Ukraine's Naftogaz says military successes can help restore output

KYIV (Reuters) -Gas production by Ukraine's state energy firm Naftogaz fell by 2% in January-August due to the Russian invasion, but its CEO Yuriy Vitrenko said on Tuesday he hoped to restore production thanks to the recent military successes of the Ukrainian army.

Naftogaz produces the lion's share of Ukrainian gas, with output of 13.7 billion cubic meters (bcm) in 2021. Most of the gas deposits are located in the Poltava and Kharkiv regions, which have almost been liberated by recent counteroffensive measures.

"We continue to extract gas even in those regions where hostilities are taking place. We will increase production in the west of the country," Yuriy Vitrenko told a televised briefing.

"We understand how important it is for Ukraine to have more gas, especially gas from its own production."

Ukraine has not purchased Russian gas since 2015 and now imports gas from European countries. Industry experts say Ukraine will need to import up to 3.5 bcm for the 2022/23 heating season, or 0.5 bcm per month.

The government has said Ukraine has accumulated 13 bcm of gas in storage as of early September compared with around 19 bcm in 2021.

Russia's recent missile attacks on Ukrainian energy facilities, the capture of Europe's largest Zaporizhzhia nuclear power plant and the possible cessation of gas transit have prompted Ukrainian officials to expect the most difficult winter in Ukrainian modern history.

Ukraine has already banned exports of gas, coal and fuel oil.

"I appeal to Ukrainians to save gas and energy as much as possible. We must understand that the less we spend gas, the less we lose it, the more money the state has left to send it to the front," Vitrenko said.

The government does not disclose its estimates of domestic gas consumption in 2022, while energy minister German Galushchenko told Reuters last month gas consumption had fallen 40% compared with peacetime levels.

Russia calls its actions in Ukraine a "special military operation."

Vitrenko gave no 2022 gas production forecast, but said the total gas deposits of Ukraine are around 994 bcm.

Vitrenko told Reuters this month that Naftogaz was working to boost natural gas production, and could supply gas to European countries in time for next year's heating season.

He said the company was converting gas-fired power plants to use wood and other biomass materials, which would boost Ukraine's resilience and make the centralised Soviet-era distribution system less vulnerable to disruptions.

(Reporting by Pavel Polityuk, editing by Ed Osmond and Bernadette Baum)