
10.3390/en15186604
Academic Editor: Behnam Zakeri
Received: 14 August 2022
Accepted: 6 September 2022
Published: 9 September 2022
Publisher’s Note: MDPI stays neutral
with regard to jurisdictional claims in
published maps and institutional affil-
iations.
Copyright: © 2022 by the authors.
Licensee MDPI, Basel, Switzerland.
This article is an open access article
distributed under the terms and
conditions of the Creative Commons
Attribution (CC BY) license (https://
creativecommons.org/licenses/by/
4.0/).
energies
Article
Underground Gas Storage Facilities in Ukraine: Current State
and Future Prospects
Natalia Iwaszczuk 1, * , Ivanna Zapukhliak 2, Aleksander Iwaszczuk 3, Oleh Dzoba 4
and Oleksandra Romashko 5
1Faculty of Management, AGH University of Science and Technology, Mickiewicz Av. 30,
30-059 Krakow, Poland
2Department of Management and Administration, Ivano-Frankivsk National Technical University of Oil and
Gas, Karpatska Str. 15, 76019 Ivano-Frankivsk, Ukraine
3College of Social Sciences, Cracow University of Technology, Warszawska Str. 24, 31-155 Krakow, Poland
4Department of Entrepreneurship and Marketing, Ivano-Frankivsk National Technical University of Oil and
Gas, Karpatska Str. 15, 76019 Ivano-Frankivsk, Ukraine
5Department of Finance, Ivano-Frankivsk National Technical University of Oil and Gas, Karpatska Str. 15,
76019 Ivano-Frankivsk, Ukraine
*Correspondence: niwaszcz@zarz.agh.edu.pl
Abstract:
The article considers the system of underground gas storage in Ukraine, the history of its
development, the characteristics of regional gas storage complexes, and the current state and role
of the gas group enterprises in the domestic gas market. The study also proves the significant role
of Ukrainian UGS facilities in ensuring the energy security of Europe. However, their position in
the European gas market depends significantly not only on the demand for gas storage services
from foreign companies but also on the awareness at the state level of the importance of collective
energy security manifested in energy policy regulations. To process forecasts for the development of
the European gas market, an assessment of the environment of the gas storage operator of Ukraine
was carried out using PESTEL and SWOT analysis. As a result, pessimistic, realistic, and optimistic
scenarios for using underground gas storage facilities in Ukraine have been formed.
Keywords:
underground gas storage (UGS); gas transmission system (GTS); gas storage operator;
SWOT analysis; PESTEL analysis; scenario analysis
1. Introduction
The efficient functioning of enterprises of the fuel and energy complex of Ukraine
(including enterprises of production, storage, and transportation of natural gas) is the
basis of energy security, protection of national interests, and the success of the country’s
external integration processes. It is also a necessary condition for internal stabilization and
development of the economy, that is, fully satisfying the population’s needs and social
production in energy resources. Natural gas is increasingly seen as the most acceptable
energy source for two reasons:
(1)
improvement of gas production technologies;
(2)
recognition of gas as the most „clean” type of fossil fuel (its combustion entails a
minimum emission of carbon dioxide and is consistent with decarbonization goals).
However, today there are several challenges and threats to the functioning of the gas
transportation system (GTS) of Ukraine, among which the greatest threat is dependence on
Russian gas supplies. To reduce this threat, it is necessary to:
•Make the most of internal traditional energy sources;
•Increase the share of energy received from domestic renewable sources;
•Diversify external suppliers of energy resources;
•
Use underground gas storage (UGS) facilities located on the country’s territory more efficiently.
Energies 2022,15, 6604. https://doi.org/10.3390/en15186604 https://www.mdpi.com/journal/energies

Energies 2022,15, 6604 2 of 34
To meet the domestic energy demand, Ukraine uses various sources: oil, natural
gas, coal, nuclear energy, water, wind, sun, etc. The most demanded in Ukraine now are
fossil resources—natural gas and coal. In 2020, primary energy production amounted to
57.0 million tons of oil equivalent, 5.7% less than the previous year. Nuclear energy (35.1%),
natural gas (27.8%), and coal (22.4%) had the largest share in the structure of their own
production. The total share of renewable energy (RE) sources was only 10.3%. Moreover,
own production provided 66.0% of the total primary energy supply. In the structure of final
consumption, the share of natural gas was the largest—27.6% [
1
], which remains one of the
main types of energy resources. Therefore, it is so important to study the gas transportation
system of Ukraine, which includes gas pipelines and underground storage facilities.
Until recently, the gas pipelines of Slovakia, Poland, Hungary, Romania, and Bulgaria
were set up so that gas could be transported in only one direction—from the supplier
(Gazprom PJSC, Russia [
2
]) to the consumer. For several years, these countries have
built interstate gas pipelines (interconnectors), which were provided for by several EU
documents, in particular, the Third Gas Directive. This made it possible to increase the
security of gas supplies, including by purchasing gas on the „spot” market—gas „hubs”.
The purpose of the interconnectors was to connect all European gas facilities, which made
it possible to pump gas from any point in any direction. The necessary investments
for transferring gas transmission systems to the reverse mode are small compared to
constructing new gas pipelines [3].
Imports of natural gas in 2020 amounted to 7.3 billion m
3
, which is 38.2% less than
in the previous year, with more than 4.4 billion m
3
Ukraine bought from Switzerland
and Germany. Moreover, the volume of imports from Slovakia increased 6 times—up to
1.1 billion m3
. Since November 2015, Ukraine has not bought gas from Russia [
4
]. For
10 months of 2021, Ukraine imported more than 2.5 billion m3of natural gas [5].
To compensate for seasonal fluctuations in gas consumption, many countries accumu-
late gas reserves stored in underground storage facilities. In addition, UGS facilities ensure
the reliability of gas supply in the event of an emergency in the GTS or an energy crisis (for
example, the crisis associated with Russia’s aggression against Ukraine).
For gas storage, cavities are most often used, which remain after the extraction of gas
and oil. There are general requirements for the construction of such facilities:
•They should be located as close as possible to the route of the main gas pipeline;
•Their placement should be close to the largest consumer groups;
•
the storage must be airtight (to avoid gas losses and prevent damage to the environment);
•
Gas pressure that meets the operating conditions of the gas transportation and distri-
bution system must be created and maintained in the storage facility.
There are not many scientific publications containing research on the gas market in
Ukraine, although they started to appear more often in connection with the Ukraine–Russia
crisis that began in 2014. Goldthau and Boersma [
6
] examined how this crisis influenced
the energy market in political terms. The authors claim that “while the energy world is
entering the next phase with a renewed emphasis on renewables and energy efficiency,
and markets for energy becoming increasingly global and interconnected, a substantial
number of politicians and foreign policy makers seem to be stuck in a Cold War paradigm”.
However, as the events of recent months show, they were right. Skalamera [
7
], in turn,
believes that the gas factor (i.e., Ukraine’s leading role in the transit of Russian gas to
Europe) was one of the most important factors in the aforementioned crisis of 2014. Van de
Graaf and Colgan [
8
] also devoted their research to this crisis, looking for answers to two
questions: “How exactly did energy contribute to the crisis in the region? Can energy be
wielded as a ‘weapon’ by Russia, the EU, or the US?” They stated that “Russian gas pricing
played a crucial role as a context factor in igniting the Ukrainian crisis”, but that was not the
only cause of the crisis. In turn, Lee [
9
] returned in his research to the gas conflict between
Russia and Ukraine in 2009, attempting to identify the causal mechanisms between their
interdependence in the gas sphere and the gas conflict. The topic of the gas conflict in
2006–2009 and its impact on the energy security of European Union countries was also

Energies 2022,15, 6604 3 of 34
investigated by Rodríguez-Fernandez, Carvajal, and Ruiz-Gomez [
10
]. The gas market in
the context of the Russian-Ukrainian crisis was also the subject of research by Stulberg [
11
],
who examined strategic limitations in gas relations between Europe and Russia.
As the Ukrainian gas market underwent reform, Goncharuk and Storto [
12
] compared
it with the gas reform in Italy regarding natural gas distribution to end users. The authors
stated that “both countries are low performing in terms of operators’ technical and scale
efficiency, and there is room to design more efficient market configurations”. The study
of the team of authors of the publication [
13
] concerned “the assessment of the ability of
the Ukrainian economy and individual industries to ensure, in the conditions of economic
growth, a stable reduction in natural gas consumption and reduce dependence on its
import” (assess the ability of the Ukrainian economy and its individual industries to ensure,
in the conditions of economic growth, a stable reduction of natural gas consumption and
to reduce dependence on its imports). However, since 24 February 2022, geopolitical
conditions have changed drastically.
Yakovenko and Mišík [
14
] studied the political discourse on transit and the role of
natural gas in Ukraine and Slovakia in the context of energy security and compliance with
the idea of the European Green Deal. Sauvageot [
15
] examined the issues of energy security
of the European Union in the context of its dependence on Russia as a gas supplier and
Ukraine as the main transit country. The author also considered the issue of increasing
LNG supplies as an alternative to gas delivered via pipelines.
Teichmann, Falker, and Sergi [
16
], in turn, conducted a qualitative study of the impact
of corruption in Ukraine on the extractive industries. The authors have proved that
eliminating corruption is desirable for both governments and corporations. Bocse [
17
]
analyzed the impact of the unrest in Ukraine and Russia’s annexation of Crimea in 2014 on
EU–US energy relations. The author stated that “strategic considerations played a more
important role in thinking about energy security, not only in the EU but also in the US, and
securitization characterizes the US response to the crisis”.
Alberini, Khymych, and Milan Scasný[
18
] examined the price elasticity of demand
for natural gas, using the example of Ukrainian households’ response to an increase in
the price of this raw material. Such studies are important for determining the appropriate
tariff policy in the country and for implementing reforms in the gas sector. Ukrainian
households were also the subject of research for Goncharuk and Cirella [19], who focused
their attention on the impact of the government’s “gas tax” on the economic and social
aspects of consumers’ lives. According to the authors, he “has significantly increased
inflation, reduced domestic consumption, reduced profitability of local businesses, reduced
the size of the middle class and increased stratification of society, concealed real income
and escaladed a shadow economy and enhanced injustice and an outmigration of labor”.
However, due to the dynamic changes taking place in the economy of Ukraine, including
the gas sector, a researcher ’s gap has arisen regarding the prospects for its development,
including the use of underground gas storage.
On the other hand, there are many studies on the use of underground gas storage,
but without reference to the Ukrainian gas market. Almeidaa et al. [20] assessed the main
barriers to developing underground natural gas storage facilities in Brazil. They indicated
what conditions should be met for implementing UGS projects to become effective. The
authors proved that “there is an important economic value associated with the storage
of gas in periods of low power prices and its consumption in a period of high power
prices”. Chen et al. [
21
] proposed a viable variant model to analyze the optimal investment
strategy for UGS in the context of the ongoing reform of the natural gas market in China.
Yu et al. [
22
] have developed an integrated methodology for assessing the reliability of gas
supplies in a pipeline system involving underground gas storage.
Matar and Shabaneh [
23
] assessed the geological and economic viability of UGS in
Saudi Arabia “under different scenarios: with and without LNG imports allowed, and
low and high domestic gas production”. Zhang et al. [
24
] investigated the natural gas
market and the possibilities of developing underground gas storage in China. They paid

Energies 2022,15, 6604 4 of 34
particular attention to the imbalance between supply and demand in the domestic gas
market, resulting from both regional and seasonal differences, as well as imported gas
supplies. The authors emphasized the unique role of UGS in solving the above problem.
Skrzy´nski [
25
] examined the role of UGS in the continuity of natural gas supplies to
customers from the Visegrad Group countries (Poland, the Czech Republic, Hungary, and
Slovakia). Syed and Lawryshyn [
26
] developed a quantitative model to test the operational
reliability risk of an underground gas storage facility.
Tongwen et al. [
27
] focused on the technical issues of using UGS; namely, they pro-
posed an integrated technology for constructing crude oil displacement tanks and under-
ground gas storage. The authors described the advantages of this technology as well as
technical connotations, rules for selecting a location, and the process of optimizing the
operating parameters of gas storage facilities. Similarly, Thanh et al. [
28
] presented the
machine learning method “to develop a series of unique deliverability smart models for
underground natural gas storage in different types of target formations” to help forecast
the above-mentioned deliverability. The authors believe that this approach will contribute
to cleaner production and the implementation of the principles of sustainable development.
Sadeghi and Sedaee [
29
] applied a mechanistic numerical simulation method to study
the effects of molecular diffusion, operating conditions, and bed and rock properties on
pillow gas replacement in conventional reservoirs. In the second article [
30
], the authors
focused on the problem of fractures in the mixing of cushion and working gases during
underground gas storage. Zhang et al. [
31
] focused on the issues of ensuring the safety and
integrity of the UGS infrastructure, which is undoubtedly important for energy reliability.
According to the authors, advanced monitoring and simulation of the risk management of
underground gas storage may contribute to this.
The article aims to analyze the current state of UGS facilities in Ukraine, to study
their role and potential for ensuring the reliable functioning of the European natural gas
market, and to model possible scenarios for the use of Ukrainian underground gas storage
facilities by the EU countries to increase the level of energy security. The relevance of
the article is also due to the change in the conditions for the functioning of the European
gas market, caused by the aggressive energy policy of the Russian Federation and the
need to attract new alternative sources of gas supplies from other regions of the world,
including through the use of LNG technologies. All of this will require a revision of the
strategies for the formation of natural gas reserves and the balancing of the European
gas market and, consequently, a more active and systematic involvement in the use of
Ukrainian UGS facilities.
The article reviews the information available in the scientific literature and regulations,
as well as on internet pages. PESTEL and SWOT analyses were applied to the processing of
the collected information, which made it possible to formulate scenarios for developing the
gas industry in Ukraine, in particular, the underground gas storage sector.
2. General Overview of Underground Gas Storage Facilities in Ukraine
2.1. The Country’s Underground Gas Storage System—A History of Development
The emergence of UGS facilities in Ukraine was associated with the development of
gas production in the Precarpathian region and the Kyiv region. In the overwhelming
majority of cases, depleted gas and oil fields have been adapted for gas storage. The
development of the underground gas storage system in Ukraine can be divided into three
periods: 1964–1969, 1970–1985, and 1986 up to the present (Table 1).

