14.07.2026
A new chapter is unfolding for the European gas market. Alongside issues of energy security, the phasing out of Russian gas, and Ukraine’s integration into the European energy landscape, regulatory compliance, origin transparency, and digital data verification are taking on ever-greater importance. The future of cross-border gas trade, the utilization of Ukraine’s underground storage facilities, and our country’s role in Europe’s new energy architecture will ultimately depend on how the EU and Ukraine address these challenges.
Aura Sabadus, Senior Journalist at ICIS – one of the world’s leading providers of news, analytics, and market data for energy and commodity markets – and a Non-resident Senior Fellow at the Center for European Policy Analysis (CEPA), sat down with Energy Club journalist Olena Karpachova to discuss the pivotal changes shaping today’s gas market, the risks of legal uncertainty, and the opportunities ahead for Ukraine. As one of the most authoritative experts on Eastern European and Ukrainian gas markets, she explains why trust, origin verification, and digital data are becoming just as vital as the energy commodity itself.
– In your recent post, you wrote that Ukraine is “caught in the middle” between EU decarbonisation, energy security and regulatory measures. What makes Ukraine’s position particularly difficult now?
– Ukraine is in a particularly difficult position because it is trying to balance three competing priorities at once: supporting Europe’s energy security, aligning with the EU’s decarbonisation agenda and complying with increasingly stringent regulatory requirements.
On the one hand, Ukraine wants to maximise the value of its storage facilities, infrastructure and domestic production to become a key pillar of Europe’s energy system. On the other, the EU is demanding greater transparency, origin verification and compliance as it phases out Russian gas and tightens climate-related rules.
The challenge is that Ukraine must remain commercially attractive to traders while providing robust safeguards against the risk that its infrastructure could be used to reintroduce Russian gas into the EU market. In other words, Kyiv is being asked to preserve market flexibility while simultaneously delivering a level of traceability and regulatory certainty that satisfies European policymakers.
Its success will depend on proving that Ukraine can be both a strategic energy partner and a trusted gatekeeper of the EU’s evolving energy and sanctions framework.
However, I don’t think this is a question of sacrificing flexibility for credibility. Rather, it’s about finding a way to preserve flexibility through credible and efficient verification mechanisms.
If Ukraine can implement robust origin-tracking, certification and data-sharing systems at the point where gas enters storage, there should be no need to subject every withdrawal to cumbersome checks that undermine the attractiveness of its storage facilities. In that sense, transparency and flexibility are not mutually exclusive; they can reinforce one another.
Indeed, the more confidence European regulators and market participants have in Ukraine’s ability to verify the origin and compliance status of gas, the more likely they are to support simplified procedures and increased use of Ukrainian infrastructure.
– How are the EU’s CBAM, REPowerEU and methane regulations changing the operating environment for neighbouring non-EU countries that are already closely integrated with the European energy market?
– Europe’s energy markets are entering a new era in which transparency, traceability and verifiable data are becoming almost as valuable as the molecules themselves. Against that backdrop, the EU’s CBAM, REPowerEU and methane regulations are changing the operating environment for neighbouring non-EU countries that are already deeply integrated with European energy markets.
The common thread across all three policies is that market access increasingly depends not only on supplying energy, but also on proving its carbon footprint, methane intensity, origin and regulatory compliance. For neighbouring producers, traders and infrastructure operators, the challenge is no longer simply delivering gas, power or industrial products into Europe; it is demonstrating, with credible and auditable data, that those supplies meet the EU’s evolving standards.
CBAM is perhaps the clearest example of this shift. By introducing a carbon cost on imports of emissions-intensive products, the mechanism extends the impact of the EU carbon market well beyond the bloc’s borders. Exporters of electricity, steel, aluminium, fertilisers and hydrogen must increasingly quantify and verify the embedded emissions of their products if they want to remain competitive in the European market. This is pushing all countries interested in continuing exports to Europe to improve emissions accounting systems, develop carbon-pricing mechanisms and align more closely with EU climate policy.
