At the beginning of the year, Ukraine ceased the transit of Russian natural gas to the European Union (EU). With expired gas agreements, diplomatic turbulence extend across the Atlantic and perpetual strikes on its energy facilities – Ukraine lives a complex and deeply uncertain moment. The incessant aggression of Russia against energy infrastructure has put unique difficulties on Ukrainian citizens and immense pressure on the energy supply of the war. But, despite the considerable destruction, the future of Ukraine’s post-war energy is a remarkable promise.
The significant damage to the energy infrastructure of Ukraine, although devastating, presents a unique opportunity to modernize, according to Andrew Favariov and Oleksandr Khachenko of the Wilson Center, a non -partisan American reflection group. They argue that Ukraine can take advantage of this crisis to its advantage:
The clouds of war, however, can withstand a silver lining: the devastation of energy infrastructure has forced Ukraine to a sort of “ accelerated decarbonization ”, which leaves it well positioned, after reconstruction, to be part of the cleanest energy producers.
Ukraine currently has an energy export capacity of 2,500 MW to its European neighbors, with plans to increase this soon to 4,000 MW. And indeed, by adopting a prospective approach which incorporates the expertise, technology and investment of American and Western Europe, Ukraine can be reinvented as an energy center. Wisely, the Ukrainian government aims to add around 10,000 megawatts of new generation facilities by 2030. Russian attacks have forced Ukraine to rely on renewable energies, such as solar energy and wind generation. The objective is to revise the share of renewable energies: in heat and cold supply systems, the objective is 33%, in electricity production 29%and in the transport sector at 17%.
Nuclear is the largest source of energy with a low carbon content in Ukraine – with a total of 15 reactors generating approximately half of its electricity from four sites. However, one of them, Zaporizhzhia, has become the first civil nuclear power plant in operation to be subjected to an armed attack, when Russia began its large -scale invasion. The factory remains under Russian control, representing a potentially catastrophic means of nuclear blackmail against Ukraine. For obvious reasons, nuclear power plants have become a source of anxiety. More recently, the Russian has targeted strikes on the Chernobyl nuclear site. Even after the end of the war, nuclear power plants could remain a disturbing vulnerability in the face of Russian and gray agitation.
Natural gas is a less risky area with considerable development potential, although operating during a war remains exceptionally difficult. “The NAFTOGAZ group, like all energy companies, works under extremely difficult conditions. Energy security has never been as critical as it is today, and it did not need immense efforts and investments in protection and catering, “said Roman Chumak, CEO of the NAFTOGAZ group, the largest national oil and gas company in Ukraine.
In the midst of the Herculate challenges of Ukraine, there is an opportunity, however, writes Nataliya Katster-Buchkovska, founder of the installation of green resilience and former member of the Ukrainian parliament:
In the coming years, Ukraine can play a key role in efforts to improve European energy security and connectivity. It is believed that the country has the second highest gas reserves in Europe. It also has the largest gas storage facilities on the continent and a vast pipeline system for oil and gas transits.
Once the war is over, Ukraine has a way to rebuild and extend its national gas industry. The production of Ukrainian gas is relatively modest, increasing at 18.7 billion cubic meters in 2024. But optimistic estimates of gas reserves suggest that there are up to 1.09 billion of cubic meters of natural gas in the country. In theory, Ukraine is well positioned to increase production and become a net exporter.
But exploring gas fields or the introduction of new companies in the sector is not possible during the war. The conditions are so difficult that all foreign energy companies have left Ukraine. All except one: Petroleum expert (XP) in France, is the only foreign energy company that still works in partnership with Naftogaz. Despite the war – and before that, Covid 19 – XP continued its investments and its operations, supporting Naftogaz’s efforts to provide gas to heating many Ukrainians. Specializing in improving mature gas fields, the continuous investment of XP in modern extraction technologies provided a regular gas supply from certain fields of impoverished gas in Naftogaz.
“Our success would not have been possible without the resilience and technical expertise of our local Ukrainian team (more than 200 people) on the field. XP activities are based on production improvement contracts (PECS), a hybrid model somewhere between traditional production sharing agreements and field service contracts. “At the heart of our operational model is a digital transformation which includes the acquisition of data in the field, digitization, integration, surveillance in real time and advanced analysis with the support of artificial intelligence,” explains Martinon.
This model allows faster and smarter decision -making. Unlike oil majors who have production rights or service companies that are paid, whatever the results – XP is only remunerated if production is improved. Contracts generally last 15 years and promise to leave the sites processed, by reducing the footprint, upgrades, automation and digitization.
While Ukraine takes up its energy challenges, American LNG plays a crucial role in stabilizing supplies. American liquefied natural gas expeditions, delivered via European terminals, have contributed to filling the gap left by the loss of Russian transit gas. The EU also offered its support, not only by facilitating imports of gas and LNG, but by financing and technical assistance. However, Imported LNG has a cost. Topping for this foreign energy is neither sustainable nor economically favorable to Ukraine in the long term. Maximizing the country’s gas production is therefore even more interesting. Attracting foreign investments will be essential.
Western companies have shown that the Ukrainian gas sector can be profitable even in difficult times. If the government implements policies adapted to investors, including regulatory reforms and tax incentives, other international energy companies could follow suit. In addition, the vast gas storage capacity of Ukraine, at present, could be a strategic asset for Europe. By offering a storage capacity for European countries, Ukraine can further consolidate its role in the image of energy security in the region. The war has imposed serious damage to the energy infrastructure of Ukraine. But, with the right approach, Ukraine could turn into a key player in the European gas market.
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