Energies 2022,15, 6604 5 of 34
Table 1. Periods of development of underground gas storage in Ukraine.
Period Period Features Commissioned Facilities
1964–1969
The period coincides with the
global trend in underground
storage in the design and
development of large gas
supply systems in the USA,
France, and Russia.
- Olyshivske UGS facility and
Chervonopartyzanske UGS facility (in
aquifers) were created for the needs of gas
supply to the city of Kyiv and the region.
1969–1985
The creation of gas storage
facilities in depleted deposits
of gas fields has begun.
- In 1969 for the first time, a pilot gas
injection was carried out into the
production horizons No. XIV-XV of the
Uherske gas field (using the existing well
stock and equipment).
- In parallel, design work was carried out to
create an underground storage facility at
the Oparske gas field.
-
In 1973 construction of the Dashavske UGS
facility and the Krasnopopivske UGS
facility started.
- 30 April 1979, pilot operation of the
Bohorodchanske UGS facility (created
based on a depleted gas field of the same
name, using residual reserves as a buffer
gas) began.
- In 1983 Hlibovske UGS facility in Crimea
was commissioned.
The mid-
80’s—until
now
The period is characterized by
an increase in UGS capacity
and the achievement of
maximum daily productivity
during gas extraction.
- In 1987 Solokhivske UGS facility in the
Poltava region was commissioned.
- In 1988 Pilot operation of the Proletarske
UGS facility in the Dnepropetrovsk region
started.
- In 1989 Pilot operation of the Verhunske
UGSF in the Luhansk region started.
Source: developed by the authors of [32].
The outstanding achievement of the third period was the creation of the Bilche-
Volytsko-Uherske UGS facility (with a capacity of over 17 billion m
3
of natural gas), the
second largest gas storage facility in Europe. Its pilot operation began in 1983 and was
completed by the commissioning of the 4th compressor shop in 1992. Since then, the UGS
has been functioning all the time.
In total, 13 UGS facilities (with a total capacity of 31.95 billion m
3
) are located on the
territory of Ukraine. 11 of them were created in depleted gas and gas condensate fields,
and 2 (Olyshivske and Chervonopartyzanske) in aquifers. The largest number of and
largest capacity UGS facilities are concentrated in the Western part of Ukraine. This location
was due to the need for uninterrupted gas supplies from the Soviet Union to European
countries. The purpose of UGS facilities in other regions of Ukraine was to supply gas to
local consumers and compensate for seasonal (and daily) fluctuations in gas demand. All
gas storage in Ukraine is divided into 4 complexes: western; central; eastern; and southern
(Table 2).

Energies 2022,15, 6604 6 of 34
Table 2. Characteristics of underground gas storage complexes in Ukraine.
Characteristic
The Name of the Complex
Western Complex Central Complex Eastern Complex Southern Complex
Place of creation
of the complex
The complex was created in the
Precarpathian region, in the system
of transcontinental, interstate, and
intrastate gas pipelines
The complex was created
in the Kyiv system of main
gas pipelines
The complex was created
in the Donetsk gas
pipeline system
The complex was created
in the Dnieper region and
the Autonomous Republic
of Crimea
Purpose of
the complex
Ensure:
-
reliability of gas supplies for
consumers in
Western Ukraine,
- gas export via “Soyuz”,
Urengoy-Pomary-
Uzhhorod, and “Progress”
gas pipelines (transit
supplies through Slovakia,
Hungary, and Romania to
European countries)
Ensure the reliability of
gas supplies for
consumers in the city of
Kyiv, as well as Kyiv,
Khmelnytskyi, Vinnytsia,
Zhytomyr, Kirovohrad,
Cherkasy, Chernihiv,
Poltava, Sumy, and
Kharkiv regions
Ensure reliable gas
supplies for Donbass
consumers
Ensure reliability of:
- gas supplies to
domestic consumers,
- transit gas supplies
(through the
southern regions of
Ukraine) to Moldova,
the countries of the
Balkans, and Turkey
List of gas
storage facilities
Five gas storage facilities:
- Bilche-Volytsko—Uherske;
- Uherske;
- Oparske;
- Dashavske;
- Bohorodchanske
Four gas storage facilities:
- Olyshivske (no
injection since 2012);
-
Chervonopartyzanske;
- Solokhivske;
- Kehychivske.
Two gas storage facilities:
- Krasnopopivske;
- Verhunske (no
injection since 2012,
is located in the
uncontrolled
territory of
Luhansk region)
Two gas storage facilities:
- Proletarske;
- Hlibovske (located
in the occupied
territory of the
Autonomous
Republic of Crimea)
Achieved
capacity
about 81% 11.5% 2.5% 5%
the total amount of active gas in the gas storage of the country
Source: developed by the authors based on [33].
UGS facilities in Ukraine perform several important functions for the economy, namely:
•
Reliable, uninterrupted, and rational supply of Ukrainian consumers with natural gas;
•Ensuring reliable gas transit through the territory of Ukraine to European countries;
•
Creation of long-term gas reserves to equalize seasonal fluctuations in gas consumption
and in case of emergencies.
2.2. Current State of Ukraine’s UGS
Reforming energy markets towards liberalization is part of the overall policy of the
European Union (EU) aimed at creating a single market with clear, understandable, and
transparent rules of the game. To achieve these goals, the EU has created an appropriate
regulatory framework, combined as part of the Second and Third Energy Packages. The
Second Energy Package includes the Directives 2003/55/EU “On the fundamentals of the
functioning of the internal market of natural gas” [
34
], as well as natural gas Regulation
1775/2005 “On conditions for access to the natural gas transmission networks” [
35
]. The
Third Energy Package includes Directive 2009/73/EU, ”On the general principles of func-
tioning of the internal natural gas market” [
36
], and Regulation 715/2009, “On conditions
for access to the transmission networks” [37].
Having chosen the European vector of development and trying to integrate into
the European energy market, Ukraine has pledged to implement European directives
and regulations and is purposefully moving in this direction. A significant step towards
integration with the European gas market was the adoption in 2015 of the Law of Ukraine
“On the natural gas market” [
38
]. The basic components of the process of liberalization of
the Ukrainian gas market (in accordance with the mentioned directives) were:
•
Renunciation of state regulation of producers’ selling prices and prices on the whole-
sale gas market;
•
Privatization of state holdings and separation of natural monopoly and potentially
competitive activities of energy companies;
•Providing consumers with the right to choose a supplier;

Energies 2022,15, 6604 7 of 34
•
Stimulating (in various forms) the entry of new participants into potentially competi-
tive market segments;
•
Creation of conditions conducive to the expansion of secondary trade in transport
capacities and capacities of underground gas storage facilities;
•Achieving market transparency by providing public access to information on supply
volumes, demand, availability of transport capacities, tariff structure, etc.
The success of Ukraine’s gas market reforms is today confirmed by the international
community. According to the conclusions of the EU Energy Community, Ukraine in
2020 demonstrated the most significant progress among the contracting countries in the
development of the gas sector [39].
An important stage of market transformation was also the fact that from January 1,
2020, the functions of transporting gas through the territory of Ukraine instead of JSC
Ukrtransgaz (a subsidiary of NJSC “Naftogaz of Ukraine”) are carried out by a specially
created company—LLC Transmission System Operator of Ukraine. Unbundling was
implemented according to the ISO model, so the gas transmission system remained the
property of the state. A separate ministry, endowed with a certain autonomy, became
the body for managing this property—to eliminate unwanted political influence on the
management of the GTS [40].
In reforming the market, Ukraine ensured the implementation of the principle of
third-party access, which operates in the EU member states. Its main task is to ensure
transparent and non-discriminatory access of third parties to the capacities of the GTS. This
is a prerequisite for creating a competitive natural gas market, where capacity is distributed
among participants according to transparent, non-discriminatory, and market-based rules.
To do this, in 2020, the GTS Operator of Ukraine initiated the relevant amendments to the
GTS Code on the rules for capacity allocation and introduced the auction distribution of
capacities at interstate connections through auctions on certified platforms, in particular,
the information system of the GTS Operator of Ukraine.
In addition, in accordance with European requirements and practices, the GTS Opera-
tor of Ukraine launched the Transparency Platform [
41
], where all interested parties can
access aggregated information on: physical and commercial gas flows through interstate
connection points and UGS facilities; custom capacities; production and consumption of
natural gas; imbalances; other performance indicators of the GTS. Thus, access to informa-
tion has been created for all customers and traders who would like to use the services of
the GTS [42].
The adoption by the Verkhovna Rada of Ukraine of amendments [
38
] on the possibility
of GTS Operators, gas distribution networks, and UGS facilities entering the stock exchange
was an important and positive step toward the creation of a liquid gas market that meets
EU standards.
In 2020, the main provisions for the development of a liquid gas market were laid
down—household consumers were allowed to choose a gas supplier, and short-term
products were launched at LLC “Ukrainian Energy Exchange”.
The Ukrainian Energy Exchange was established in 2010 to organize and conduct
exchange trading in energy resources. Today it is the leader of exchange trading in Ukraine
and the only centralized platform where the greatest liquidity and trading of all types
of energy resources is concentrated. Both small market participants and international
companies, large global traders, and state-owned enterprises, in particular Trafigura, MET
Group, SOCAR Trading, JKX Oil&Gas, JSC Ukrgasvydobuvannya, JSC Ukrtransnafta, PJSC
Centerenergo, the DTEK group of companies, NNEGC Energoatom, PJSC Ukrhydroenergo,
NPC Ukrenergo, LLC Naftogaz Trading, and others, take part in exchange trading. In total,
there are more than 1100 participants, of which about 300 are in the Natural Gas direc-
tion [
42
]. To bring energy exchange in Ukraine closer to European standards, the Ukrainian
Energy Exchange has become a member of all-Ukrainian and European associations: the
European Business Association, the “Exchange and Electronic Platforms” Association, and
the Association of European Energy Exchanges Europex.

Energies 2022,15, 6604 8 of 34
2.3. Naftogaz Group and Its Role in the Ukrainian Gas Market
The structure of Naftogaz Group includes the National Joint Stock Company “Naftogaz
of Ukraine”, as well as 7 joint stock companies, 9 subsidiaries, 7 representative offices and
affiliates that are 100%-owned by the Company, as well as 5 companies whose share capital
is 40–100% owned by National Joint Stock Company “Naftogaz of Ukraine”. In addition,
the National Joint Stock Company “Naftogaz of Ukraine” owns shares in 39 joint stock
companies dealing with gas distribution and gasification. It operates in all regions of
Ukraine, as well as in the Arab Republic of Egypt. Naftogaz also has representative offices
in Turkmenistan and the Kingdom of Belgium [43].
NJSC “Naftogaz” is a vertically integrated group covering the gas business from
production to sales. Companies in which Naftogaz owns stakes are major players in
the gas and oil market in Ukraine. About 90% of the Group’s asset value and sales
volumes are accounted for by the gas business. Each line of business is served by separate
companies [44]. The business areas of NJSC “Naftogaz” are shown in Figure 1.
Energies 2022, 15, x FOR PEER REVIEW 8 of 35
In 2020, the main provisions for the development of a liquid gas market were laid
down—household consumers were allowed to choose a gas supplier, and short-term
products were launched at LLC “Ukrainian Energy Exchange”.
The Ukrainian Energy Exchange was established in 2010 to organize and conduct
exchange trading in energy resources. Today it is the leader of exchange trading in
Ukraine and the only centralized platform where the greatest liquidity and trading of all
types of energy resources is concentrated. Both small market participants and interna-
tional companies, large global traders, and state-owned enterprises, in particular Trafig-
ura, MET Group, SOCAR Trading, JKX Oil&Gas, JSC Ukrgasvydobuvannya, JSC
Ukrtransnafta, PJSC Centerenergo, the DTEK group of companies, NNEGC Energoatom,
PJSC Ukrhydroenergo, NPC Ukrenergo, LLC Naftogaz Trading, and others, take part in
exchange trading. In total, there are more than 1100 participants, of which about 300 are
in the Natural Gas direction [42]. To bring energy exchange in Ukraine closer to European
standards, the Ukrainian Energy Exchange has become a member of all-Ukrainian and
European associations: the European Business Association, the “Exchange and Electronic
Platforms” Association, and the Association of European Energy Exchanges Europex.
2.3. Naftogaz Group and Its Role in the Ukrainian Gas Market
The structure of Naftogaz Group includes the National Joint Stock Company
“Naftogaz of Ukraine”, as well as 7 joint stock companies, 9 subsidiaries, 7 representative
offices and affiliates that are 100%-owned by the Company, as well as 5 companies whose
share capital is 40–100% owned by National Joint Stock Company “Naftogaz of Ukraine”.
In addition, the National Joint Stock Company “Naftogaz of Ukraine” owns shares in 39
joint stock companies dealing with gas distribution and gasification. It operates in all re-
gions of Ukraine, as well as in the Arab Republic of Egypt. Naftogaz also has representa-
tive offices in Turkmenistan and the Kingdom of Belgium [43].
NJSC “Naftogaz” is a vertically integrated group covering the gas business from pro-
duction to sales. Companies in which Naftogaz owns stakes are major players in the gas
and oil market in Ukraine. About 90% of the Group’s asset value and sales volumes are
accounted for by the gas business. Each line of business is served by separate companies
[44]. The business areas of NJSC “Naftogaz” are shown in Figure 1.
Figure 1. Naftogaz’s operations are managed by business divisions. Source: [43].
Figure 1. Naftogaz’s operations are managed by business divisions. Source: [43].
The gas storage operator of Ukraine, JSC Ukrtransgaz, manages the Ukrainian system
of underground gas storage. It started working as an independent operator on 1 January
2020, after the completion of one of the largest reforms in the gas industry of Ukraine—the
separation of gas transportation activities. Structural changes in the Ukrainian gas market
from 1998–2020 are shown in Table 3.
Table 3. Evolution of organizational forms of enterprises in the gas market of Ukraine.
Date The Company Name The Essence of Changes Activities
25 February 1998 National Joint Stock
Company “Naftogaz” Establishment of “Naftogaz”
- full cycle of operations on
exploration and
development of deposits,
production, and
exploration drilling;
- transportation and storage
of oil and gas;
- supply of natural and
liquefied gas to consumers

Energies 2022,15, 6604 9 of 34
Table 3. Cont.
Date The Company Name The Essence of Changes Activities
24 July 1998 Ukrtransgaz subsidiary
Establishment of a subsidiary
company “Ukrtransgaz” of
NJSC “Naftogaz”
- transportation and storage
of oil and gas;
- supply of natural and
liquefied gas to consumers
18 July 2012 PJSC “Ukrtransgaz”
Reorganization of the
company by turning into a
public joint-stock company
- transportation and storage
of oil and gas;
- supply of natural and
liquefied gas to consumers
21 May 2018 JSC “Ukrtransgaz”
Changing the type of
company from a public joint
stock company to a private
joint stock company
- transportation and storage
of oil and gas;
- supply of natural and
liquefied gas to consumers
2 November 2018
Branch “Operator of Gas
Storages of Ukraine” as a
structural unit within JSC
“Ukrtransgaz”, without
separation into a separate
legal entity
Separation of gas
transportation and
storage activities
- natural gas storage;
- ensuring efficient and
uninterrupted operation of
UGS facilities in Ukraine
1 January 2020 Gas storage operator JSC
“Ukrtransgaz”
Separation of natural gas
transportation activities
- natural gas storage;
- ensuring efficient and
uninterrupted operation of
UGS facilities in Ukraine
Source: developed by the authors based on [39].
According to the charter of JSC “Ukrtransgaz” [
45
], the main types of activity of the
gas storage operator of Ukraine include:
•
Provision of natural gas storage services, including accounting for natural gas, in
particular in the regime of a customs warehouse;
•Management of gas storage facilities;
•
ensuring reliable, safe, and efficient operation of gas storage and its long-term capacity;
•Planning commercial activities for the storage of natural gas in gas storage facilities;
•Elaboration of gas storage development programs;
•Implementation of foreign economic activity and work with clients;
•
Ensuring the creation and proper functioning of an open-type customs warehouse and
customs control zones at the Company’s gas storage facilities;
•
Provision of services for customs clearance of natural gas in the customs regime of a
customs warehouse.
The gas storage operator of Ukraine provides the following basic services [
46
]: storage
(injection, withdrawal); natural gas transmission administration; customs warehouse,
customs warehouse, and short haul. It also provides a number of additional services, incl.
monitoring of pledged gas and exchange trading in gas stored in UGS facilities. At the
same time, package services are provided (provided for 1 year of storage) and individual
services (for 1 month, 1 day ahead).
The organizational structure of the Ukrainian gas storage operator is represented by
six production departments of underground gas storage (PDUGS), the Uhersko production
department of repair and maintenance services, and other structural divisions (Figure 2).