Meanwhile, REPowerEU is transforming Europe’s energy relationships with neighbouring countries. While the initiative was launched to reduce dependence on Russian fossil fuels, the broader effect has been to accelerate diversification, renewable energy deployment and closer integration with alternative suppliers and partner countries.
Just like CBAM, the EU Methane Regulation brings an unprecedented scrutiny to emissions across the fossil-fuel value chain. Because Europe imports a large share of the oil, gas and coal it consumes, the regulation extends beyond EU borders, requiring increasing levels of methane measurement, monitoring, reporting and verification from suppliers to the European market.
Taken together, these measures are creating demand for a new layer of market infrastructure built around trusted data. Carbon intensity, methane performance, origin certification and sanctions compliance are becoming commercial attributes that may influence the value and marketability of energy supplies. As a result, digital solutions capable of tracking and certifying these characteristics across complex cross-border supply chains are becoming increasingly important.
In this sense, the industry appears to be moving towards a future in which energy commodities are accompanied by a comprehensive digital identity. Rather than managing separate certifications for emissions, methane, origin and compliance, market participants may increasingly seek integrated frameworks that combine all these credentials into a single trusted digital asset. For neighbouring non-EU countries, adapting to this data-driven regulatory environment will be crucial not only for maintaining access to European markets, but also for remaining competitive in an energy system where transparency is fast becoming a prerequisite for trade.
In brief, in the future, electricity or gas markets will no longer be simply about underlying electrons or molecules but also about the data that underpin them and could turn them into trustworthy sources of supply.
– The EU is moving toward restrictions on Russian spot gas imports. What practical questions does this create for gas stored in Ukraine and later transported back into the EU?
– Ukraine faces an ironic dilemma.
On the one hand, it has spent years painstakingly building a gas market that is increasingly regarded as a trusted linchpin of Europe’s energy security. Its vast storage capacity, growing integration with EU energy markets and commitment to regulatory reform have positioned the country as a potentially indispensable partner for the continent. Yet cementing that status may require Ukraine to surrender some of the flexibility that has historically underpinned its attractiveness, as it aligns more closely with the EU’s REPowerEU framework and increasingly stringent origin-verification requirements.
On the other hand, Ukraine has every incentive to maximise the commercial value of gas held in its storage facilities by encouraging greater exports and re-exports. Higher volumes would improve companies’ cash flow, stimulate trading activity and support much-needed investment in the energy sector. However, without sufficiently robust tracking and verification mechanisms, this approach carries a significant risk: that Ukraine’s extensive infrastructure could be viewed as a potential conduit through which Russian gas re-enters the EU market, undermining both Kyiv’s credibility and Brussels’ efforts to phase out Russian energy imports.
The challenge is particularly acute as Ukraine works with partner transmission system operators along the Trans-Balkan corridor to establish a viable import route for gas entering the region from the south. The initiative is strategically important and has generated considerable interest among policymakers, not least because it could facilitate access to LNG supplies, including cargoes of US origin.
Yet there is an uncomfortable reality. A significant share of the gas entering Bulgaria from Turkey continues to be of Russian origin, and once gas enters the transmission network, molecules cannot be physically distinguished by where they were produced. In practice, origin is established not through the gas itself but through documentation, certification and traceability systems.
Whether policymakers are willing to acknowledge it or not, some of this gas could ultimately make its way into Ukraine. That does not mean it is Russian gas by default, but it does underline the importance of having credible mechanisms capable of tracking gas from source to destination.
Proponents of the current regulatory framework may argue that persistently high Russian import volumes merely reflect companies front-loading purchases under the remaining long-term contracts before tighter restrictions take effect. That may be true. Nevertheless, the broader concern remains. As the EU erects ever more sophisticated regulatory barriers, market participants determined to preserve access to discounted Russian gas may prove more adept at finding ways around the rules than policymakers are at closing loopholes.
Without robust verification and traceability tools, there is a risk that gas of prohibited origin could be blended, relabelled or otherwise obscured as it moves through multiple jurisdictions and trading hubs before eventually reaching Ukraine’s storage facilities. In such a scenario, those facilities could inadvertently become a staging point through which banned Russian volumes re-enter the European market.
