For the construction of underground fuel storage facilities to become possible in Ukraine, a compromise must be reached between the government and the private sector regarding the streamlining of permitting procedures and the provision of affordable long-term financing.
Oleg Chikida, CEO and co-owner of the Western Fuel and Energy Company (ZTEK), expressed this view in an exclusive interview with the “Interfax-Ukraine” news agency.
“We need to bring the government and the business community to the negotiating table and find a compromise: to safeguard the country’s strategic interests and create realistic economic conditions for private companies to build up reserves. As of now, I don’t see such a compromise yet,” he said.
According to the CEO, from the government’s perspective, reserves of oil and petroleum products are clearly necessary, but the conditions for businesses to build the required storage facilities have not yet been established.
“The first problem is financial. Building reserves means that a company must effectively freeze a significant amount of working capital. For ZTEK, this could potentially amount to more than one million dollars,” Chikida noted.
As he explained, an underground storage facility with a capacity of approximately 10,000 metric tons could require an investment of 10 million dollars, and for a private company, this is a very significant amount; therefore, affordable long-term financing is necessary to implement such projects.
“Programs are being discussed through state-owned banks at an interest rate of approximately 12% per year in hryvnia for five years. This is a step in the right direction, but it will not meet the industry’s needs,” the CEO believes.
The second problem, he says, is infrastructure-related. Since a significant portion of the storage facility network was destroyed or damaged during the war, the question arises: where should this resource be stored, and who will bear the risk if the storage site becomes a target of attack again?
“Specifically, we have a site where we could build an underground storage facility. But obtaining all the permits could take about a year and a half, and the construction itself, according to our estimates, is roughly three times more expensive than an above-ground facility,” Chikida noted.
He added, however, that ZTEK is ready to invest even under such conditions.
“But if we start the permitting process in September 2026, we’ll be lucky to get the documents in 2027, and construction won’t be completed until 2028. How will market demand change by then, and how will we recoup these investments?” the CEO asked.
As previously reported, Ukraine is set to launch a pilot project for the underground storage of petroleum products from the minimum reserves of oil and petroleum products (MZNN) starting in early 2027, in accordance with Cabinet of Ministers Resolution No. 1037 dated August 13, 2026.
The full text of the interview with Oleg Chikida, CEO and co-owner of ZTEK, will be published on the websites of the agency “Interfax-Ukraine” and its energy project “Energoreforma.”