Energies 2022,15, 6604 10 of 34
Energies 2022, 15, x FOR PEER REVIEW 10 of 35
• Provision of services for customs clearance of natural gas in the customs regime of a
customs warehouse.
The gas storage operator of Ukraine provides the following basic services [46]: stor-
age (injection, withdrawal); natural gas transmission administration; customs warehouse,
customs warehouse, and short haul. It also provides a number of additional services, incl.
monitoring of pledged gas and exchange trading in gas stored in UGS facilities. At the
same time, package services are provided (provided for 1 year of storage) and individual
services (for 1 month, 1 day ahead).
The organizational structure of the Ukrainian gas storage operator is represented by
six production departments of underground gas storage (PDUGS), the Uhersko produc-
tion department of repair and maintenance services, and other structural divisions (Figure
2).
Figure 2. Structure of the Gas storage operator JSC “Ukrtransgaz” as of 1 January 2022. Source: [32].
The Gas storage operator manages 12 underground gas storage facilities in mainland
Ukraine. The Verhunske UGS facility (with a storage capacity of 0.4 billion m3) has been
located in the temporarily uncontrolled territory of Ukraine in the Luhansk region since
March 2015. The total capacity of all gas storage on mainland Ukraine is 30.95 billion m3
and is the largest in Europe. Ukraine also owned the Hlibovske gas storage facility (with
a capacity of about 1 billion m3), operated by Chornomornaftogaz, located in the occupied
Crimea (Figure 3).
Figure 2.
Structure of the Gas storage operator JSC “Ukrtransgaz” as of 1 January 2022. Source: [
32
].
The Gas storage operator manages 12 underground gas storage facilities in mainland
Ukraine. The Verhunske UGS facility (with a storage capacity of 0.4 billion m
3
) has been
located in the temporarily uncontrolled territory of Ukraine in the Luhansk region since
March 2015. The total capacity of all gas storage on mainland Ukraine is 30.95 billion m
3
and is the largest in Europe. Ukraine also owned the Hlibovske gas storage facility (with a
capacity of about 1 billion m
3
), operated by Chornomornaftogaz, located in the occupied
Crimea (Figure 3).
Energies 2022, 15, x FOR PEER REVIEW 11 of 35
Figure 3. Characteristics of UGS of Ukraine (capacity in million m
3
). Source: [46].
The total capacity of exit points to the gas transmission system for gas storage (with-
drawal) is 260.1 million m
3
per day, and the capacity of entry points (injection) is 252.4
million m
3
per day [32]. The capacity of individual gas storage is shown in Figure 4.
Figure 4. Characteristics of the maximum capacity of UGS of Ukraine during gas injection/with-
drawal. Source: [32].
The Bilche-Volytske UGS facility is the largest not only in Ukraine but also in Europe
and can hold 17 billion m
3
of gas, while the total capacity of other fields in Western
Ukraine is about 2 billion m
3
. As for the daily capacity, the Bilche-Volytske UGSF has 18
million m
3
more injection than the withdrawal, while Bohorodchanske UGS, on the con-
trary, has a daily withdrawal that exceeds the injection volume by 24 million m
3
. In Cher-
vonopartyzanske, Solokhivske, and Kehychivske UGS facilities, the daily withdrawal vol-
ume exceeds the injection volume, and vice versa in Krasnopopivske and Verhunske UGS
Figure 3. Characteristics of UGS of Ukraine (capacity in million m3). Source: [46].
The total capacity of exit points to the gas transmission system for gas storage
(withdrawal) is 260.1 million m
3
per day, and the capacity of entry points (injection) is
252.4 million m3per day [32]. The capacity of individual gas storage is shown in Figure 4.

Energies 2022,15, 6604 11 of 34
Energies 2022, 15, x FOR PEER REVIEW 11 of 35
Figure 3. Characteristics of UGS of Ukraine (capacity in million m
3
). Source: [46].
The total capacity of exit points to the gas transmission system for gas storage (with-
drawal) is 260.1 million m
3
per day, and the capacity of entry points (injection) is 252.4
million m
3
per day [32]. The capacity of individual gas storage is shown in Figure 4.
Figure 4. Characteristics of the maximum capacity of UGS of Ukraine during gas injection/with-
drawal. Source: [32].
The Bilche-Volytske UGS facility is the largest not only in Ukraine but also in Europe
and can hold 17 billion m
3
of gas, while the total capacity of other fields in Western
Ukraine is about 2 billion m
3
. As for the daily capacity, the Bilche-Volytske UGSF has 18
million m
3
more injection than the withdrawal, while Bohorodchanske UGS, on the con-
trary, has a daily withdrawal that exceeds the injection volume by 24 million m
3
. In Cher-
vonopartyzanske, Solokhivske, and Kehychivske UGS facilities, the daily withdrawal vol-
ume exceeds the injection volume, and vice versa in Krasnopopivske and Verhunske UGS
Figure 4.
Characteristics of the maximum capacity of UGS of Ukraine during gas injec-
tion/withdrawal. Source: [32].
The Bilche-Volytske UGS facility is the largest not only in Ukraine but also in Europe
and can hold 17 billion m
3
of gas, while the total capacity of other fields in Western
Ukraine is about 2 billion m
3
. As for the daily capacity, the Bilche-Volytske UGSF has
18 million m
3
more injection than the withdrawal, while Bohorodchanske UGS, on the
contrary, has a daily withdrawal that exceeds the injection volume by 24 million m
3
. In
Chervonopartyzanske, Solokhivske, and Kehychivske UGS facilities, the daily withdrawal
volume exceeds the injection volume, and vice versa in Krasnopopivske and Verhunske
UGS facilities. In other Ukrainian UGS facilities, injection and withdrawal volumes are
the same.
As of 1 September 2021, there are 1679 wells in Ukraine, of which 1366 are production
and injection production wells (including 134 wells awaiting connection), and 313 are
monitoring and special wells (Table 4). All wells are owned by the gas storage operator
of Ukraine.
Table 4. UGS structure by capacity and fund of production wells.
N◦The Name of the UGS
Design Indicators of Storage
Capacity (Million m3)
Fund of Production
Wells (Units)
Total Volume Active Project Fact
1 Uherske 3850 1900 88 88
2 Bilche-Volytsko—Uherske 33,450 17,050 341 341
3 Oparske 4570 1920 76 76
4 Dashavske 5265 2150 100 100
5 Bohorodchanske 3420 2300 156 156
6 Olyshivske 660 310 40 40
7 Chervonopartyzanske 2973.8 1500 67 67
8 Solokhivske 2100 1300 81 81
9 Kehychivske 1300 700 53 53
10 Proletarske 2980.3 1000 100 251
11 Krasnopopivske 800 420 40 40
12 Verhunske 951 400 73 73
Total 62,320.1 30,950 1215 1366
Source: [46].

Energies 2022,15, 6604 12 of 34
Most of the Operator’s gas storage facilities are located near the western border of
Ukraine. The proximity of UGS facilities to the countries of the European Union and
the convenience of logistics processes make underground gas storage profitable for both
foreign traders and Ukrainian companies providing services related to cross-border gas
transportation and storage.
3. SWOT and PESTEL Analysis
3.1. Environment of the Gas Storage Operator of Ukraine
The main task of the Gas Storage Operator of Ukraine is the effective management
of underground gas storage facilities, accumulation of gas reserves necessary for the
uninterrupted passage of heating seasons, as well as the development of the gas storage
business with customers in Ukraine and abroad. Subdivisions of the Business Unit are
part of JSC ”Ukrtransgaz”. The Business Unit manages 12 gas storage facilities located in
mainland Ukraine. The portfolio also includes another underground storage facility located
in the temporarily occupied territory of the Luhansk Region. The network of UGS facilities
is an important element of the Ukrainian energy system. Their steady and uninterrupted
operation is necessary for the passing heating seasons, operation of industrial enterprises,
and fulfilling obligations towards foreign partners. Europe’s largest capacity and gas
market reform create considerable opportunities for Ukrainian UGS facilities to attract
foreign customers. This approach allows for commercializing available resources and
reinforcing the country’s energy independence [47].
Transformation processes in the economy of Ukraine and changes in the national
strategy aimed at deepening European integration processes require studying the external
environment in which business entities operate. The external environment can be divided
into several levels:
•Global level;
•Level of macroenvironment;
•Level of microenvironment.
When examining the operating environment of the gas storage operator of Ukraine, it
is necessary to identify global factors in the hierarchy of levels of the external environment
that will influence the formation of the strategy of the gas storage operator of Ukraine:
•Situation in the global gas market;
•Changes in the natural resource potential of the regions of the world;
•Formation of the global communication and information space;
•Ukraine’s access to this space;
•International regulation of relations in the global gas market;
•Development of transnational companies;
•Aggravation of global and geopolitical problems.
Macroenvironment factors are related to the general conditions for the functioning of
the national economy. At the same time, microenvironment factors are associated with the
immediate environment of the enterprise (suppliers, buyers, competitors, and partners).
Figure 5shows the interaction diagram of the three components of the external environment
and the gas storage operator of Ukraine.
Until recently, the style of interaction between UGS facilities in Ukraine and global
factors was reactive, but today it is acquiring the character of an analytical style. The same
style is the optimal style of their interaction with macro factors since it is characterized by
an attempt to adapt the elements of the external environment to their activities to mitigate
or enhance their action. As for the micro factors, UGS facilities interact with the subjects
of the near environment mainly in a proactive style, which is reflected in the ability to
predict and prevent their action or even influence the surrounding economic entities and
try to adapt their activities to achieve their goals. The result of a conscious and competent
interaction of an enterprise with the external environment is the stability of its functionality
and the possibility of future development. At the same time, ignoring or not being able to

Energies 2022,15, 6604 13 of 34
take into account the signals coming from the external environment can have a devastating
effect on the enterprise and lead to its degradation.
Energies 2022, 15, x FOR PEER REVIEW 13 of 35
• Level of macroenvironment;
• Level of microenvironment.
When examining the operating environment of the gas storage operator of Ukraine,
it is necessary to identify global factors in the hierarchy of levels of the external environ-
ment that will influence the formation of the strategy of the gas storage operator of
Ukraine:
• Situation in the global gas market;
• Changes in the natural resource potential of the regions of the world;
• Formation of the global communication and information space;
• Ukraine’s access to this space;
• International regulation of relations in the global gas market;
• Development of transnational companies;
• Aggravation of global and geopolitical problems.
Macroenvironment factors are related to the general conditions for the functioning
of the national economy. At the same time, microenvironment factors are associated with
the immediate environment of the enterprise (suppliers, buyers, competitors, and part-
ners). Figure 5 shows the interaction diagram of the three components of the external en-
vironment and the gas storage operator of Ukraine.
Figure 5. Conceptual scheme of interaction between the components of the external environment
and the Gas Storage Operator of Ukraine. Source: improved based on [48,49].
Until recently, the style of interaction between UGS facilities in Ukraine and global
factors was reactive, but today it is acquiring the character of an analytical style. The same
style is the optimal style of their interaction with macro factors since it is characterized by
an attempt to adapt the elements of the external environment to their activities to mitigate
Figure 5.
Conceptual scheme of interaction between the components of the external environment
and the Gas Storage Operator of Ukraine. Source: improved based on [48,49].
Systematization of theoretical knowledge on the essence and composition of the
external environment of enterprises, taking into account the peculiarities of the operation
of UGS facilities in Ukraine, made it possible to decompose environmental factors, consider
the establishments, organizations, and institutions through which the interaction between
the external environment and UGS facilities is carried out, as well as identify the nature of
such interaction.
Therefore, the question arises of choosing methods for assessing the influence of
factors on the functioning of Ukrainian UGS facilities and the possibilities of using their
capacities. In such cases, the tools and capabilities of expert research methods are usually
used, using an individual or collective assessment of experts. Among the methods of
individual expert assessment, the most common methods in practice are questionnaires,
interviews, analytical, and written scripts. Among the collective expert methods, one
can single out the Delphi method, matrix methods (PEST, SLEPT, STEEPLE, and SWOT
analysis), and methods of collective generation of ideas (brainstorming). In our study,
to form scenarios for the use of Ukrainian UGS facilities in the future, in the process of
analyzing the UGS environment, we will apply PESTEL and SWOT analysis.
3.2. PESTEL and SWOT-Analysis of the Prospects for the Use of UGS Facilities in Ukraine
One of the common methods for assessing the environment to identify the strengths
and weaknesses of an object while simultaneously identifying the opportunities and threats
inherent in the external environment is the methodology for conducting a SWOT analy-

