In your new role as CEO of Naftogaz of Ukraine, what are your immediate main priorities for the company in the coming 6 months?
In the coming 6 months, our main priority is to ensure uninterruptable gas supplies or basically security of supply during the upcoming heating season. And it’s a challenge, especially given that we don’t know what will happen to Nord Stream 2. We see some other challenges in the electricity sector too. So, the security of supply is our first priority.
The second priority would be to ensure that the corporate governance reform is back on track. We have an open, competitive procedure to select the new supervisory board of Naftogaz. It’s essential to gain the trust of all the stakeholders, including Ukrainian people. And then finally, we will bring the operations back on track in terms of increasing efficiency, for example, in gas production because unfortunately due to the last couple of years, we can see decreasing gas production.
It’s the opposite of the national agenda because we believe that Ukraine has a potential that needs to be realised. That’s why we are, on the one hand attracting foreign investors and international companies to come to Ukraine and to invest in gas production jointly with us, or on their own. Of course, as Naftogaz, we are here to support the development of the upstream sector of Ukraine.
Where do you see opportunity for international companies looking at potential investments and partnerships with Naftogaz of Ukraine?
We see a lot of greenfield opportunities, so it’s offshore and onshore. We do believe again that gas production can be increased in Ukraine. Historically Ukraine produced a lot of gas and oil, and with today’s new innovative technologies, companies operating in Ukraine can get access to new reservoirs or just increase production from existing wells.
We also see some great potential in biogas production. Ukraine is the biggest country in Europe by territory, so we have a lot of potential for agricultural production that can be used basically like some waste can be used for biogas production. Also, we see a possibility to produce gas out of wood sawdust, from our forestry business. From that perspective, again, we believe that biogas can be a big thing for Ukraine.
The third priority or the third area with some excellent potential is hydrogen production in Ukraine, including green hydrogen. For example, recently, we started working with one of the largest German energy companies, RWE on green hydrogen and hydrogen economy in general. We agreed to cooperate in exploring commercial opportunities for the sale of Ukrainian green hydrogen in European markets, focusing on the main markets of RWE.
Here we also see a potential to cooperate with other companies because Ukraine has significant potential for hydrogen economy development. Besides, we are also looking for partnerships, and we are ready to facilitate any foreign investments in other sectors where we have already been developing some successful partnerships. For example, in product enhancement contracts in the upstream sector as well as in heating or other sectors. From our side, Naftogaz, as a national company of Ukraine, is here to support international investments in Ukraine and create a transparent platform for successful partnerships to mutually prosper
What’s your outlook for Ukraine’s upstream gas activities in the medium-term?
I believe that currently, the climate is very favourable for investors to come to Ukraine, both in the upstream and other parts of the gas value chain. As Naftogaz of Ukraine, we will make this process as efficient and easy as possible for potential partners and potential investors.
So, that is why we believe that we will see significant gas production growth in the next, let's say 3 to 5 years. If we look at the longer term, we will see green transition taking place in Ukraine. Probably that would be the faster path than we see in other parts of Europe and globally.
The Ukrainian government has defined ambitious strategic targets to increase its domestic natural gas production by 50%, to halt natural gas imports by 2030 and to achieve net zero carbon emissions by 2040. How significant is this to the company’s long-term strategic and financial growth?
As a national company, it’s our job basically to make it happen. So, we need to grow production ourselves; we need to facilitate production growth in Ukraine in general.
We will also facilitate increasing energy efficiency so that we don’t waste energy. Then we will encourage the transition from natural gas to biogas with, for example, the heating sector across the country. That is why we believe that we must be very serious about the targets and the roadmap to get there, and we are very serious about them, and there are some practical steps that we are taking as we speak in this respect.
With Ukraine’s vast gas transmission and distribution pipelines and close geographical location, it’s been noted that Ukraine could be a possible supplier and transporter of renewable hydrogen as part of the EU’s Hydrogen Strategy. What are the immediate next steps and priority areas for Ukraine to realise this vision?
Recently, we have signed an MoU with German company RWE to focus on green hydrogen. And the first step will be the production of green ammonia. But it’s just one of the options. We are also looking at other options. In particular, we are considering producing green hydrogen from solar energy and wind energy, this is a great fit as Naftogaz is already active in solar and wind production. Also, together with Ukraine’s Gas transmission system operator, we are looking at the opportunities to export green hydrogen via existing pipelines. It’s one of the options, at least.
This October is the dateline for the first Ukraine Gas Investment Congress taking place from 20-22 in Kyiv. In your opinion, how important is the Congress going to be terms of in exploring strategic and technical business opportunities and fostering partnerships
We believe the Congress will be rather important because we will show that Ukraine is open for investments, even if historically people believed Ukraine was not a very welcoming place for investments in the gas sector and the gas production particularly, now we are demonstrating that we are really open.
As Naftogaz we are committed to helping investors in Ukraine. That is our role as a national company to foster such investments. And this Congress is the perfect platform and opportunity for us to tell the whole world about that and to show that Ukraine is indeed open for business.