There are already sufficient reasons to be vigilant. Russia has long demonstrated its ability to adapt to changing market conditions and preserve its commercial footprint. Various market participants have raised concerns that storage facilities in third countries, regional trading hubs and intermediary transactions could be used to obscure the provenance of gas and maintain Russian influence in European markets despite mounting restrictions.
This is why the debate extends far beyond customs procedures or storage regulations. The real issue is trust.
Ukraine’s ambition to become a cornerstone of Europe’s future gas market will depend not only on the scale of its infrastructure, but also on its ability to provide a level of transparency and traceability that leaves little room for doubt about the origin of the gas crossing its borders. The country’s success may ultimately hinge on demonstrating that its storage facilities are a gateway to European energy security rather than a loophole in Europe’s effort to eliminate Russian gas from its market.
Indeed, it would be the ultimate irony if the very country whose struggle against Russian aggression helped drive the EU’s decision to phase out Russian gas were ultimately used to legitimise or “whitewash” volumes that the bloc is seeking to exclude from its energy system.
– What happens if the gas was placed into Ukrainian storage before the new restrictions, but traders cannot conclusively prove its origin or the reliability of the initial vetting? Could this become a serious compliance issue?
– This, it appears, is already happening and traders are having issues trying to prove the origin of the gas which had entered underground facilities before the ban came in place.
– Could regulatory ambiguity reduce the attractiveness of Ukrainian underground gas storage facilities for European traders, even though Ukraine’s storage capacity remains strategically important for Europe?
– Yes, very much so.
As Washington has scaled back its support for Ukraine, the EU has stepped in, offering both financial assistance and political backing. The shift has reinforced Ukraine’s strategic alignment with Europe and heightened the importance of complying with EU regulations, not least in the energy sector.
In practical terms, this means Ukraine has a strong incentive to align its policies with evolving EU priorities, whether on energy security, sanctions enforcement, market integration or the implementation of measures such as REPowerEU. As the EU assumes a larger role in underpinning Ukraine’s economic and political resilience, Kyiv has become more attuned to European concerns and expectations.
This partnership also strengthens the case for Ukraine to pursue closer regulatory convergence with the EU, even if doing so requires relinquishing some of the flexibility that has traditionally characterised its gas market.
Choosing not to align, or attempting to seek regulatory shortcuts, would risk undermining the trust that European partners have invested in Ukraine at a time of unprecedented political and financial support. It would also create an uneven playing field for those companies that have invested significant resources to comply fully with the EU’s increasingly stringent requirements on origin verification, transparency and sanctions compliance.
For Ukraine, the issue is therefore not simply one of regulatory alignment, but of credibility. Demonstrating a willingness to uphold both the letter and the spirit of EU rules is essential if the country is to cement its position as a trusted partner in Europe’s energy system and a future hub for regional gas trade and storage.
– What should the European Commission clarify to prevent Russian gas from entering the EU market while avoiding unnecessary barriers for legitimate gas flows through Ukraine?
– The EU should make it unequivocally clear that any attempt to circumvent its rules is unacceptable and risks undermining the integrity of the bloc’s energy and sanctions policies.
At the same time, Brussels must work closely with Kyiv to ensure that Ukraine’s electricity and natural gas assets are fully integrated into the broader European energy architecture. The objective should not simply be regulatory compliance, but the gradual incorporation of Ukraine into Europe’s energy system as a future trusted and indispensable member state.
Ultimately, the EU has a strategic interest in helping Ukraine realise the full value of its energy sector. A transparent, well-regulated and closely integrated Ukrainian gas market would strengthen European energy security, support Ukraine’s economic resilience and reinforce its long-term path towards EU membership. Ukraine should be viewed not as a potential loophole in Europe’s energy policy, but as a valued future member of the European family whose energy assets contribute directly to the bloc’s security and prosperity.