Energies 2022,15, 6604 14 of 34
sis. The essence of this analysis is the division of factors and phenomena that affect the
functioning and development of enterprises into four categories: strengths, weaknesses,
opportunities, and threats.
The preparation of a SWOT analysis is preceded by such stages of the strategic man-
agement process as an analysis of the internal and external environment. Analysis of the
external environment allows one to identify both factors that are external opportunities for
the enterprise and factors that can negatively affect it. Analysis of the internal environment
is aimed at identifying the strengths and weaknesses of the company’s activities, which
allows one to place values and make the best development strategy. This method can be
used to determine the development prospects for business entities and industries, regions,
or countries.
To assess the magnitude of the influence of the external environment on the possibil-
ities of using Ukrainian UGS facilities and form scenarios for their use, we use PESTEL
analysis, a matrix analysis method involving the study of components of the environment
such as political, economic, socio-cultural, technological, legal, and environmental (natural
factors, including geographic ones). PESTEL analysis will start by identifying trends for
each component and assessing their potential impact on UGS facilities. The next step will
be to predict the consequences of such an impact, allowing us to substantiate strategic
hypotheses (scenarios). Based on these scenarios, UGS facilities in Ukraine will be able to
build their own development strategies that provide various options for changes in the
external environment.
4. PESTEL-Analysis
Let us consider the trends of changes among the components of the external environ-
ment and their possible impact on UGS facilities in Ukraine, divided into groups of
factors
:
•Political;
•Economic;
•Social;
•Technological;
•Environmental;
•Legal.
In each country, a group of political factors has a significant impact on the formation of
the stability of the macro-environment of enterprises. Effective political actions and a stable
political situation in the country create the appropriate foundation for the calm planning of
economic activity. Above all, it allows one to create long-term investment strategies.
The constituent factors of the economic component reflect both the state of the economy
as a whole and its individual aspects that affect this type of economic activity. In particular,
important factors for UGS facilities in Ukraine are effective regulation of tariff formation
for gas storage services, access to investment and credit resources, the level of state funding
for programs to modernize UGS facilities, and state support for research and development
in the oil and gas industry.
Among a significant number of factors of the social component, of great importance
are the educational level of the population, the level of labor and intellectual migration,
the level of quality and training of personnel, and personal attitudes to work and leisure.
They reflect the social structure and social stratification of the population, as well as the
presence of an economically active group of people within it. It is the social component
that largely forms informal public institutions, the influence of which is reflected in the
formation of common values, the level of education and skills of workers, manifestations
of their creativity, etc.
The study of the factors of the technological component has an impact on the search
for priority areas for the technical and technological renewal of facilities (in particular, UGS
facilities in Ukraine), the intensification of innovation activities, the improvement of the
mechanism of institutions for monitoring the quality and safety of services (including natu-
ral gas storage), the development of various levels of programs and projects in the scientific

Energies 2022,15, 6604 15 of 34
and technical industry. The constituent factors of the technological component are the pres-
ence in the country and access to advanced technologies, the technical and technological
level of partner enterprises, equipment suppliers and other stakeholders, the development
of information and communication technologies, the use of energy resources, etc.
Factors of the environmental component are determined by the characteristics of the
ecological environment and the natural and geographical conditions of the location of
economic facilities. Concerning UGS facilities in Ukraine, such factors are: the state of the
environment and environmental safety; climatic conditions for the functioning of UGSF
facilities and the complexity of passing routes that directly affect the operation parameters
of UGSF facilities and the formation of final costs for natural gas transportation; degree
of exploration and development of national oil and gas deposits, geographical location of
UGS facilities by markets and sources of natural gas, which will influence the formation of
scenarios for their use.
The factors of the legal component include transparency and stability of the national
energy legislation, the level of adaptation of the regulatory and legal framework to Eu-
ropean integration energy processes, legal support for standardization and certification
of natural gas storage services, protection of intellectual property, transparency, and the
possibility of obtaining licenses to carry out activities. The presence of legal institutions that
are legally enshrined in laws, decrees, regulations, clarifications, nationwide concepts, and
development strategies and their effective interaction and mutual agreement is a necessary
condition for improving the efficiency of the function and development of UGS facilities
and their successful European integration. These institutions are also mechanisms for con-
trolling the quality and safety of natural gas storage services and eliminating shortcomings
in their functioning as a subject of natural monopolies.
Let us consider in more detail the main environmental factors (in the context of
individual components) and the nature of their interaction with UGS facilities in Ukraine
(Table 5).
Table 5.
Main environmental factors and the nature of their interaction with UGS facilities in Ukraine.
External
Environment
Component
Factors Reflecting the
Components of the External
Environment for Underground
Storage Facilities
Institutes, Organizations,
and Institutions through
Which Influence Occurs
Consequences for UGS Facilities
Political
- political stability;
- political climate;
- euro focus on
UGS customers
Verkhovna Rada of Ukraine,
Cabinet of Ministers,
President of Ukraine, political
forces and confidence in them;
authorities at different levels
of government.
International organizations,
world legislation,
transnational companies, and
multinational corporations.
- unstable political situation in
the country,
- lack of a consolidated position of the
authorities on the strategy of
reconstruction and modernization of
the GTS.
- Reorientation of part of gas flows from
the Russian Federation to the countries
of the Asia-Pacific region, which
reduces the demand for GTS services
(including UGS facilities).
- The intensified efforts of European
countries to diversify sources and
routes of gas supplies to domestic
markets, as well as their rejection of
Russian gas (sanctions due to the war),
reduce gas transit through Ukraine and
its storage in underground
storage facilities.

Energies 2022,15, 6604 16 of 34
Table 5. Cont.
External
Environment
Component
Factors Reflecting the
Components of the External
Environment for Underground
Storage Facilities
Institutes, Organizations,
and Institutions through
Which Influence Occurs
Consequences for UGS Facilities
Economic
- changes in natural
gas prices;
- support for innovation
processes and
government policy;
- credit, tax, protectionist
and depreciation policy;
- capacity of
commodity markets;
- exactingness of
consumers;
- state of banking and
insurance services;
- availability of commercial
funds, trade
organizations.
National Bank, State Fiscal
Service, Antimonopoly
Committee, State Audit
Service, Ministry of Fuel and
Energy, NJSC ”Naftogaz”,
National Commission for
State Regulation of Energy
and Public Utilities (NEURC),
Oil and gas companies, gas
distribution enterprises,
infrastructure enterprises,
industrial enterprises, stock
exchanges, banks, financial
and credit intermediaries,
commercial funds, insurance
agencies, employment
services, trade, and
other organizations.
- monopolization of gas supply,
- lack of competition in the gas market,
- dependence on one supplier of
natural gas,
- slowdown in the development and
operation of domestic oil and gas fields;
- creation of new pipeline gas
transportation routes bypassing the
territory of Ukraine;
- increased demand for natural gas
storage services due to higher natural
gas prices and the energy crisis;
- high inflation rate,
- low level of information
communications,
- unsatisfactory state of banking and
insurance services,
- insufficiency of intermediary, financial,
insurance, and advisory organizations.
Social
- cultural level of
society development;
- formation of consumer
protection groups;
-
compliance with the ethics
of cooperation
with partners;
- focus on
strategic partners;
- educational level;
- age structure;
- income level of
the population;
- unemployment;
- labor and
intellectual migration.
Public organizations,
international partners,
relations with the population,
national traditions, cultural
and educational institutions;
communication networks;
information and
library network.
Research institutes, higher
education institutions,
postgraduate education,
international specialists and
organizations in the oil and
gas industry, trade unions,
employment services, etc.
- lack of ethics of cooperation, especially
with Eastern partners,
- unfair struggle in the gas market,
- low level of technical awareness of the
population, which hinders the change
in the structure of personnel in
accordance with the achievements of
scientific and technical progress.
- sufficient educational and professional
qualification level of oil and
gas specialists,
- providing postgraduate education,
- development of distance learning,
- low level of international exchange of
experience and information,
- the need for professional development,
- passivity of trade unions and
various associations.
Technological
- Availability and access to
advanced technologies;
- modern systems and
methods of management
and organization of the
production process;
- technical and
technological level of
domestic engineering and
pipe plants;
- technical level
of information
communications.
Research institutes, higher
educational institutions,
international specialists and
organizations in the oil and
gas industry, organizations,
enterprises, and institutions
that ensure the functioning of
oil and gas
transportation enterprises.
- limited access and investment
opportunities for the implementation
of advanced technologies;
-
presence in Ukraine of its capacities for
the production of gas pumping units,
pipes, and other oil and gas equipment;
- creation of new technologies for the
transportation of liquefied gas.

Energies 2022,15, 6604 17 of 34
Table 5. Cont.
External
Environment
Component
Factors Reflecting the
Components of the External
Environment for Underground
Storage Facilities
Institutes, Organizations,
and Institutions through
Which Influence Occurs
Consequences for UGS Facilities
Environmental
- spatial conditions;
- geographical location in
relation to sales markets;
- geographic location in
relation to sources of
natural gas;
- availability of
water supply;
- the difficulty of passing
the routes;
- climatic conditions.
Environment components;
population.
- restriction of certain areas of
development through possible damage
to the environment;
- loss over time of the necessary useful
properties of UGS facilities, in
particular, due to damage to the
insulation of pipelines;
- impact on gas transportation and
storage parameters;
- advantageous geographical location of
the gas pipeline system and gas
storage facilities.
Legal
- patenting of inventions;
- State control over the
quality and safety of the
provision of gas storage
services;
- regulation of pricing for
gas storage services;
- licensing of activities.
National Bank, State Fiscal
Service, Antimonopoly
Committee, State Audit
Service, Ministry of Fuel and
Energy, NJSC “Naftogaz”,
NEURC, and other central
authorities involved in the
operation of the Ukrainian gas
sector. Laws, regulations,
orders, programs, strategies,
and projects.
- low level of support for innovation
processes and modernization of
UGS facilities;
- ill-conceived tax, depreciation, and
credit policy;
- contradictions in the legislation;
- low level of support for the interests of
the domestic UGS system in the
international market;
- elimination of monopolists, in
particular, restructuring of
NJSC “Naftogaz”;
-
creation of an independent regulator in
the gas market.
The current situation in Ukraine and Europe testifies to a deep energy crisis, inability
to ensure energy security, high dependence on the monopoly gas supplier (Russia), and lack
of sufficient gas reserves in underground gas storage facilities (to ensure the alignment of
seasonal fluctuations in gas consumption and prevent the consequences of a crisis that has
arisen). The environmental factors that formed the crisis in the European energy market
emphasized the competitiveness of Ukrainian UGS facilities and the need to use their
capacities to maintain Europe’s energy security.
5. SWOT Analysis of Ukraine’s Competitive Position in the Field of Natural Gas Storage
Conducting a SWOT analysis includes such steps as assessing the factors of the internal
environment and identifying and analyzing external opportunities and threats.
5.1. Strengths
UGS facilities in Ukraine create significant strategic opportunities for gas storage
not only for the whole of Europe but for the whole world. They are the largest on the
European continent and the third largest in the world, and in recent years have become
a significant element of the EU energy balance. The active capacity of Ukrainian UGS
facilities is approximately 20% of the total capacity of gas storage facilities in European
countries. The total capacity of all gas storage on mainland Ukraine is 30.95 billion m
3
and
is the largest in this part of the world. Ukraine has the biggest working storage capacity in
Europe and amounts to a third of the combined storage capacity of the EU28 [
50
]. Ukrainian
gas storage facilities are the third largest in the world, after the US and Russia [51].
As of September 1, 2021, the total active capacity of UGS facilities in European countries
was about 138 billion m
3
, of which 30.95 billion m
3
(i.e., 22.43%) was in Ukraine (Table 6).

Energies 2022,15, 6604 18 of 34
More than 71% of all gas storage capacities are concentrated in six European countries—
Ukraine, Germany, Italy, the Netherlands, France, and Austria. The latest GlobalData report
“Underground Gas Storage Industry Outlook in Europe, North America, and Former Soviet
Union (FSU) to 2025—Capacity and Capital Expenditure Outlook with Details of All
Operating and Planned Storage Sites” shows that as of September 2021, 151 underground
gas storage facilities were operating in Europe [52].
Table 6. Capacities of underground gas storage of European countries as of 1 September 2021.
N◦Country Storage Volume,
Million m3
The Share of Gas Storage
Facilities in UGS in Europe,%
1 Ukraine 30,950 22.43
2 Germany 21,881 15.86
3 Italy 18,904 13.70
4 Netherlands 13,748 9.96
5 France 12,640 9.16
6 Austria 9128 6.62
7 Hungary 6657 4.82
8 Slovakia 4068 2.95
9 Czech Republic 3441 2.49
10 Poland 3421 2.48
11 Spain 3274 2.37
12 Romania 3150 2.28
13 Latvia 2310 1.67
14 Great Britain 1115 0.81
15 Denmark 1000 0.72
16 Belgium 861 0.62
17 Bulgaria 599 0.43
18 Croatia 499 0.36
19 Portugal 341 0.25
Total 137,987 100.00
Source: [52].
An additional strength of Ukrainian UGS facilities is their territorial location—about
80% of them are located near the western border of Ukraine. It is the significant active
volume of UGS facilities in the Western region of Ukraine (located closest to other European
countries), a wide range of possibilities for extracting natural gas from UGS facilities
(providing extraordinary flexibility in gas flows), optimization of operating modes, and
convenience of logistics processes that create a fairly profitable infrastructure for the use of
Ukrainian underground storage facilities not only for storing operational and strategic gas
reserves but also for its uninterrupted supply to European countries.
As of mid-January 2022, the number of customers using the services of Ukrainian
UGS facilities was 1003, incl. 111 foreign companies from 27 countries located on three
continents—Europe, North America, and Asia. Among them are companies from the Czech
Republic, Switzerland, USA, Canada, United Arab Emirates, Hong Kong, and Singapore.
The Gas storage operator provides gas storage services to both suppliers of this energy
resource and its consumers. Daily operational information on the operation of gas storage
facilities in Ukraine can be found on the transparency platform [
53
], launched in 2015.
Since 2014, similar data has also been published on the European Transparency Platform
AGSI+ [
54
]. Ukraine was the first country outside the EU to join the AGSI+ transparent data
display system according to the standards of the Association of European Underground
Gas Storage Operators (GSE) [55].
Until June 2019, the gas storage operator of Ukraine created its own IT environment
and a unified database (of process parameters), as well as set up its own dispatching system.
Operational dispatching of UGS operation is currently carried out from Lviv, not far from
several major storage facilities, where a central control room has been set up. In August
2019, an information platform was launched to interact with UGS customers, significantly

Energies 2022,15, 6604 19 of 34
increasing its efficiency. We are constantly working on expanding the functionality of
the platform. To account for gas transferred between two operators, counting equipment
installed at connection points is used. To improve the accuracy of gas metering, by 2023,
equipping new metering units is planned [55].
In November 2020, the gas storage operator of Ukraine introduced a new service that
allowed banks to track transactions with natural gas in UGS facilities. Clients use this
gas as collateral for loans [
56
]. Since 21 May 2020, Ukrtransgaz customers have had the
opportunity to submit separate nominations and renominations [
57
] for volumes of natural
gas submitted for injection and/or withdrawal to/from gas storage facilities using the
short-haul service. The essence of the short-haul service is to issue trade notices identifying
that the natural gas to be transferred has been supplied to the exit point in the gas storage
or group of gas storage facilities under the terms of capacity use with restrictions. The new
service is most in demand by Ukrainian and foreign gas traders who use Ukrainian UGS
facilities for seasonal gas storage [
58
]. Currently, Ukrtransgaz is implementing a program to
prepare for the transition to gas accounting in energy units, scheduled for 1 May 2022. The
advantages of gas storage facilities in Ukraine include competitive tariffs for the storage of
natural gas, as shown in Table 7(as of 1 October 2021).
Table 7. Comparison of gas storage tariffs in Ukraine and nearby EU countries.
Directions
Tariff for Short-Haul Transportation and Storage in the
“Customs Warehouse” Mode (EUR/MWh) Country Storage Tariff
(EUR/MWh)
Annual Lunar The Day before
Ukraine—Poland
Poland—Ukraine 1.55 1.64 1.70 Poland 3.2–3.7
Ukraine—Hungary
Hungary—Ukraine 1.52 1.60 1.66 Hungary 2.5
Ukraine—Slovakia
Slovakia—Ukraine 1.47 1.55 1.61 Slovakia 2.2–2.9
Ukraine—Romania
Romania—Ukraine 1.47 1.56 1.62 Romania 2.64
Source: [53].
The proximity of Ukrainian UGS facilities to the border with the EU, favorable condi-
tions, and competitive tariffs for storage and transportation of gas are several convincing
arguments for gas traders from all over the world to choose these UGS facilities for storing
their own natural gas reserves. This possibility is especially relevant during the period of
instability in the gas market, which we are now witnessing in connection with Russia’s
attack on Ukraine. These strengths form the strategic attractiveness and importance of
Ukraine’s UGS facilities against the backdrop of growing demand for underground gas
storage services.
5.2. Weaknesses
Weaknesses include the service life of UGS facilities and their associated technical
condition, technological capabilities, and wear and tear of fixed assets. In general, the
majority of gas compressor units (GCUs) in UGS facilities were put into operation in the
1970s and 1980s. Although the overall percentage of technical wear and tear is low (due
to the short period of use of the main production equipment during the year), 102 gas
compressor units (79.7% of their total number) have already been in operation for more
than 30 years. More than 53% of gas compressor units have a service life of 31 to 40 years (68
out of 128). Most of them work at booster compressor stations (BCS) Dashava, BCS Opary-1,
CS Kechyhivka, CS Solokha, and in some compressor shops (CC) CS Bohorodchany, CS
Mryn, BCS Bilche-Volytsia. There is also a significant number of GPUs (34 in total) operated
for more than 40 years, most of them installed at BCS Uhersko, CS Mryn, CS Olyshivka,
and CS Krasnopopivka [32] (Figure 6).

