Embracing Investment Opportunities For A New Energy Future

Interview with Roman Abramovskyy, the Minister of Environmental Protection and Natural Resources of Ukraine

The Government of Ukraine has set an ambitious strategic goal – to achieve climate neutrality by 2060. How is the Ministry of Environmental Protection and Natural Resources of Ukraine contributing to achieving this goal?

Our intention to reduce the environmental impact is in line with the European Green Deal. We consider Ukraine as a member of the European community. Therefore, we share its aspirations, values and standards.

Our ministry acts as an engine and mouthpiece of changes in the ecosystem. This year, we have prepared proposals to reduce national greenhouse gas emissions by 65% compared with 1990 by 2030. The green course will have an impact on all economy sectors, including energy, manufacturing, transport, utilities, agriculture, forestry and waste management.

In particular, for the energy sector, there is a goal to increase power generation from renewable sources (solar and wind). Their share in power generation should grow to 17% in 2030 and up to 25% in 2035, which is provided for in the energy strategy of Ukraine. Ukraine is already one of the European leaders in the development of green energy generation and potential for further growth is far from exhausted.  

Now we are also actively discussing the huge prospects of Ukraine in the area of hydrogen production and transmission. Namely, Naftogaz of Ukraine is already planning the first pilot projects in cooperation with Germany’s RWE.

Along with the development of green capabilities, we will decommission heat generating units with expired service life and provide for the gradual abandonment of coal mines. Of course, this will be accompanied by coal regions transformation programmes.

How do you see the future of the Ukrainian gas industry in this context? Since your appointment in 2020, what changes have you initiated in the oil and gas industry?

The energy transition cannot take place in an instant, especially in such a large, industrialised country with a high level of energy consumption. We will not be able to stop using fossil fuel completely, so like the rest of the world, we consider gas as a transitional energy carrier. In the next 10-15 years, its role will remain essential. First, as a replacement for coal that is significantly more harmful to the environment, and secondly, to provide room for manoeuvre.

Ukraine is lucky to have some of the largest gas fields in Europe, however at the same time, their potential was not fully utilised, and the country was losing both hydrocarbons and money. Since my appointment in 2020, I have initiated the development of large oil and gas bearing areas, where no exploration was previously carried out. In particular, I managed to restart the large Black Sea exploration project. At the end of 2020, Naftogaz of Ukraine obtained licenses for exploration of several dozen blocks. They have great potential and can open a new chapter for Ukraine’s oil and gas industry. This is evidenced by the success of our neighbours – Romania and Turkey, which have explored significant reserves in the Black Sea.

We have also started developing large onshore oil and gas fields that were previously inaccessible to investors, including the Yuzivske field, which is unique in size and potential.

The UN climate change conference, also known as COP26, will be held in November this year. Recently Ukraine announced its commitment to move towards a zero CO2 emissions future, can you tell us more about what you are doing to encourage and to stimulate investment in Ukraine as part of its transition to clean energy?

The climate goals that we set for ourselves are ambitious and require huge resources. Therefore, over the next 10 years, Ukraine will need Euro102 billion of capital investment to finance decarbonisation projects.

Some of them will be provided by businesses. Companies should adjust their development plans to adapt to the Green Deal and decarbonisation. They need to understand that this is no longer a nice to have, but a mandatory requirement for their further sustainable development.

Part of the costs will be covered by the State. For example, by direct loans to businesses at acceptable interest rates so that businesses can introduce decarbonisation measures.

At the same time, we are very limited with our in-house resources, and I constantly emphasise this during meetings with foreign stakeholders, in particular, with the ambassadors of the G7 countries. Therefore, we count on external investment and are actively working to inform investors about the opportunities that await them in Ukraine. Compared to other European countries, the Ukrainian economy requires almost the largest investment. To attract attention of investors, we must offer almost turnkey projects with a guarantee of mutual benefit.

Today, Ukraine is improving the investment climate not with words, but with concrete actions. The State is ready not only to support, but also to act as a guarantor of complex risky projects. And I would like our international partners and investors to hear this message.

With the support of the Ministry of Environmental Protection and Natural Resources of Ukraine, the Ukrainian Gas Investment Congress will be held in Kyiv for the first time from 20-21 October. How important do you think the Congress will be in terms of demonstrating to the world Ukraine's commitment to the energy transition in the context of the climate change?

Without a doubt, it will be an outstanding event. Perhaps for the first time in many years, important issues of the energy industry and the energy transition will be considered with the involvement of the country's leaders, international stakeholders and business representatives from more than 15 countries. This will be an opportunity to look at and assess risks and opportunities from different angles and from different perspectives.

I hope that the Ukrainian Gas Investment Congress will become a platform for making important decisions, launching new projects and areas of cooperation.

Moreover, I hope that the Congress will help numerous investors and partners learn about the business opportunities that exist today in Ukraine, as well as what is being done to implement these opportunities as easily and quickly as possible.

The Ukrainian Gas Investment Congress received support from our Ministry and other government representatives. We will be happy to meet with all interested parties and will be open to discussions on topical issues.