01.05.2026
On 9 June 2026, Energy Club will hold the Europe-Ukraine Energy Trading Forum 2026: Recovery, Market Coupling & New Trading Frontiers in Budapest. One of the key discussions of the forum will be the panel Gas, Storage, Biomethane, and Regulatory Signals: A New Regional Energy Logic, moderated by Dr. Aura Sabadus, Senior Journalist at ICIS.
Ahead of the forum, we spoke with Dr. Sabadus about Ukraine’s changing role after the end of Russian gas transit, whether Ukrainian underground gas storage can become a stable commercial asset for European traders, which regulatory barriers still hold the market back, and what is needed for Ukraine to realise its potential in biomethane, gas logistics and regional energy security.
Dr. Sabadus, you have been covering European gas markets, Ukraine and the Black Sea region for many years. How would you describe the current moment for Ukraine’s role in the European energy landscape?
With the end of Russian gas transit, Ukraine has shifted from its historical role as the main corridor for Russian supplies to a new function as a guarantor of security of supply, leveraging its extensive underground gas storage capacity to support regional market stability and flexibility.
This shift is becoming increasingly evident as companies diversify away from Russian gas, replacing it with alternative sources such as North Sea and Black Sea production, as well as LNG imports via coastal markets. In this new landscape, the lack of liquid trading hubs across central and eastern Europe forces many market participants to transport gas over long distances, often incurring high transmission costs.
Against this backdrop, Ukraine’s strategic location at the centre of an increasingly interconnected gas market spanning the Baltic, Black and Adriatic Seas offers a key advantage. Its large storage capacity enables companies to store gas efficiently and use these facilities to optimise flows across borders at short notice, helping to balance portfolios and manage price and supply risks more effectively.
This role will become more obvious in the years to come once the war ends and Ukraine’s reconstruction efforts get in full swing.
After the end of Russian gas transit through Ukraine, how has the regional gas logic in Central and Eastern Europe changed in practice?
The end of Russian gas transit has likely been one of the most positive developments for central and eastern Europe in recent years. As those flows have declined, infrastructure operators across the region have begun to compete more actively for customers, offering increasingly attractive commercial terms.
At the same time, multiple supply corridors are emerging from different directions — Germany, Denmark, Poland and the Baltic states in the north and west, and Italy, Croatia, Greece and potentially Turkey in the south and southeast. This growing diversity of routes is reshaping regional gas dynamics.
Countries are no longer operating in isolation but are instead working more closely with their neighbours to streamline cross-border flows and reduce transmission costs. This shift is already delivering benefits for consumers, as greater competition drives both supply diversity and downward pressure on prices. It is also supporting the broader European objective of deeper market integration and stronger cooperation, not only among EU member states, but also with neighbouring and aspiring members such as Ukraine and Moldova.
Do you see Ukraine’s gas transmission system and underground gas storage facilities becoming a stable commercial asset for European traders, or is the market still too cautious because of security and infrastructure risks?
Ukraine’s gas storage operator has made significant efforts to develop a broad range of market-friendly services, despite the extremely challenging conditions the country has faced in recent years. However, utilisation of its storage capacity is shaped not only by domestic factors, but also by external market dynamics.
This has been clearly illustrated by seasonal pricing trends. In years when summer–winter spreads were sufficiently wide, market participants were willing to absorb the security risks associated with the war and inject gas into Ukrainian storage, attracted by the potential commercial upside. By contrast, over the past two years, narrower spreads have failed to provide adequate margins, leading many companies to abstain from using these facilities.
Looking ahead, a return to more typical global gas market conditions — with stronger seasonal price signals — could significantly enhance the attractiveness of Ukraine’s storage offering. In such an environment, its large, flexible storage capacity stands out as a valuable asset for market participants seeking optimisation opportunities across an increasingly interconnected European gas system.
What are the key conditions needed to restore and strengthen trust in Ukrainian underground gas storage among European companies? Is it mainly about security, insurance, regulation, contractual guarantees, or market liquidity?
Let’s be clear: the main constraint on interest in Ukraine’s gas market is not its storage offering, but the continued regulation of the sector. Household tariffs — which account for more than a third of total gas demand — have remained unchanged since 2021 and are now roughly four times lower than prevailing market prices. This creates a substantial financial burden for Naftogaz at a time when the company is already facing extraordinary challenges, including ensuring security of supply, repairing damaged infrastructure and supporting consumers. Such a model is clearly unsustainable.
It’s understandable that, under martial law, the war has disrupted and delayed Ukraine’s earlier efforts to liberalise its gas market. Nevertheless, policymakers need to recognise that the current framework must evolve. The government should move from broad, universal subsidies to targeted support aimed specifically at the most vulnerable consumers. At the same time, it must ensure full payment discipline — it is not viable to allow continued consumption in the absence of payment.
From a market perspective, additional reforms are also necessary to unlock Ukraine’s full potential. These include reconsidering the application of value-added tax on gas and electricity trades and the administrative burdens it creates — such as requirements for foreign companies to establish a local presence — as well as reducing Naftogaz’s dominant position in the retail segment to foster greater competition.
Ukraine has demonstrated remarkable agility across many sectors, successfully streamlining, digitising and innovating under extreme pressure. There is strong reason to believe it can achieve similar progress in its energy markets. However, timely action will be critical, as failure to reform risks exacerbating financial strains and creating longer-term challenges for security of supply.
From your perspective, what are the most important legal, contractual and regulatory barriers that still limit broader participation of European companies in Ukraine’s gas market?