Energies 2022,15, 6604 20 of 34
Energies 2022, 15, x FOR PEER REVIEW 21 of 35
Figure 6. The structure of the fleet of gas-pumping units of the storage system according to the
service life by the production departments of the UGS facilities. Source: [32].
The transparent display of information on UGS facilities in Ukraine (using the AGSI+
data display system according to the standards of the Association of European
Underground Gas Storage Operators (GSE)) is an important component of Europe’s
energy security. However, the full-scale entry of Ukrainian UGS facilities into the
European gas market requires introducing digitalized information technologies. In
particular, this concerns the processes of managing the client base of potential consumers
of UGS services (both Ukrainian and foreign), the number of which is constantly growing.
For example, in the 2020/2021 gas withdrawal season, the number of customers increased
from 802 (as of 10 October 2020) to 901 (as of 30 April 2021). Over the past three years,
from January 2019 to January 2022, the portfolio of customers of Ukrtransgaz services has
more than doubled to 1003. And the number of non-resident companies in it has grown 8
times [59].
The enterprises of the gas transmission system (gas transmission, gas distribution,
and gas storage), due to the specifics of their operation, are also monopolized in the state
form of ownership. This complicates the development of strategic mechanisms for
managing them [60]. In addition, the unpredictability of the state policy of Ukraine—in
the field of gas storage and the formation of tariffs for the services of gas storing
enterprises—complicates the work with potential customers. The problem is also the lack
of investment attractiveness of the enterprise since UGS facilities are state-owned, and
little funds are allocated from the budget for the renewal of fixed assets, which could
increase the efficiency of these enterprises.
5.3. Opportunities
As already mentioned, most Ukrainian UGS facilities were created on the site of
depleted fields. However, two of them—Chervonopartyzanske and Olyshivske—are
based on aquifers [61]. Although each Ukrainian gas storage is located at a distance of 3–
3.5 thousand km from the main areas of natural gas production, they are all
interconnected through a system of gas pipelines, creating favorable conditions for the
redistribution of gas flows and meeting the needs of local and remote consumers. The
Ukrainian GTS is also closely connected with the gas pipeline systems of neighboring
European countries—Russia, Belarus, Poland, Slovakia, Hungary, Romania, and
Moldova. Thus, it is integrated with the European gas network and is also a bridge
between the gas-producing regions in Russia and Central Asia and consumers in Europe
Figure 6.
The structure of the fleet of gas-pumping units of the storage system according to the
service life by the production departments of the UGS facilities. Source: [32].
The transparent display of information on UGS facilities in Ukraine (using the AGSI+
data display system according to the standards of the Association of European Under-
ground Gas Storage Operators (GSE)) is an important component of Europe’s energy
security. However, the full-scale entry of Ukrainian UGS facilities into the European gas
market requires introducing digitalized information technologies. In particular, this con-
cerns the processes of managing the client base of potential consumers of UGS services
(both Ukrainian and foreign), the number of which is constantly growing. For example, in
the 2020/2021 gas withdrawal season, the number of customers increased from 802 (as of
10 October 2020) to 901 (as of 30 April 2021). Over the past three years, from January 2019
to January 2022, the portfolio of customers of Ukrtransgaz services has more than doubled
to 1003. And the number of non-resident companies in it has grown 8 times [59].
The enterprises of the gas transmission system (gas transmission, gas distribution, and
gas storage), due to the specifics of their operation, are also monopolized in the state form
of ownership. This complicates the development of strategic mechanisms for managing
them [
60
]. In addition, the unpredictability of the state policy of Ukraine—in the field
of gas storage and the formation of tariffs for the services of gas storing enterprises—
complicates the work with potential customers. The problem is also the lack of investment
attractiveness of the enterprise since UGS facilities are state-owned, and little funds are
allocated from the budget for the renewal of fixed assets, which could increase the efficiency
of these enterprises.
5.3. Opportunities
As already mentioned, most Ukrainian UGS facilities were created on the site of
depleted fields. However, two of them—Chervonopartyzanske and Olyshivske—are based
on aquifers [
61
]. Although each Ukrainian gas storage is located at a distance of 3–3.5
thousand km from the main areas of natural gas production, they are all interconnected
through a system of gas pipelines, creating favorable conditions for the redistribution of
gas flows and meeting the needs of local and remote consumers. The Ukrainian GTS is
also closely connected with the gas pipeline systems of neighboring European countries—
Russia, Belarus, Poland, Slovakia, Hungary, Romania, and Moldova. Thus, it is integrated
with the European gas network and is also a bridge between the gas-producing regions
in Russia and Central Asia and consumers in Europe [
53
]. In 2015, Ukraine proposed to
Poland and Hungary that they use this powerful gas transmission hub, as well as the UGS

Energies 2022,15, 6604 21 of 34
facilities located next to it, as the basis of the Eastern European gas hub. On 19 January
2015, NJSC Naftogaz and the Polish Gaz-System SA signed an agreement to construct an
interconnector. On 29 May 2015, JSC Ukrtransgaz (gas storage operator of Ukraine) and the
Hungarian operator FGSZ signed an agreement to unite the cross-border gas pipelines of
the two countries. Moreover, in March 2020, the United States announced that it was ready
to create a hub for its liquefied gas in Ukraine, but with the spread of COVID-19, this idea
was put on hold. Unfortunately, the war further pushed these plans into the future.
According to the estimates of leading Ukrainian non-governmental organizations and
government agencies, with the support of European structures and experts, the energy
balance of Europe will undergo significant changes by 2028. Renewable energy sources
(including biogas, biomethane, hydrogen, and other “environmental gases”) and natural
gas will significantly strengthen their positions. In Ukraine, the share of natural gas,
according to the Energy Strategy of Ukraine until 2035, will not undergo significant changes,
but the share of nuclear energy and renewable energy sources will increase significantly [
62
].
Ukraine does not use all the capacities of its UGS facilities. From 2013–2018, Ukraine
had about 15 billion m3of free capacity it could offer European consumers (Figure 7).
Energies 2022, 15, x FOR PEER REVIEW 22 of 35
[53]. In 2015, Ukraine proposed to Poland and Hungary that they use this powerful gas
transmission hub, as well as the UGS facilities located next to it, as the basis of the Eastern
European gas hub. On 19 January 2015, NJSC Naftogaz and the Polish Gaz-System SA
signed an agreement to construct an interconnector. On 29 May 2015, JSC Ukrtransgaz
(gas storage operator of Ukraine) and the Hungarian operator FGSZ signed an agreement
to unite the cross-border gas pipelines of the two countries. Moreover, in March 2020, the
United States announced that it was ready to create a hub for its liquefied gas in Ukraine,
but with the spread of COVID-19, this idea was put on hold. Unfortunately, the war
further pushed these plans into the future.
According to the estimates of leading Ukrainian non-governmental organizations
and government agencies, with the support of European structures and experts, the
energy balance of Europe will undergo significant changes by 2028. Renewable energy
sources (including biogas, biomethane, hydrogen, and other “environmental gases”) and
natural gas will significantly strengthen their positions. In Ukraine, the share of natural
gas, according to the Energy Strategy of Ukraine until 2035, will not undergo significant
changes, but the share of nuclear energy and renewable energy sources will increase
significantly [62].
Ukraine does not use all the capacities of its UGS facilities. From 2013–2018, Ukraine
had about 15 billion m3 of free capacity it could offer European consumers (Figure 7).
Figure 7. The level of filling, injection, and withdrawal of UGS of Ukraine in 2010–2021. Source: [63].
In 2019, the maximum gas injection volume increased to 21.8 billion m3, i.e., free
capacity was 10 billion m3. The record year was 2020, when the highest level in the last 10
years in terms of injection volumes (28.3 billion m3) was reached. And a third of these
stocks were created by foreign customers, most of whom were from EU countries [63].
This fact is convincing evidence that the most important elements of Ukraine’s gas energy
infrastructure are being successfully integrated into the energy space of the European
Union. In addition, the gas storage operator of Ukraine is recognized as a reliable business
partner in Europe, and Ukraine as a whole has significantly strengthened its position in
its gas market.
0
5
10
15
20
25
30
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
million cubic meters
filling level gas storage gas extraction
Figure 7.
The level of filling, injection, and withdrawal of UGS of Ukraine in 2010–2021. Source: [
63
].
In 2019, the maximum gas injection volume increased to 21.8 billion m
3
, i.e., free
capacity was 10 billion m
3
. The record year was 2020, when the highest level in the last
10 years in terms of injection volumes (28.3 billion m
3
) was reached. And a third of these
stocks were created by foreign customers, most of whom were from EU countries [
63
].
This fact is convincing evidence that the most important elements of Ukraine’s gas energy
infrastructure are being successfully integrated into the energy space of the European
Union. In addition, the gas storage operator of Ukraine is recognized as a reliable business
partner in Europe, and Ukraine as a whole has significantly strengthened its position in its
gas market.
In 2020, the gas storage operator and the GTS operator offered their customers a new
service—storage of natural gas in the “Customs warehouse” mode and transportation of
gas from entry/exit points to/from the GTS at interstate connections of UGS facilities at a
reduced short-haul tariff. This provides special tariffs for transit transportation services,

Energies 2022,15, 6604 22 of 34
that is, for capacities with limited access to the Ukrainian VTP (the virtual trading point
where natural gas is transferred) and the domestic market. Accordingly, in 2020, Ukrainian
gas storage facilities received 6.1 billion m
3
of gas in the short-haul mode. The “Customs
warehouse” service provides traders with the opportunity to store natural gas in 10 under-
ground gas storage facilities in Ukraine for 1095 days without paying taxes and customs
duties, subject to further transportation of natural gas from the territory of Ukraine or
placing it in another customs regime. This service was introduced to the market back in
2017. In 2019, the customers of this service placed more than 8.1 billion m
3
of natural gas in
the customs warehouse regime (more than 30% of the total volume of gas storage), of which
natural gas of residents (10 customers) amounted to 6.1 billion m
3
(65%), and non-residents
(19 customers)—2.0 billion m3(35%) (Figure 8) [63].
Energies 2022, 15, x FOR PEER REVIEW 23 of 35
In 2020, the gas storage operator and the GTS operator offered their customers a new
service—storage of natural gas in the “Customs warehouse” mode and transportation of
gas from entry/exit points to/from the GTS at interstate connections of UGS facilities at a
reduced short-haul tariff. This provides special tariffs for transit transportation services,
that is, for capacities with limited access to the Ukrainian VTP (the virtual trading point
where natural gas is transferred) and the domestic market. Accordingly, in 2020,
Ukrainian gas storage facilities received 6.1 billion m
3
of gas in the short-haul mode. The
“Customs warehouse” service provides traders with the opportunity to store natural gas
in 10 underground gas storage facilities in Ukraine for 1095 days without paying taxes
and customs duties, subject to further transportation of natural gas from the territory of
Ukraine or placing it in another customs regime. This service was introduced to the
market back in 2017. In 2019, the customers of this service placed more than 8.1 billion m
3
of natural gas in the customs warehouse regime (more than 30% of the total volume of gas
storage), of which natural gas of residents (10 customers) amounted to 6.1 billion m
3
(65%),
and non-residents (19 customers)—2.0 billion m
3
(35%) (Figure 8) [63].
Figure 8. Dynamics of the provision of the “Customs warehouse” service in 2017–2019. Source: [54]
(p. 93).
In 2021, the injection of natural gas into UGS facilities in Ukraine amounted to 3.59
billion m
3
(in 2020—16.8 billion m
3
), and withdrawal—13.62 billion m
3
(in 2020—7.4 billion
m
3
). Thus, in 2021, the total gas withdrawal from storage facilities exceeded its injection
by 10.03 billion m
3
, while in 2020, injection exceeded the withdrawal by 9.4 billion m
3
. In
the 2020/2021 withdrawal season, gas reserves in Ukrainian UGS facilities were unusually
high compared to the previous decade, thanks in large part to foreign customers of
services who actively used gas storage facilities to store their own reserves [64]. By the
beginning of the 2021–2022 heating season, 19 billion m
3
of gas had been accumulated in
Ukrainian UGS facilities. The Gas storage operator of Ukraine entered 2022 with gas
reserves in UGS facilities at the level of 13.5 billion m
3
[65].
The potential of Ukrainian UGS facilities is much higher, as is the role of Ukraine in
the European energy space. This is not only about the rational and efficient use of existing
natural gas storage capacities but also reasonable prerequisites for expanding the UGS
network in Ukraine and increasing the total active volume of storage facilities at the
expense of depleted gas fields.
0.1 0
8.2
54
29
0
5
10
15
20
25
30
2017 2018 2019
volume of natural gas, billion cubic meters number of customers
Figure 8.
Dynamics of the provision of the “Customs warehouse” service in 2017–2019. Source: [
54
]
(p. 93).
In 2021, the injection of natural gas into UGS facilities in Ukraine amounted to
3.59 billion m3
(in 2020—16.8 billion m
3
), and withdrawal—13.62 billion m
3
(in 2020—
7.4 billion m
3
). Thus, in 2021, the total gas withdrawal from storage facilities exceeded its
injection by 10.03 billion m
3
, while in 2020, injection exceeded the withdrawal by 9.4 billion
m
3
. In the 2020/2021 withdrawal season, gas reserves in Ukrainian UGS facilities were
unusually high compared to the previous decade, thanks in large part to foreign customers
of services who actively used gas storage facilities to store their own reserves [
64
]. By the
beginning of the 2021–2022 heating season, 19 billion m
3
of gas had been accumulated
in Ukrainian UGS facilities. The Gas storage operator of Ukraine entered 2022 with gas
reserves in UGS facilities at the level of 13.5 billion m3[65].
The potential of Ukrainian UGS facilities is much higher, as is the role of Ukraine
in the European energy space. This is not only about the rational and efficient use of
existing natural gas storage capacities but also reasonable prerequisites for expanding the
UGS network in Ukraine and increasing the total active volume of storage facilities at the
expense of depleted gas fields.
5.4. Threats
There are several threats to companies providing natural gas storage services. The most
important of these is the significant influence of the political and regulatory environment,
by which we mean laws, government institutions, and pressure groups that put pressure
on and restrict the activities of enterprises. Another type of restriction on business activities
is licensing, since some of the activities of the gas storage operator JSC “Ukrtransgaz”