– Looking ahead, what should Ukraine do to remain a trusted and competitive part of the European gas market after the end of Russian gas transit?
– In the short term, there is an opportunity to consider a workable solution that would combine early verification, digital traceability and ongoing oversight.
One proposal that was already made by a Ukrainian advocacy group was to ensure that gas is verified at the point of injection into Ukrainian storage, or when it first enters the EU-Ukraine trading chain, rather than repeatedly checked every time it drawn.
Once verified, it could be assigned a digital certificate or batch identifier that travels with the gas throughout its lifecycle.
This would need to be supported by integrated data-sharing between Ukrainian customs authorities, Ukrtransgaz and GTSOU, allowing market participants and regulators to track injections, withdrawals, ownership changes and supporting documentation. A mass-balance approach would ensure that certified non-Russian exports never exceed certified non-Russian injections, while accounting for technical losses and balancing requirements.
At the same time, a risk-based system could distinguish between Ukrainian-produced gas, imports from low-risk countries and supplies with more complex trading histories, applying stricter verification where warranted. Regular audits, reporting requirements and the ability to suspend simplified treatment in cases of irregularities would provide an additional layer of confidence and help preserve the integrity of the system.
To my mind, this proposal offers a highly pragmatic way out of the current impasse. Not only would it strengthen Ukraine’s credibility as a transparent and reliable regional gas hub but it would also address a key practical challenge facing the market.
Requiring traders to provide full prior-authorisation documentation every time gas is withdrawn from storage and re-exported to the EU risks undermining one of Ukraine’s greatest competitive advantages: the flexibility of its storage regime. A system based on verification at the point of injection, combined with robust traceability throughout the storage cycle, would preserve that flexibility while still providing the level of assurance sought by European regulators.
In doing so, Ukraine could demonstrate that market efficiency and regulatory compliance are not mutually exclusive. Rather than creating additional administrative burdens at the withdrawal stage, the proposed framework would provide a transparent, auditable chain of custody from the moment gas enters storage, giving the EU confidence that its rules are being respected while allowing Ukraine to retain the commercial attractiveness of its storage facilities.
In the longer term, Ukraine could even seize the opportunity to develop a new market for energy data, centred on an integrated, all-in-one certification framework that combines emissions data, methane performance, origin verification and compliance credentials within a single trusted digital asset.
Such a vision is far from unrealistic. Ukraine has already demonstrated remarkable expertise in building sophisticated digital infrastructure under some of the most challenging circumstances imaginable, particularly in the defence and public sectors. The country has shown that it can develop resilient, scalable and highly innovative digital solutions when strategic priorities demand it.
A similar opportunity is now emerging in the energy sector. As Europe moves towards stricter requirements on carbon emissions, methane monitoring, origin verification and sanctions compliance, the commercial value of energy commodities will increasingly depend on the quality and credibility of the data attached to them. In the future, traders may not simply buy gas; they may buy gas accompanied by a trusted digital passport detailing where it was produced, how it was transported, its methane intensity, its carbon footprint and its compliance with European regulations.
Ukraine is uniquely positioned to help build that future. By leveraging its expertise in digital innovation and its growing role in the European energy system, it could develop the platforms and certification systems needed to support a more transparent and traceable market. Such an ecosystem would not only strengthen confidence in Ukrainian storage and supply routes but could also create an entirely new source of value, with data becoming as important a commodity as the energy itself.
If successful, Ukraine would move beyond being merely a transit country or storage provider. It could become a leading provider of the trusted digital infrastructure underpinning the next generation of European energy markets.
The European gas market is evolving rapidly, and the rules of the game are changing along with it. For Ukraine, this is not only a challenge but also an opportunity to cement its role as a trusted partner for Europe. Ukraine’s success will depend on how effectively the country can combine transparency, advanced digital solutions, and compliance with EU requirements. This will determine not only the competitiveness of its storage facilities but also Ukraine’s place in the energy architecture of the future. After all, in this new reality, the value of energy commodities will be defined not just by gas volumes, but by the level of trust in the data that verify their origin.