As noted, the combination of frozen tariffs, weak payment discipline and a burdensome VAT regime continues to deter market entry, with many companies unwilling to take on additional war-related risks under such conditions.
Yet the market’s underlying potential remains significant. Ukraine boasts substantial gas reserves, well-developed infrastructure and a skilled workforce committed to advancing the country’s integration into the EU.
Even in the current wartime environment, it is crucial for policymakers to recognise that meaningful progress is still possible. By removing at least some of the structural barriers holding the market back, they can unlock investment, strengthen resilience and lay the groundwork for a more competitive and sustainable gas sector.
Ukraine is increasingly discussed as a potential biomethane supplier to the EU. What needs to happen for Ukraine to move from individual export cases to a systemic biomethane export market?
Ukraine’s biomethane potential is among the largest in Europe, and it’s encouraging to see concrete steps being taken to scale up production and exports. However, the barriers to faster growth lie both within Ukraine and at the EU level.
Domestically, the main challenges stem from regulatory uncertainty and broader market distortions. As noted earlier, regulated pricing, burdensome taxation and weak payment discipline undermine investor confidence and complicate long-term planning. In addition, there are still technical bottlenecks, particularly around grid connection rules, metering standards and the practical integration of biomethane into the existing gas system.
Beyond Ukraine, challenges also exist in relation to certification and market access. While progress has been made on guarantees of origin, full interoperability with EU systems is not yet seamless. This is not solely Ukraine’s responsibility but it still affects the bankability of projects aimed at export markets. More broadly, the absence of fully harmonised rules for cross-border biomethane trade continues to slow the development of a liquid and transparent market.
How important is REMIT implementation and market monitoring for Ukraine’s credibility as part of the European energy market?
Transparency is fundamental to well-functioning markets and to building trust among participants. In Ukraine’s case, the war creates a high-risk environment that already discourages investor participation. Strengthening transparency, preventing market abuse and deploying robust monitoring frameworks through REMIT implementation can help mitigate some of these risks.
By aligning with these standards, Ukraine can enhance confidence among market participants, support the development of cross-border trade and liquidity, and accelerate its integration into the European energy market.
In your view, what should European traders and investors understand about Ukraine today that is often missing from the public debate?
War continues to distort perceptions of risk, creating a narrative that discourages many investors from engaging with Ukraine. Yet the reality on the ground is far more nuanced.
Despite the extreme challenges since the start of the war, Ukraine’s energy sector has remained operational, even during its most difficult moments. Market participants have adapted with remarkable resilience, maintaining trading and operational activities under extraordinary conditions. Life and business have not stopped. On the contrary, Ukraine has demonstrated an ability not only to keep pace with European developments, but in some areas, such as the rapid advancement of its biomethane sector, to move ahead of several EU member states.
In this context, it’s increasingly clear that some of the most material risks are not purely physical or war-related, but also institutional — linked to regulation, governance and policy predictability.
This is not to downplay the reality or severity of the war, but rather to recognise that Ukraine cannot be viewed in simplistic, black-and-white terms. As is often the case, the reality is more complex: a high-risk environment, certainly, but also one characterised by adaptability, creativity and significant untapped potential.
The forum will bring together traders, investors, infrastructure companies, regulators and market experts. What kind of discussion would you like to see during the gas panel in Budapest?
I’d like to see a candid and solutions-oriented discussion that tackles the structural issues still holding back Ukraine and the wider region’s gas markets.
What is still preventing countries in central and eastern Europe from developing fully functional, liquid markets? How can existing infrastructure be better optimised to provide access to a diverse range of supply sources at competitive and transparent tariffs?
Another key theme should be regulatory harmonisation. If the region is serious about integration, then aligning rules, standards and market practices is essential to creating truly seamless trading areas.
I would also welcome a frank discussion on the future role of Russian gas in the region. While many companies emphasise their diversification efforts, significant volumes continue to enter the EU — both as LNG and via pipelines, in some cases rebranded or routed through intermediaries.
Do market participants genuinely expect a full phase-out by 2027, particularly in light of ongoing global uncertainties such as the Strait of Hormuz risks? Russia has historically combined cheap gas with targeted incentives to maintain its foothold in European markets, even as the geopolitical and ethical implications of these flows have become increasingly clear.
Will these practices finally stop, or are they likely to persist in new forms? And if so, what does this mean for investment decisions, infrastructure utilisation and, ultimately, the credibility of Europe’s diversification strategy?
Finally, it’s important to be honest about facts. Many of the remaining barriers to regional market integration are not purely technical or commercial, they are political. This raises an important question: what role can market participants, infrastructure operators and experts play in helping to overcome these obstacles? Do they have a voice at all?
Looking ahead to 2026–2030, what could be Ukraine’s most realistic and valuable role in the regional gas and energy market: storage hub, transit and logistics corridor, biomethane exporter, flexibility provider, or a combination of these roles?
All of the above. Ukraine has the capacity, flexibility and strategic positioning to take on these roles. What remains insufficient, but can and should be strengthened, is an environment of credibility.
A key starting point is to ensure strong corporate governance and robust safeguards against government interference in institutions that are meant to operate independently. This includes transparent decision-making, clear accountability, and adherence to internationally recognised governance standards.
Ukrainian policymakers need to recognise that corporate governance is not a secondary consideration or a “nice to have,” but a fundamental prerequisite for functioning markets. Without it, investor confidence will remain fragile and the country’s full market potential will be difficult to realise, even where the underlying fundamentals are strong.