Energies 2022,15, 6604 23 of 34
are subject to state licensing. JSC “Ukrtransgaz” carries out its activities in the field of
underground gas storage based on:
•
5 licenses of the National Commission of Ukraine (carrying out state regulation of
energy and public utilities),
•11 special permits of the State Service of Geology and Subsoil of Ukraine,
•4 other permits.
These licenses and permits cover and regulate the activities of the gas storage oper-
ator and meet the requirements of the energy legislation of the European Union. At the
same time, certain features require the continuation of work on harmonizing the energy
legislation of Ukraine and the EU.
A characteristic feature of Ukraine is imperfect legislation, which also creates addi-
tional threats to the activities of market entities for underground gas storage services. After
all, each enterprise must determine the permissible boundaries of economic activity, the
boundaries of relationships with other entities, and methods for defending their interests.
In addition, the imperfection of the gas market and the incompleteness of structural
reforms in the energy sector of Ukraine complicate their cooperation with European gas
giants and pose a threat to the effective functioning of both UGS facilities and the GTS of
Ukraine in the long term. At the same time, such threats are not critical and can be leveled
quite easily by further improvement of the energy legislation of Ukraine. The need to create
and operate a transparent gas market requires further reform of NJSC Naftogaz and its
subsidiaries by turning them into a modern corporate business structure with a high level
and quality of management.
The economic crisis, high inflation, rising unemployment, high-interest rates on loans
in recent months, and now also the war (the worst that could befall the country and
its inhabitants) have all negatively affected and will continue to affect the activities of
underground gas storage companies in Ukraine.
The technological environment, which requires a separate systematic study in terms of
limitations, trends, and opportunities for a particular enterprise, is of particular importance.
Currently, Ukrainian gas storage facilities mainly use traditional technologies, which are
quite reliable, but looking ahead, it is necessary to work now on the modernization of the
gas industry in Ukraine.
During all 30 years of Ukraine’s independence, the government of the Russian Federa-
tion has used natural gas as an instrument of political blackmail and diktat. The GTS of
Ukraine has been developing technological and economic interconnection with the GTS
of Russia and European countries for a long time, serving as a means of intercontinental
natural gas transit from its production areas (located mainly in Western Siberia of the
Russian Federation) to end consumers in Europe. The gas crises of 2004–2005, 2009–2010,
and 2021–2022 have become clear evidence of the use by the Russian Federation of its
monopoly position in the European gas market for political pressure and blackmail. At
the same time, Ukraine’s underground gas storage system also experienced a negative
impact, as the reduction in the volume of Russian gas transit through the Ukrainian GTS
reduced the level of workload and the use of Ukrainian UGS capacities to regulate seasonal
fluctuations in gas consumption in European countries. Today, however, the biggest threat
has been Russia’s invasion of Ukraine, the destruction of its infrastructure, and massacres
of civilians. Concerning UGS facilities, this is fraught with a loss of control over gas storage
facilities located in war zones.
However, the main gas storage facilities are located in the western part of the country
and are under the control of Ukraine. On the other hand, the need has become clear for:
•
Refusal of European countries from the monopoly supply of natural gas from the
Russian Federation;
•Diversification of sources of supply;
•Formation of large reserves of natural gas and its storage in UGS facilities.

Energies 2022,15, 6604 24 of 34
An analysis of the development of the military conflict, and in fact, a full-scale war
between Ukraine and the Russian Federation in the period from February to August 2022,
testifies to the ability of Ukraine to defend its independence, and the aid of the countries
of the European Union, the United States, and the United Kingdom allows us to draw an
encouraging conclusion about a fairly quick end to hostilities, preservation of Ukraine’s
independence, and rapid integration into the European community. Under these conditions,
the use of the potential of Ukrainian UGS facilities to ensure the reliable functioning of the
European gas market becomes especially attractive and promising.
5.5. SWOT Conclusions
Summing up the analysis, Table 8shows an extended SWOT matrix for underground
gas storage facilities in Ukraine and, consequently, for Ukrainian companies engaged in
underground gas storage in the context of identifying Ukraine’s competitive position in the
European gas market.
As seen from the above SWOT analysis, Ukrainian UGS facilities have several compet-
itive advantages, which can be used to win in foreign markets. These include:
•Geographic location;
•Well-developed transport communications;
•
Technical characteristics (a wide range of options for natural gas withdrawal from
underground storage facilities, providing extraordinary flexibility of gas flows, opti-
mization of operating modes, provision, and maintenance of reverse flows);
•Favorable conditions and competitive tariffs, data transparency.
Table 8. Matrix of SWOT analysis of the prospects for using UGS facilities in Ukraine.
Strengths Weaknesses
1. The most powerful network of underground gas storage
facilities in Europe, the volume of which is about 20% of
the capacity of all UGS facilities in the EU countries.
2. The largest storage facilities are located near the western
border of Ukraine, at the intersection of key gas pipelines
connecting the GTS of Ukraine, Belarus, Poland, Slovakia,
Hungary, and Romania.
3. A positive business reputation among customers and a
fairly high efficiency in promoting underground gas
storage services and other related services to foreign
markets (especially in the last 2–3 years).
4. Provision of gas storage services in UGS facilities to both
suppliers and consumers of gas.
5. Data transparency and daily information about gas
storage services on the European transparency platform
AGSI+.
6. Favorable conditions and competitive tariffs for storage,
injection, withdrawal, and gas transportation.
7. Unique technical characteristics of gas storage facilities:
- a wide range of natural gas extraction options from
UGS facilities, providing extraordinary gas flow
flexibility,
- optimization of operating modes, provision, and
maintenance of reverse flows.
8. High degree of compliance with contractual obligations.
1. Low innovation activity, focus mainly on the use of
traditional technologies.
2.
A significant age of operation of UGS facilities and a high
degree of depreciation of fixed assets, as well as the
unsatisfactory technical condition and limited
technological capabilities associated with these factors.
3. Lack of working capital, hindering investment.
4. Low profitability of underground gas storage companies.
5. Insufficient investment attractiveness of UGS facilities for
commercial investments, since UGS facilities are
state-owned and are not subject to alienation.
6. Sufficiently low activity of expanding the client base of
consumers of services provided by UGS facilities in
Ukraine.
7.
Insufficient number of qualified personnel, specialists, and
workers in the industry for the use and implementation of
digital technologies.
8. Instability of state policy in the field of gas storage.

Energies 2022,15, 6604 25 of 34
Table 8. Cont.
Opportunities Threats
1. High market potential for natural gas storage services for
customers from Europe and other parts of the world.
2. The high potential of existing storage facilities and
significant opportunities to create the necessary
operational and strategic gas reserves at the expense of
spare capacities.
3. Attractive prospects for expanding the UGS network in
Ukraine and increasing the total active volume of storage
facilities by creating new UGS facilities based on depleted
gas fields.
4. Improving approaches to forming tariffs for services for
the injection, storage, and withdrawal of natural gas.
5. Development of new services based on UGS.
6. Compensation for seasonal fluctuations in gas
consumption, since the nature of gas demand is seasonal
and cyclical.
7.
Availability of a program to improve the quality of service
delivery through the digitalization of management,
business, and production processes.
8. Attracting foreign investors on the terms of expanding
access to active UGS facilities.
9. Creation of an Eastern European gas hub based on UGS
facilities in the Western region of Ukraine.
10.
Construction of terminals for LNG (e.g., in Odessa), with
subsequent injection of gas into the GTS and UGS
facilities.
11.
Possibility of adapting the GTS infrastructure to LNG
transportation and storage; however, a gas port needs to
be built.
12.
Use of UGS facilities for storage of other substances (e.g.,
hydrogen and carbon dioxide).
1. The war launched by the Russian Federation against
Ukraine destroyed the opportunities for the rapid
development of the gas industry in Ukraine. Moreover,
there is a threat of loss of control over UGS facilities and
the impossibility of their intended use.
2. The difficult political situation in the country and the
frequently changing imperfect legislation do not
contribute to long-term planning and investment.
3. Socio-economic instability, which does not contribute to
the development of both the country’s economy as a
whole and its sectors.
4. High inflation, which creates difficulties for investments,
since it is unrealistic to calculate their profitability.
5. Absence or insufficiency of government measures to
develop the gas transportation industry and the
underground gas storage system.
6. Imperfection of the gas market.
7.
Incompleteness of general structural reforms in the energy
sector of Ukraine.
8. The use of natural gas by the Russian Federation as an
instrument of political blackmail and diktat.
9. Development of alternative energy, which, on the one
hand, is beneficial for the environment (less impact on
climate change and global warming), and on the other
hand is competitive with fossil energy sources (including
natural gas).
10.
The development of LNG reduces the share of capacity
utilization of the GTS built for traditional gas
transportation methods.
At the same time, the greatest advantages are the high capacity potential of UGS
facilities in Ukraine and the high degree of compliance with contractual obligations for
end users. However, most gas storages experience problems associated with the long
service life of their production facilities. To ensure the competitiveness of Ukrainian UGS
facilities, considerable attention should be paid to the construction, reconstruction, technical
re-equipment, and overhaul of production facilities to ensure long-term performance. In
addition, an insufficient number of qualified workers in the field of using the latest digital
technologies leads certain consumers to be dissatisfied with the quality of service provision.
Clearly, political factors and the presence of monopolists in the market cannot be
ignored, as evidenced by the events in the European natural gas market in the summer and
autumn of 2021, as well as in March 2022. The events were accompanied by an astronomical
increase in gas prices in spot markets and clearly demonstrated the vulnerabilities of the
European energy security system (Figure 9).
However, the shortcomings mentioned can be overcome and threats prevented. Ukraine
has all the possibilities to do this. The gas storage operator of Ukraine has the opportunity
to expand its activities (due to the high potential of the European sales market), but for
this, it is necessary to use strengths and eliminate weaknesses, as well as closely monitor
changes in the external environment.

Energies 2022,15, 6604 26 of 34
Energies 2022, 15, x FOR PEER REVIEW 27 of 35
and autumn of 2021, as well as in March 2022. The events were accompanied by an
astronomical increase in gas prices in spot markets and clearly demonstrated the
vulnerabilities of the European energy security system (Figure 9).
Figure 9. Dutch TTF European natural gas price dynamics in 2021–2022 (EUR/MWh). Source: [66].
However, the shortcomings mentioned can be overcome and threats prevented.
Ukraine has all the possibilities to do this. The gas storage operator of Ukraine has the
opportunity to expand its activities (due to the high potential of the European sales
market), but for this, it is necessary to use strengths and eliminate weaknesses, as well as
closely monitor changes in the external environment.
6. The Role of UGS Facilities in Ensuring Energy Security in Europe
The growth of the role of Ukrainian UGS facilities in the European gas market
significantly depends not only on the demand for gas storage services from foreign
companies but also on the awareness at the state level of the importance of collective
energy security manifested in energy policy regulations. An important role in this aspect
is played by the problem of forming a single European energy space and its reliable and
efficient function. At the same time, one should consider not only the availability and
volume of storage facilities in different countries but also other infrastructure parameters,
in particular their connection to existing gas pipelines, the development of pipeline
networks, and their performance. All this ultimately creates opportunities for the rational
use of storage capacities from the standpoint of national, regional, and European energy
security.
To determine the role played by Ukrainian UGS facilities, we analyzed the available
storage volumes in various European countries and domestic gas consumption in 2019
and 2020. We also assessed the level of UGS facilities supplying the internal needs of
individual European countries (Table 9).
Figure 9. Dutch TTF European natural gas price dynamics in 2021–2022 (EUR/MWh). Source: [66].
6. The Role of UGS Facilities in Ensuring Energy Security in Europe
The growth of the role of Ukrainian UGS facilities in the European gas market signifi-
cantly depends not only on the demand for gas storage services from foreign companies
but also on the awareness at the state level of the importance of collective energy security
manifested in energy policy regulations. An important role in this aspect is played by the
problem of forming a single European energy space and its reliable and efficient function.
At the same time, one should consider not only the availability and volume of storage
facilities in different countries but also other infrastructure parameters, in particular their
connection to existing gas pipelines, the development of pipeline networks, and their per-
formance. All this ultimately creates opportunities for the rational use of storage capacities
from the standpoint of national, regional, and European energy security.
To determine the role played by Ukrainian UGS facilities, we analyzed the available
storage volumes in various European countries and domestic gas consumption in 2019 and
2020. We also assessed the level of UGS facilities supplying the internal needs of individual
European countries (Table 9).
Table 9.
Provision of underground storage facilities to the domestic needs of individual Euro-
pean countries.
Country Storage Volume,
Billion m3
Volume of Natural Gas
Consumption, Billion m3
Ratio of UGS Capacity
for Domestic Needs
2019 2020 2019 2020
Ukraine 30.950 28.3 29.3 1.094 1.056
Germany 21.881 88.7 86.5 0.247 0.253
Italy 18.904 70.8 67.7 0.267 0.279
France 12.640 43.7 40.7 0.289 0.311
Netherlands 13.748 37.0 36.6 0.372 0.376
Austria 9.128 8.9 8.5 1.026 1.074
Hungary 6.657 9.8 10.2 0.679 0.653
Czech Republic
3.441 8.3 8.5 0.415 0.405
Poland 3.421 20.9 21.6 0.164 0.158
Spain 3.274 36.0 32.4 0.091 0.101

