Facing major disruptions, the Ukrainian energy sector remains vulnerable yet vital for Ukraine’s pursuit of independence. The Government of Ukraine is actively working to enhance the production and output of electricity, oil, and natural gas, even amid the challenges of the full-scale invasion. Russian attacks remain the main threat. They are likely to continue over the coming months, particularly on gas infrastructure: production, distribution, and underground storage facilities. For the three quarters of 2025, Ukraine produced 11.6 billion cubic meters (bcm) of natural gas, which is 7% less than in corresponding period of 2024. According to the pre-existing Energy Strategy of Ukraine until 2050 and the National Energy and Climate Plan until 2030, Ukraine must abandon coal generation by 2035 and develop its energy mix on nuclear, gas generation, and renewable energy sources. This means designing, in the short term, a set of technologies based on nuclear, renewables, and gas generation, which will create the basis of the country’s future energy mix. The gas sector stands as a potential cornerstone for Ukraine’s postwar economic recovery.

Oil and Gas Production

Ukraine boasts significant yet largely untapped reserves of unconventional oil and gas, with approximately 900 billion cubic meters of proven natural gas reserves (second in Europe).  The country’s hydrocarbon resources are concentrated in three main regions: the Dnipro-Donetsk basin, the Carpathian region in western Ukraine, and the Black Sea and Crimea region in the south.  The Dnipro-Donetsk basin, accounting for 90% of Ukraine’s current production, is a major oil and gas-producing area.  The composition of Ukraine’s hydrocarbon production is predominantly natural gas (89%), followed by oil (7.9%) and gas condensate (3.1%), with the most valuable gas reserves located deeper than 5,000 meters.

State-owned companies, especially PJSC Ukrgasvydobuvannya (UGV), a Naftogaz Group subsidiary, and PJSC Ukrnafta, lead in gas production, contributing 74% and 6%, respectively, while six major Ukrainian private companies produce the remaining 20%. 

Challenges and Opportunities

The war has resulted in supply chain disruptions, damaged production facilities, and emergency regulations such as currency control restrictions and limitations on foreign currency repatriation. Opportunities are emerging, however, for state-owned companies in exploration and production (E&P) services with planned procurements for 2025-2026, reflecting the approved procurement plans of major state oil and gas production companies:

• Drilling Equipment: Drilling bits – $7.6 million
• Perforation systems – $10.3 million
• Chemical products – $10.3 million
• Well repair services – $17 million
• Well drilling services – $11 million
• Well cementing services – $11 million
• Well repair services with coiled tubing equipment – $14.8 million
• Gas compressors - $24 million  
   

Gas Storage Facilities

Ukraine, using only 13 bcm of its 30 bcm storage capacity, spread across 11 to 12 facilities, offers ample opportunity for cooperation. Ukraine is number one in underground gas storages (UGS) within Europe. These 12 gas facilities have the ability to store gas for both domestic and international use. The largest facility is the Bilche-Volitsko-Uherske UGS, which alone holds more than 17 bcm. Most Ukrainian UGS facilities are built on depleted gas fields, with about 80% of the total capacity concentrated near Ukraine’s western border, making them a valuable resource for European energy security.  In 2025, European gas traders significantly reduced their use of Ukrainian gas storage facilities to 2 bcm, after Russian attacks damaged energy infrastructure, including storage pumping stations, increasing the risk and diminishing the profit incentive for storing gas in a war zone.

Civil Nuclear

As Ukraine grapples with the devastating effects of Russia’s invasion, including significant damage to and partial occupation of its energy infrastructure, the power generation and civil nuclear sectors emerge as critical areas with substantial opportunities for U.S. equipment suppliers.

Throughout the war, Ukraine’s energy infrastructure faced, and continues to face massive attacks, resulting in damage or occupation to half of the country’s power system.  In June 2023, the Kakhovskaya Hydro Power Plant was destroyed by Russian forces, a devastating blow with dual ramifications: the direct costs for reconstruction are estimated at $1 billion, and it triggered a massive ecological catastrophe that compromised the safety of the Zaporizhzhia Nuclear Power Plant (ZNPP), Europe’s largest nuclear plant, to the north. The ZNPP experienced eight power outages throughout the year, highlighting the fragility of Ukraine’s energy infrastructure. Consequently, the country faces a 51% decrease in its power generation capacity and a 31% reduction in electricity consumption.

Ukraine’s civil nuclear sector comprises 15 nuclear reactors across four facilities with a cumulative installed capacity of 14,148 MW. Despite the occupation of ZNPP, State Enterprise NAEK Energoatom, responsible for the nation’s nuclear power, has managed to ensure more than half of the country’s electricity supply in 2025.
A key achievement in 2024-2025 was the collaboration between Energoatom and American company Westinghouse to produce and load locally developed nuclear fuel into VVER-440 reactors.  This advance not only serves Ukraine but is also applicable to similar reactors within the EU.  Furthering this collaboration, a $437.5 million agreement was signed for acquiring equipment for the Khmelnytsky NPP’s Unit No. 5, employing advanced AR1000 technology to enhance safety mechanisms against power outages.

Opportunities

Life extension and upgrades to nuclear facilities represent vital areas of focus.  Energoatom secured a 10-year operational license extension for the South Ukraine NPP’s Unit 1 in November 2023, following a similar extension for Khmelnitskiy Unit 1 through December 2028.  These extensions were supported by intensive upgrades undertaken between 2018 and 2019.

Nuclear waste management is another critical area.  With the transition from shipping spent fuel to Russia – a practice costing Energoatom $200 million annually – to utilizing a centralized dry storage facility in the Chernobyl Exclusion Zone, Ukraine embraces more sustainable and secure nuclear waste management practices.