Ukraine LNG Newcomer Aims to Boost Supplies as Transit Deal Ends

(Bloomberg) -- DTEK, Ukraine’s largest private energy company, plans to bring two to three liquefied natural gas cargoes a month into Europe as it ramps up its new trading business.

The firm’s D.Trading unit last week bought its first LNG cargo for Ukraine, delivering US fuel into an import terminal in Greece. It will gradually increase deliveries, primarily targeting American supplies, according to Chief Executive Officer Dmytro Sakharuk.

The new player is coming into the LNG market just as Europe prepares for a halt in pipeline-gas deliveries from Russia crossing Ukraine. A transit deal between the two warring nations is about to expire, with little prospect for a renewal.

“We believe it’s symbolic because it came in December, just a day or two before the termination of transit, which is very important for Europe, for Ukraine,” Sakharuk said in an interview. “The most important thing is to continue bringing gas into Europe. We have this route, and this is exactly what we are going to do in 2025 and later.”

To avoid high transportation costs, D.Trading doesn’t physically bring LNG to Ukraine, which doesn’t have an import terminal. It will use terminals in Europe to bring in LNG and sell it to partners in Greece, Bulgaria or Hungary. The firm will then use swaps to physically inject gas into Ukraine from the European gas system, he said.

“If you have positions in storages in Greece, Bulgaria, Hungary, Ukraine, you can do those swaps,” he said in an interview. “We have consumption in Ukraine, we have consumers in Europe that we may service.”

D.Trading plans to concentrate on Europe in the next two to three years, focusing particularly on steady supply of LNG from the US to Ukraine. Longer term, it has the ambition to trade LNG globally, too, he said. 

The firm hired James O’Brien to lead LNG trading and is looking to make more hires.

“Without LNG in the portfolio, you could not be a real player on the gas market in Europe anymore,” he said. “That’s why we started this business half a year ago.”

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