Energies 2022,15, 6604 27 of 34
Table 9. Cont.
Country Storage Volume,
Billion m3
Volume of Natural Gas
Consumption, Billion m3
Ratio of UGS Capacity
for Domestic Needs
2019 2020 2019 2020
Romania 3.150 10.7 11.3 0.294 0.279
Great Britain 1.115 77.3 72.5 0.014 0.015
Belgium 0.861 17.4 17.0 0.049 0.051
Portugal 0.341 6.1 6.0 0.056 0.057
Source: compiled by the authors according to [61,67].
Based on the data (Table 9), we calculated the ratio of UGS capacities to meet gas
consumption needs as the ratio of natural gas consumption to the active volume of gas
storage facilities. We divided the results into five groups, characterizing the level of
provision of each country with these capacities from the standpoint of internal energy
security (Table 10).
Table 10. Levels of supply of countries with underground gas storage facilities.
Ratio Limits ≤20% 21–30% 31–40% 41–50% >50%
The level of
the ratio
critically low
level low level average level high level ultra-high
level
Country
Poland
Spain
Great Britain
Germany
Italy
Romania
Netherlands
France
Czech
Republic
Ukraine
Austria
Hungary
The level of supply of UGS capacities for domestic needs is an important component
of the country’s energy security. If UGS capacities are less than 20% of the annual volume
of gas consumption, then this level is considered critically low. The availability of UGS
facilities at the level of 21–30% of annual consumption corresponds to a low level, 31–40%
to an average level, 41–50% to a high level, and more than 50% to an ultra-high level. Next,
we ranked the European countries (from Table 9) according to the level of provision of
domestic needs with underground gas storage facilities.
The results obtained allow for a more reasonable approach to creating strategies for
improving the energy security of both individual European countries and the region. This
approach contributes to the rationalization and optimization of the tasks of developing
the network of underground gas storage facilities and allows minimizing the total costs
of developing the UGS network from the standpoint of European energy security. Of
course, this should take into account the peculiarities of the economic development of
individual countries, the structure of gas consumption, the presence of industries with
high gas consumption, and the possibility of alternative use of energy resources, including
the replacement of natural gas with other energy resources, climatic conditions, environ-
mental factors, the availability of pipeline infrastructure for cross-border movement of gas
streams, etc.
7. Formation of Scenarios for the Use of UGS Facilities in Ukraine
Ukraine (according to the Association Agreement between Ukraine and the Euro-
pean Union [
68
]) is actively implementing measures aimed at further integration with
the European energy market, in particular, the gas market. Therefore, when planning
the development of the Ukrainian gas storage system, it is necessary to take into account
the prospects for the consumption of energy resources in the EU countries. According to
experts, the forecast energy balance of Europe and Ukraine in 2028 will have the following
structure (Figures 10 and 11).

Energies 2022,15, 6604 28 of 34
Energies 2022, 15, x FOR PEER REVIEW 29 of 35
environmental factors, the availability of pipeline infrastructure for cross-border
movement of gas streams, etc.
7. Formation of Scenarios for the Use of UGS Facilities in Ukraine
Ukraine (according to the Association Agreement between Ukraine and the
European Union [68]) is actively implementing measures aimed at further integration
with the European energy market, in particular, the gas market. Therefore, when planning
the development of the Ukrainian gas storage system, it is necessary to take into account
the prospects for the consumption of energy resources in the EU countries. According to
experts, the forecast energy balance of Europe and Ukraine in 2028 will have the following
structure (Figures 10 and 11).
Figure 10. Forecast of energy balance in 2028 (Europe). Source: [55].
Figure 11. Forecast of energy balance in 2028 (Ukraine). Source: [55].
As we can see, both in Ukraine and in European countries, natural gas will continue
to play a dominant role in the coming years (although the development of alternative
energy sources will weaken its market position). Although forecasts up to 2050 may
33%
10%
5%
25%
9%
18% oil
coal
hydropower
natural gas
nuclear energy
renewable energy
sources
10%
15%
1%
31%
31%
12% oil
coal
hydropower
natural gas
nuclear energy
renewable energy
sources
Figure 10. Forecast of energy balance in 2028 (Europe). Source: [55].
Energies 2022, 15, x FOR PEER REVIEW 29 of 35
environmental factors, the availability of pipeline infrastructure for cross-border
movement of gas streams, etc.
7. Formation of Scenarios for the Use of UGS Facilities in Ukraine
Ukraine (according to the Association Agreement between Ukraine and the
European Union [68]) is actively implementing measures aimed at further integration
with the European energy market, in particular, the gas market. Therefore, when planning
the development of the Ukrainian gas storage system, it is necessary to take into account
the prospects for the consumption of energy resources in the EU countries. According to
experts, the forecast energy balance of Europe and Ukraine in 2028 will have the following
structure (Figures 10 and 11).
Figure 10. Forecast of energy balance in 2028 (Europe). Source: [55].
Figure 11. Forecast of energy balance in 2028 (Ukraine). Source: [55].
As we can see, both in Ukraine and in European countries, natural gas will continue
to play a dominant role in the coming years (although the development of alternative
energy sources will weaken its market position). Although forecasts up to 2050 may
33%
10%
5%
25%
9%
18% oil
coal
hydropower
natural gas
nuclear energy
renewable energy
sources
10%
15%
1%
31%
31%
12% oil
coal
hydropower
natural gas
nuclear energy
renewable energy
sources
Figure 11. Forecast of energy balance in 2028 (Ukraine). Source: [55].
As we can see, both in Ukraine and in European countries, natural gas will continue to
play a dominant role in the coming years (although the development of alternative energy
sources will weaken its market position). Although forecasts up to 2050 may include a
decrease in the share of gas in the global consumption of primary energy sources, they
will remain significant in the future [
69
–
71
]. In this regard, it is important to forecast the
production and consumption of this energy resource in the coming decades.
Based on the studies, we will consider three scenarios for using UGS facilities in
Ukraine: pessimistic; realistic; optimistic (Figures 12–14).

Energies 2022,15, 6604 29 of 34
Energies 2022, 15, x FOR PEER REVIEW 30 of 35
include a decrease in the share of gas in the global consumption of primary energy
sources, they will remain significant in the future [69–71]. In this regard, it is important to
forecast the production and consumption of this energy resource in the coming decades.
Based on the studies, we will consider three scenarios for using UGS facilities in
Ukraine: pessimistic; realistic; optimistic (Figures 12–14).
Figure 12. Pessimistic scenario.
Figure 13. Realistic scenario.
Figure 12. Pessimistic scenario.
Energies 2022, 15, x FOR PEER REVIEW 30 of 35
include a decrease in the share of gas in the global consumption of primary energy
sources, they will remain significant in the future [69–71]. In this regard, it is important to
forecast the production and consumption of this energy resource in the coming decades.
Based on the studies, we will consider three scenarios for using UGS facilities in
Ukraine: pessimistic; realistic; optimistic (Figures 12–14).
Figure 12. Pessimistic scenario.
Figure 13. Realistic scenario.
Figure 13. Realistic scenario.

Energies 2022,15, 6604 30 of 34
Energies 2022, 15, x FOR PEER REVIEW 31 of 35
Figure 14. This is a figure. Schemes follow the same formatting.
Considering the pessimistic scenario, which provides for a long-term energy crisis, a
slow change in the energy infrastructure, and an increase in the monopoly supply of
natural gas to Europe, we can predict its implementation within the next five years at
least. As for the optimistic scenario, which provides for a complete renewal of the energy
infrastructure, maximum demonopolization, and diversification of gas supply services, it
is obvious that the implementation of such a scenario involves large investments,
powerful scientific developments, and requires a significant period for implementation,
in particular, in our opinion, not less than 10 years. A realistic scenario for the use of UGS
capacities in Ukraine, in our opinion, can be implemented in the next 3–5 years.
Obviously, the implementation of the individual components of the realistic scenario has
already begun.
Given the current situation, a realistic scenario for using UGS facilities in Ukraine is
more likely to materialize. However, in the longer term, Ukraine should prepare for
alternative uses of gas storage facilities, in particular for hydrogen [71] and carbon dioxide
storage [72], and to expand its offer of GTS services outside of Europe.
8. Conclusions and Prospects for Further Research
Underground gas storage is important for meeting domestic demand for natural gas.
Facilities are used to compensate for the uneven consumption of gas in countries with a
distinct change of seasons, as well as to level the risks of undersupply of gas of various
natures (including technological, political, economic, and environmental) that may
Figure 14. This is a figure. Schemes follow the same formatting.
Considering the pessimistic scenario, which provides for a long-term energy crisis,
a slow change in the energy infrastructure, and an increase in the monopoly supply of
natural gas to Europe, we can predict its implementation within the next five years at
least. As for the optimistic scenario, which provides for a complete renewal of the energy
infrastructure, maximum demonopolization, and diversification of gas supply services, it
is obvious that the implementation of such a scenario involves large investments, powerful
scientific developments, and requires a significant period for implementation, in particular,
in our opinion, not less than 10 years. A realistic scenario for the use of UGS capacities
in Ukraine, in our opinion, can be implemented in the next 3–5 years. Obviously, the
implementation of the individual components of the realistic scenario has already begun.
Given the current situation, a realistic scenario for using UGS facilities in Ukraine
is more likely to materialize. However, in the longer term, Ukraine should prepare for
alternative uses of gas storage facilities, in particular for hydrogen [
71
] and carbon dioxide
storage [72], and to expand its offer of GTS services outside of Europe.
8. Conclusions and Prospects for Further Research
Underground gas storage is important for meeting domestic demand for natural gas.
Facilities are used to compensate for the uneven consumption of gas in countries with a
distinct change of seasons, as well as to level the risks of undersupply of gas of various
natures (including technological, political, economic, and environmental) that may threaten
the energy security of national markets. Ukraine belongs to the group of such countries.

Energies 2022,15, 6604 31 of 34
In recent years, there have been significant changes in the functioning of Ukrainian
UGS facilities, in particular:
Separation of the UGS operator from the gas transport operator;
•Access of European countries to UGS facilities has been expanded and facilitated;
•Natural gas storage regimes have been expanded;
•Gas storage tariffs have been diversified;
•Natural gas metering system has been improved.
However, in the future, it will be necessary to diversify the range of services, improve
the quality of services already provided (including natural gas storage services), ensure the
transparency of the activities of the underground gas storage operator, reduce the number
of bureaucratic procedures, and eliminate the negative impact of monopolies that still
operate in the gas market.
The studies prove the significant role of Ukrainian UGS facilities in ensuring the energy
security of Europe. An important aspect of its improvement is regional cooperation aimed
at increasing the level of energy security of countries that should unite in regional energy
or exclusively gas clusters. The issue of forming a regional gas cluster, which could include
Ukraine, Poland, Slovakia, Hungary, and some other countries interested in optimizing
their energy balances, increasing the level of energy security and counteracting the gas
expansion of the Russian Federation, deserves careful attention. The key infrastructure
elements of such a gas cluster should be existing and potential underground gas storage
facilities, an extensive gas transmission network, gas interconnector pipelines, LNG, and
CNG terminals. In addition, gas storage facilities can be used to store hydrogen and carbon
dioxide. The military invasion of Russia on the territory of Ukraine and the energy crisis
caused by it will become an impetus for the development of hydrogen energy in European
countries and the development of liquefied gas terminals, which will lead to demand for
gas storage capacities in Ukraine.
As the study showed, UGS facilities in Ukraine have significant development opportu-
nities, and the management of enterprises must use them correctly, utilizing their strengths.
Of course, at the same time, there are many threats, but this requires effective management
to foresee and avoid them in the future.
In further studies, we propose to deepen the study of the external environment of
UGS facilities in Ukraine based on the already considered composition of factors within
the political, economic, social, technological, and legal components; to determine the
magnitude of the influence of each of the selected factors using the method of rating; to
substantiate the reliability and consistency of the results of an expert survey using economic
and mathematical criteria; and to carry out forecasting indicators of the functioning of UGS
facilities in Ukraine. Our further studies will include: an analysis of the competitiveness of
Ukrainian UGS facilities in the global gas market (taking into account macro-environment
factors); identification of their role in the geopolitical aspect (taking into account global
factors); forecasting demand for Ukrainian UGS services from foreign companies; analysis
of alternative ways to use UGS facilities (in connection with the development of new
achievements in science and technology).
Author Contributions:
Conceptualization, N.I.; methodology, A.I. and I.Z.; validation, N.I. and O.D.;
formal analysis, A.I.; investigation, A.I. and I.Z.; resources, O.D. and O.R.; data curation, O.D. and
O.R.; writing—original draft preparation, I.Z. and O.R.; writing—review and editing, N.I. and A.I.;
visualization, O.R.; supervision, N.I. and I.Z.; funding acquisition, N.I. All authors have read and
agreed to the published version of the manuscript.
Funding: The APC was funded by AGH University of Science and Technology.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement:
The data presented in this study are available on request from the authors.

