Ukraine plots fracking revolution

Yahoo

2 days ago

Ukraine is working to unleash natural gas fracking with the goal of becoming a major exporter and revolutionising Europe's energy market.
In plans critical to Volodymyr Zelensky's hopes of a post-war economic recovery, ministers in Kyiv are scrambling to lure private investment and gain access to new drilling technology to access the country's vast untapped shale gas resources.
According to sources close to Kyiv, officials are racing to attract 'foreign technology and highly experienced subsoil users', with a focus on unconventional shale resources in western Ukraine.
The hunt for cash - as revealed by the independent news platform Energy Flux - is being conducted in parallel to the rare earth minerals deal struck between Donald Trump and President Zelensky in April, which will allow the US to exploit Ukraine's natural resources, including aluminium, graphite, oil and natural gas.
The priority is to rapidly revitalise Ukraine's ailing gas sector after a gruelling winter saw roughly 40pc of production capacity taken out by a fierce Russian campaign of drone and missile strikes.
The attacks forced Ukraine to draw heavily on its gas stocks, which ended winter almost entirely depleted.
But Ukraine's Ministry of Energy believes it is possible to refill the country's cavernous underground storage facilities and even produce a surplus for export 'within 18 months', according to a senior government source.
Ukraine already has some experience with advanced drilling technology for old wells and has since carried out experimental trials that 'confirm its potential' for fracking, they said.
However, to unlock Ukraine's shale reserves, the country needs to attract more investment and newer kit, primarily from America.
'Development and production can be quickly developed using available gas infrastructure with connections to the EU gas market that make it very attractive,' the source added.
'Ukraine has enough deposits of traditional gas to cover its own consumption and to become a net exporter, and shale gas production has quite a profound effect on its development.'
Such a turnaround would help transform the fortunes of Europe's energy markets, which remain on edge following the loss of Russian pipeline gas exports via Ukraine at the start of 2025.
Refilling Ukraine's depleted gas storage – the largest in Europe, at 32bn cubic metres – is one of the main factors tightening energy markets in Central and Eastern Europe ahead of next winter.
Ukraine's gas stocks are today just 7pc full compared to the EU average of 50pc.
Efforts to pipe natural gas from Southern and Eastern Europe into Ukraine have also been thwarted by red tape and a lack of market cohesion.
However, if Ukraine could unleash its own shale revolution and create a surplus for export, the need to keep pumping European gas into Ukraine would effectively disappear overnight.
It would also help reduce Europe's reliance on costly liquefied natural gas (LNG) supplies from overseas.
Gas-starved Europe leaned heavily on LNG after Gazprom, the Kremlin-backed energy giant, halted exports to the EU following Vladimir Putin's full-scale invasion of Ukraine in 2022.
Ukrainian shale gas exports, if scaled up quickly, would erase a large chunk of European energy demand currently being met by LNG, potentially sparking a sharp drop in energy prices around the world.
However, Kyiv's proposed fracking revolution hinges largely on the country's ability to secure overseas investment.
Officials from Ukraine's Ministry of Energy are tapping Western diplomatic ties to find private capital funds with a high tolerance for risk to bankroll drilling and bring in technology partners.
A senior government team attended the Baku Energy Forum in Azerbaijan last week in part to promote Ukraine's potential as a shale hub.
Speaking at the event, one high-ranking statesman said the Lviv-Lublin geological area that straddles the Ukraine-Poland border is 'superior on the Ukrainian side' thanks to higher porosity and lower clay content, making it 'better for fracking'.
The most promising prospect is the Oleska (Olesskaya) shale block, which contains an estimated 0.8 to 1.5 trillion cubic metres of shale gas resources – enough to meet Ukraine's domestic needs for decades.
How much of this resource is economically recoverable is an open question. Chevron walked away from a 50pc interest in the Oleska project in 2014 before drilling could begin.
Chevron's stated reason for leaving was not because of political instability or lack of resources, but rather Kyiv's failure to enact specific tax reforms necessary to enable shale gas foreign investment.
Now, the Zelensky administration is moving to streamline operations and reduce bureaucratic hurdles that previously deterred foreign investors.
Ownership of the Olesskaya production sharing agreement (PSA) was transferred in April 2025 from government holding company Nadra Ukraine to Ukraine's largest oil and gas producer, Ukrnafta.
The move signalled a strategic shift in the country's approach to fracking, particularly in the Oleska block.
Ukrnafta is a state-owned enterprise following the nationalisation of strategic industries and declaration of martial law in 2022, which remains in force to this day.
Attracting significant private capital into Ukrainian shale exploration would normally be impossible under these circumstances.
However, the source said there are laws in place to ensure they can be overwritten.