Ukraine Must Seize the Global Gas Boom

Global natural gas prices have reached record heights, and forecasts indicate that they could rise even further due to Iranian military bombings of a liquefied natural gas (LNG) plant in Qatar. While this is unfortunate news, it presents a significant opportunity for Ukraine that should not be overlooked.

Ukraine possesses the second-largest natural gas reserves in Europe. Norway holds commercially viable traditional reserves of 2 trillion cubic meters (m³), while Ukraine has 1.1 trillion m³. In 2024, Norway produced 124 billion m³, whereas Ukraine has been producing a surprisingly low amount of around 20 m³ annually since 1993. If Ukraine were to utilize its known traditional gas reserves as effectively as Norway, it could potentially produce about 70 m³ per year.

Historically, Ukraine once produced gas as efficiently as Norway. In 1975, its gas extraction peaked at 69 m³, but then Soviet authorities decided to concentrate gas production in newly established fields in Western Siberia.

For decades, I have been involved in numerous projects that asserted Ukraine could, with minimal investment, increase its annual gas production from 20 m³ to at least 30 m³ within five years, yet this has never materialized. The explanation lies in the state monopoly of Naftogaz and poorly designed state regulations. None of these issues are insurmountable, and they must now be addressed. Ukraine can no longer afford such inefficient management.

It is easy to envision the potential success. First, the Naftogaz monopoly, which controls about 80 percent of total gas production, must be dismantled. Second, the private sector, which is currently entirely owned by a few large Ukrainian businessmen, needs to expand to include major foreign companies. Chevron, Shell, and Vitol have already attempted to make significant investments in Ukraine but have been hindered by numerous bureaucratic obstacles and a lack of transparency in regulations.

Changes in Ukraine's gas policy could serve as a catalyst for the recovery of the country's economy, which has faced tough times due to war and economic hardships. Increasing domestic gas production would not only reduce Ukraine's dependence on imports but also create new jobs, attract investments, and support infrastructure development. Ukraine urgently needs to take action to capitalize on this unique opportunity; otherwise, it risks being left on the sidelines of the global gas boom.