Energies 2022,15, 6604 32 of 34
Conflicts of Interest: The authors declare no conflict of interest.
References
1.
Energy Balance of Ukraine for 2020. Available online: http://www.ukrstat.gov.ua/express/expr2021/11/147.pdf (accessed on 16
April 2022).
2.
Shvidky, E.A.; Bodnar, G.F. Retrospective Analysis of the Formation Process of the Gas Transport and Gas Distribution System
of Ukraine as the Basis of the Identification and Solution of Their Main Problems Development. Available online: https:
//core.ac.uk/download/pdf/84123072.pdf (accessed on 16 April 2022).
3.
Zapukhliak, I.B. Current State and Problems of Development of the Gas Transportation System of Ukraine in the Context of
European Integration Processes. East. Eur. Econ. Bus. Manag.
2017
,3, 47–52. Available online: http://easterneurope-ebm.in.ua
(accessed on 3 May 2022).
4.
Geography and Dynamics of Natural Gas Imports to Ukraine in 2020. Available online: https://ua-energy.org/uk/posts/zvidky-
haz-heohrafiia-ta-dynamika-importu-pryrodnoho-hazu-ukrainoiu-u-2020-rotsi (accessed on 14 April 2022).
5.
TSOUA. Official Website of Ukrtransgaz. Available online: https://tsoua.com/news/za-pidsumkamy-10-misyacziv-import-
gazu-z-yes-v-ukrayinu-perevyshhuye-eksport/ (accessed on 17 April 2022).
6.
Goldthau, A.; Boersma, T. The 2014 Ukraine-Russia crisis: Implications for energy markets and scholarship. Energy Res. Soc. Sci.
2014,3, 13–15. [CrossRef]
7. Skalamera, M. The Ukraine Crisis: The Neglected Gas Factor. Orbis 2015,59, 397–410. [CrossRef]
8. Van de Graaf, T.; Colgan, J.D. Russian gas games or well-oiled conflict? Energy security and the 2014 Ukraine crisis. Energy Res.
Soc. Sci. 2017,24, 59–64. [CrossRef]
9.
Lee, Y. Interdependence, issue importance, and the 2009 Russia-Ukraine gas conflict. Energy Policy
2017
,102, 199–209. [CrossRef]
10.
Rodr
н
guez-Fernandez, L.; Carvajal, A.B.F.; Ruiz-Gomez, L.M. Evolution of European Union’s energy security in gas supply
during Russia–Ukraine gas crisis (2006–2009). Energy Strategy Rev. 2020,30, 100518. [CrossRef]
11.
Stulberg, A.N. Natural gas and the Russia-Ukraine crisis: Strategic restraint and the emerging Europe-Eurasia gas network.
Energy Res. Soc. Sci. 2017,24, 71–85. [CrossRef]
12.
Goncharuk, A.G.; lo Storto, C. Challenges and policy implications of gas reform in Italy and Ukraine: Evidence from a
benchmarking analysis. Energy Policy 2017,101, 456–466. [CrossRef]
13.
Yemelyanov, O.; Symak, A.; Petrushka, T.; Zahoretska, O.; Kusiy, M.; Lesyk, R.; Lesyk, L. Changes in Energy Consumption,
Economic Growth and Aspirations for Energy Independence: Sectoral Analysis of Uses of Natural Gas in Ukrainian Economy.
Energies 2019,12, 4724. [CrossRef]
14. Yakovenko, K.; Miљнk, M. Cooperation and Security: Examining the Political Discourse on Natural Gas Transit in Ukraine and
Slovakia. Energies 2020,13, 5969. [CrossRef]
15.
Sauvageot, E.P. Between Russia as producer and Ukraine as a transit country: EU dilemma of interdependence and energy
security. Energy Policy 2020,145, 111699. [CrossRef]
16.
Teichmann, F.; Falker, M.-C.; Sergi, B.S. Extractive industries, corruption and potential solutions. The case of Ukraine. Resour.
Policy 2020,69, 101844. [CrossRef]
17.
Bocse, A.-M. From the United States with shale gas: Ukraine, energy securitization, and the reshaping of transatlantic energy
relations. Energy Res. Soc. Sci. 2020,69, 101553. [CrossRef]
18.
Alberini, A.; Khymych, O.; Scasnэ, M. Responsiveness to energy price changes when salience is high: Residential natural gas
demand in Ukraine. Energy Policy 2020,144, 111534. [CrossRef]
19. Goncharuk, A.G.; Cirella, G.T. A perspective on household natural gas consumption in Ukraine. Extr. Ind. Soc. 2020,7, 587–592.
[CrossRef]
20.
Almeidaa, J.R.U.C.; De Almeida, E.L.F.; Torres, E.A.; Freires, F.G.M. Economic value of underground natural gas storage for the
Brazilian power sector. Energy Policy 2018,121, 488–497. [CrossRef]
21.
Chen, S.; Zhang, Q.; Wang, G.; Zhu, L.; Li, Y. Investment strategy for underground gas storage facilities based on real option
model considering gas market reform in China. Energy Econ. 2018,70, 132–142. [CrossRef]
22.
Yu, W.; Gonga, J.; Song, S.; Huang, W.; Li, Y.; Zhang, J.; Hong, B.; Zhang, Y.; Wen, K.; Duan, X. Gas supply reliability analysis of a
natural gas pipeline system considering the effects of underground gas storages. Appl. Energy 2019,252, 113418. [CrossRef]
23.
Matar, W.; Shabaneh, R. Viability of seasonal natural gas storage in the Saudi energy system. Energy Strategy Rev.
2020
,32, 100549.
[CrossRef]
24.
Zhang, J.; Tan, Y.; Zhang, T.; Yu, K.; Wang, X.; Zhao, Q. Natural gas market and underground gas storage development in China.
J. Energy Storage 2020,29, 101338. [CrossRef]
25.
Skrzy´nski, T. The Role of Underground Gas Storage Facilities in the Continuous Supply of Natural Gas to Domestic Recipients
Based on the Example of the Visegrad Group. Energy Policy J. 2020,23, 21–40. [CrossRef]
26.
Syed, Z.; Lawryshyn, Y. Risk analysis of an underground gas storage facility using a physics-based system performance model
and Monte Carlo simulation. Reliab. Eng. Syst. Saf. 2020,199, 106792. [CrossRef]
27.
Tongwen, J.; Zhengmao, W.; Jinfang, W. Integrated construction technology for natural gas gravity drive and underground gas
storage. Petrol. Explor. Develop. 2021,48, 1227–1236.

Energies 2022,15, 6604 33 of 34
28.
Thanh, H.V.; Safaei-Farouji, M.; Wei, N.; Band, S.S.; Mosavi, A. Knowledge-based rigorous machine learning techniques to predict
the deliverability of underground natural gas storage sites for contributing to sustainable development goals. Energy Rep.
2022
,
8, 7643–7656. [CrossRef]
29.
Sadeghi, S.; Sedaee, B. Mechanistic simulation of cushion gas and working gas mixing during underground natural gas storage. J.
Energy Storage 2022,46, 103885. [CrossRef]
30.
Sadeghi, S.; Sedaee, B. Cushion and working gases mixing during underground gas storage: Role of fractures. J. Energy Storage
2022,55, 105530. [CrossRef]
31.
Zhang, Y.; Oldenburg, C.M.; Zhou, Q.; Pan, L.; Freifeld, B.M.; Jeanne, P.; Tribaldos, V.R.; Vasco, D.W. Advanced monitoring and
simulation for underground gas storage risk management. J. Pet. Sci. Eng. 2022,208, 109763. [CrossRef]
32.
Plan for the Development of Gas Storage Facilities of the Gas Storage Operator of the Joint Stock Company “Ukrtransgaz” for
2021–2030. Available online: https://utg.ua/img/menu/company/docs/2021/%D0%9F%D0%BB%D0%B0%D0%BD%20%D0
%9F%D0%A1%D0%93%202021-2030.pdf (accessed on 14 April 2022).
33.
Storchak, S.O.; Zaiets, V.O. Underground Gas Storages of Ukraine—A Reliable Basis for the Creation of the Eastern European gas
hub. Oil Gas Ind. Ukr. 2016,3, 24–25.
34.
Directive 2003/55/EC of the European Parliament and of the Council of the European Union on Common Rules for the Internal
Market in Natural Gas, Which Repeals Directive 98/30/EC. Brussels. 2003. Available online: https://zakon.rada.gov.ua/laws/
show/994_380#Text (accessed on 22 December 2021).
35.
Decision of the Commission Dated August 24, 2012 “Regarding Amendments to Annex I of Regulation (EC) No. 715/2009
of the European Parliament and of the Council on Conditions of Access to Gas Transmission Systems”. Available online:
https://zakon.rada.gov.ua/laws/show/984_012-12#Text (accessed on 22 December 2021).
36.
Directive of the European Parliament and Council 2012/27/EU Dated October 25, 2012 “On Energy Efficiency, Amending
Directives 2009/125/EU and 2010/30/EU and Repealing Directives 2004/8/EU and 2006/32/EU”. Available online: https:
//zakon.rada.gov.ua/laws/show/984_017-12#Text (accessed on 22 December 2021).
37.
Regulation (EC) No. 715/2009 OF THE EUROPEAN PARLIAMENT AND COUNCIL Dated July 13, 2009 “On Conditions
of Access to Natural Gas Transportation Networks and Which Repeals Regulation (EC)” No. 1775/2005. Available online:
http://reform.energy/media/209/e8d7f3816b9d32188f2f454906fcfd0d.pdf (accessed on 22 December 2021).
38.
Law of Ukraine “On the Natural Gas Market”. Available online: https://zakon.rada.gov.ua/laws/show/329-19#Text (accessed
on 22 December 2021).
39. Official Website of NJSC Naftogaz. Available online: https://www.naftogaz.com/ (accessed on 22 December 2021).
40.
Information Platform LLC “GTS Operator of Ukraine”. Available online: https://iplatforma.tsoua.com/start (accessed on 22
December 2021).
41.
Ukraine’s Progress in the Development of the Gas Market. Ekonomichna Pravda, February 24. 2021. Available online: https:
//www.epravda.com.ua/columns/2021/02/24/671345/ (accessed on 22 December 2021).
42.
Official Website of LLC “Ukrainian Energy Exchange”. Available online: https://www.ueex.com.ua/ (accessed on 12 December
2021).
43.
About Naftogas. Official Website of NJSC Naftogaz. Available online: https://www.naftogaz.com/en/about-naftogaz (accessed
on 20 December 2021).
44.
Annual Report of Naftogaz of Ukraine for 2015. Available online: https://annualreport2015.naftogaz.com/ua/operacijna-
dijalnist/struktura-biznesu/ (accessed on 20 December 2021).
45.
Charter of JSC “Ukrtransgaz”. Available online: https://utg.ua/utg/media/news/2017/06/statut-utg-20-06-2017.html (accessed
on 15 November 2021).
46.
UTG Today. Official Website of Ukrtransgaz. Available online: https://utg.ua/utg/about-company/utg-today/ (accessed on 15
November 2021).
47.
Natural Gas Storage. Available online: https://www.naftogaz.com/business/natural-gas-storage-business-unit (accessed on 25
November 2021).
48.
Zapukhliak, I.B. Development of Gas Transportation Enterprises in the Conditions of Instability of Their Operating Environment: Theory
and Practice: Monograph; Publishing House of Ivano-Frankivsk National Technical University of Oil and Gas: Ivano-Frankivsk,
Ukraine, 2016.
49.
Zapukhliak, I.B. Institutional framework for the development of domestic gas transportation enterprises. Econ. Ann.-XXI
2016
,
158, 39–42. [CrossRef]
50.
A Gas Hub for Ukraine. Available online: http://aei.pitt.edu/52449/1/JW_and__FG_A_Gas_Hub_For_UA.pdf (accessed on 5
September 2021).
51.
Gas Storage Capacities. Available online: https://erdgasspeicher.de/en/gas-storage/gas-storage-capacities/ (accessed on 5
September 2021).
52.
Underground Gas Storage Industry Outlook in Europe, North America, and Former Soviet Union (FSU) to 2025—Capacity and
Capital Expenditure Outlook with Details of All Operating and Planned Storage Sites. Available online: https://www.giiresearch.
com/report/gd1029385-underground-gas-storage-industry-outlook-europe.html (accessed on 5 September 2021).
53.
Booklet of UGS Operator in Ukraine. Official Website of Ukrtransgaz Naftogaz. Available online: https://utg.ua/utg/psg/
underground-gas-storages.html (accessed on 25 November 2021).

Energies 2022,15, 6604 34 of 34
54.
JSC “Ukrtransgaz” Is an Information Platform of the Gas Storage Operator of Ukraine. Available online: https://iplatforma-ogu.
utg.ua/start_en (accessed on 20 November 2021).
55.
Annual Report of Naftogaz of Ukraine for 2019. Available online: https://www.naftogaz.com/files/Zvity/Naftogaz_2019_UA.
pdf (accessed on 5 September 2021).
56.
“Ukrtransgaz” Will Introduce Monitoring of Gas Transactions in UGS Facilities for Banks. Available online: https://ua-energy.
org/uk/posts/operator-hazoskhovyshch-zaprovadzhuie-posluhu-monitorynhu-operatsii-z-hazom (accessed on 10 Septem-
ber 2021).
57.
Nomination/Allocation at the Cross Border Interconnection Points. Available online: https://tsoua.com/kliyentam/komerciinyi-
dyspetchyng/nominatcii-renominatcii/alokacia-na-mizhderzhavnyh-zyednannyah/ (accessed on 10 September 2021).
58.
A New Service for Seasonal Storage of Gas in Storage Facilities will Appear in Ukraine. Available online: https://ua-energy.org/
uk/posts/informatsiini-platformy-ohts-ta-psh-obiednaiut-posluhy-short-haul-ta-mytnyi-sklad (accessed on 5 September 2021).
59.
The Number of Customers of Ukrainian UGS Services Exceeded One Thousand Companies. Available online: https://utg.
ua/utg/media/news/2022/01/klkst-zamovnikv-poslug-ukranskix-psg-perevishhila-tisyachu-kompanj.html (accessed on 10
January 2022).
60.
Doroshevych, V.I. The gas transportation system of Ukraine as a component of the security of the national economy. Molod.
Vchenyi 2018,10, 325–330. Available online: http://nbuv.gov.ua/UJRN/molv_2018_10(1)__79 (accessed on 10 January 2022).
61.
Gas Balance in European Gas Storages. Available online: https://naftogaz-europe.com/article/ua/GasBalances (accessed on 12
January 2022).
62.
On Approval of the Energy Strategy of Ukraine for the Period Up to 2035 “Security, Energy Efficiency, Competitiveness”. Available
online: https://zakon.rada.gov.ua/laws/show/605-2017-%D1%80#Text (accessed on 12 January 2022).
63.
Storage. Available online: https://www.naftogaz.com/www/3/nakweb.nsf/0/C83CD1A84832AA46C2257F1D0023448E?
OpenDocument&Expand=1.3& (accessed on 10 January 2022).
64.
The Gas Storage Operator Started 2022 by Storing 13.5 Billion Cubic Meters of Gas in UGS Facilities. Available online:
https://finbalance.com.ua/news/zapasi-hazu-v-psh-na-pochatok-2022-roku-znizilisya-do-135- mlrd-kubiv (accessed on 15
February 2022).
65.
Gas Reserves in Underground Storage Facilities by the Beginning of 2022 Decreased to 13.5 Billion Cubic Meters. Available
online: https://utg.ua/utg/media/news/2022/01/operator-gazosxovishh-rozpochav-2022-rk- zbergayuchi-u-psg-135-mlrd-
kub.-m-gazu.html (accessed on 15 February 2022).
66.
EU Natural Gas. Available online: https://tradingeconomics.com/commodity/eu-natural-gas (accessed on 8 September 2022).
67.
BP. Official Website of British Petroleum. Statistical Review of World Energy—2021, 70th ed. 2021. Available online:
https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-
stats-review-2021-full-report.pdf (accessed on 10 September 2021).
68.
The Verkhovna Rada of Ukraine, Legislation of Ukraine. Available online: https://zakon.rada.gov.ua/laws/show/984_011#Text
(accessed on 6 March 2022).
69.
Natural Gas Consumption Growth between 2020 and 2050 Is Concentrated in Two Areas: Exports and Industrial Use, EIA,
U.S. Energy Information Administration. Available online: https://www.eia.gov/outlooks/aeo/production/sub- topic-03.php
(accessed on 6 May 2022).
70.
Oil and Gas Forecast to 2050, Energy Transition Outlook 2017. Available online: https://eto.dnv.com/2017/oilgas (accessed on 6
May 2022).
71.
Global Gas Demand to Rise 50% by 2050, Gas Export Group Says, S&P Global Market Intelligence. Available online:
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/global-gas-demand-to-rise-50-by-
2050-gas-export-group-says-62844254 (accessed on 6 May 2022).
72. Dutch Energy Companies to Build Offshore CO2 Storage. Available online: https://ua-electro.com/ru/gasunie-z-niderlandiv-
nakopichuye-voden-u-pidzemnij-solyanij-pecheri/ (accessed on 6 May 2022).