06.05.2025
The war has become a turning point in Ukraine’s energy sector. Now everyone understands: the old centralized generation can no longer be a reliable power source. Renewable energy is important, first and foremost – wind and hydrogen. Small modular nuclear reactors should also be built. We need to work actively and invest in innovation, and the result will be unequivocal, because today Ukrainian companies are much more competitive than foreign ones. Zinoviy Kozytskyi, founder and owner of the Zakhidnadraservis and Eco-Optima group of companies, stated this in the “Big Interview” podcast – a special media project of the Energy Club business community.
In a frank professional conversation with journalist Andriy Kulykov, Zinoviy Kozytskyi spoke about the work of energy companies in the conditions of full-scale war, the challenges the industry faces, the achievements of Zakhidnadraservis in difficult circumstances, and future plans.
– Mr. Zinoviy, how did the full-scale invasion affect the work of the Zakhidnadraservis group of companies in the oil and gas and renewable sectors? What were the first and most acute challenges?
– In the oil and gas direction, there was a severe fuel shortage in the first months of the war. For us, this was a very big challenge, as we use up to 30 tons of fuel per day. The price, of course, also increased, and that was a problem, as was delivery to the sites where we operate.
When the war started, all of us – the whole office – went to mobilization centers. 100 people from our companies volunteered to serve. Then there was mobilization, and the issue of staff shortages arose. At that time, there was no reservation of employees of critical infrastructure enterprises as there is now.
Regarding renewable energy: the day before the war began, Nordex sent a notification about the manufacturing of 10 wind turbines for the Orivska WES. We confirmed our readiness to accept them, because according to the European agreement, the manufacturing company provides logistics and installation and guarantees energy production by the turbines within 97%. If it’s less, the company pays extra; if it’s more, we share the surplus.
Nordex’s response was negative due to force majeure circumstances – the war, and we negotiated for three months. We managed to convince the company that there were no hostilities where we were, and we would handle the logistics and installation ourselves. We had already built the foundations and connected to the grids, as these were our obligations under the agreement. The equipment had to be picked up from the manufacturer’s warehouses, but first, we needed to find companies that Nordex would approve and that could provide logistics and installation of the turbines. We found a logistics company that agreed but then refused due to lack of insurance and returned the advance payment. We found another one that delivered the equipment to the border, and from there, a Ukrainian company brought everything to the construction sites.
The Belgian crane company that had previously built two stations for us refused to cooperate, again due to lack of insurance, but offered to sell one 700-ton crane. At that time, there was only one such crane in Ukraine, and it was broken. So, we had no choice but to buy the crane. Thank God, there were Ukrainians working in that company who were left without work at that time and joined us. This is how we created a crane company and then an installation company. This is how we built a 60 MW wind power plant during the war.
– And how radically did you have to change your approaches to doing business in the new realities?
– I wouldn’t say very radically. We have always worked actively. The war stimulated us to be even more effective, as we understood that the rear is the second front, where there are no weekends or holidays. This year we started building the next 40 MW station, OKKO is also building a wind farm in Volyn, because Nordex saw that it was possible, and there were no such problems as with our first contract. This was a positive example for foreign companies: we can do everything ourselves and successfully. And everything works, everything is fine.
– Even in the difficult conditions of wartime, your company continues active work in drilling new wells. According to data from previous years, we see stable dynamics in 2024 and 2025.
– Absolutely correct. We did not stop drilling at all; on the contrary, we are intensifying processes, investing significantly in technology, and buying new modern American equipment. I believe that we are technological leaders in Ukraine and can perform the full range of drilling operations on par with leading global service companies in the oil and gas industry – Schlumberger, Weatherford, Halliburton. This leads to success. We had years when it was 50/50, and sometimes, out of 10 wells drilled, only 3 were successful. Now we can drill, thanks to prospecting and exploration, 3D seismic using high-tech equipment.
We extract 1 million cubic meters of gas per day. Based on the resources we have, we have optimistic plans to reach a daily output of 2 million by the end of the year. And this is more or less realistic.
– This is a significant contribution to the country’s energy supply. Are there any special projects?
– We are the only ones who have signed a production sharing agreement. We won the tender, and one of our companies, which is successfully operating, discovered a field and supplies gas to the state. In 2022, we drilled a well and received a production sharing agreement for the first time. All other companies are not working, citing force majeure circumstances.
– The war has affected international cooperation in the energy sector. How have your partnerships with foreign companies changed? Are there really new opportunities for cooperation in wartime conditions? Or is everything winding down?
– We have a partner – the Czech company MND, which has been exploring and extracting in Ukrainian oil and gas fields since 2014. We created a joint venture and are still actively working. And I am grateful to my colleagues and the Czech people in general for their support, because the company, despite the war, invests a lot in Ukraine and provides significant charitable assistance.
In terms of our communications with foreign companies, nothing has changed. Already in 2021, together with the gas transmission system operator, we signed a memorandum with the Slovak company Nafta, the Austrian company RAG, and the German Bayerngas GmbH on hydrogen production and its supply to Germany. The war hindered this, activity decreased, but we are continuing this direction.
This year, a Memorandum of Understanding was signed between RAG Austria AG and Eco-Optima LLC at the Ukrainian-Austrian Economic Forum. This strategic document opens new horizons for Eco-Optima for the production of “green” hydrogen within the “H2EU+Store” project. The project involves a networked international industrial partnership initiated by RAG Austria AG to scale the “green” hydrogen market in Central Europe. In the production of “green hydrogen,” electricity is generated from renewable sources. The hydrogen will then enter the international gas transmission network in Ukraine and be transported through the gas pipeline systems of Slovakia and Austria to the storage facilities of RAG Austria AG.
We are starting in 2027, and this project is expected to be operational by 2029. We hope to supply the first 100 MW of green hydrogen to Germany.
– It seems that Zakhidnadraservis does not have the financial problems that many enterprises faced during the war. How does your company maintain financial stability, and to what extent do you plan to attract additional investments to support operations and future development?
– We are increasing our activity, which means we are also increasing our income. If we reached 1 million cubic meters of gas per day in terms of extraction, we reached 1 million kilowatt-hours per day in renewable energy.
We were the first to attract an EBRD loan for the construction of the first wind farm. Then there were loans from NEFCO and the Danish Growth Fund. And we successfully repaid them during the war. Today, Ukrainian banks offer lending, and this is very good. For financing the construction project of 25 MW gas piston power plants, we held a tender among Ukrainian banks. Before, this seemed like fantasy, but now it is a reality. Our previous project was financed by Ukreximbank, and now the construction of a 40 MW wind farm, which will be installed by the end of the year, is financed by Oschadbank. That is, today there is an opportunity for lending by Ukrainian banks.
– After the war ends, large-scale reconstruction will be needed. What role, in your opinion, will Zakhidnadraservis play in this process, especially in the context of energy infrastructure and ensuring Ukraine’s energy independence?
– The war has become a turning point in Ukraine’s energy sector. Now everyone understands: the old centralized generation can no longer be a reliable power source. About 9 GW of such energy is damaged or lost – these are all old combined heat and power plants and thermal power plants that have long needed modernization. Therefore, new, flexible, and decentralized generation is very important today. Ukrenergo held tenders, in one of which we participated – 25 MW of gas piston power plants throughout the country to support generation. It is difficult for Russians to hit small stations. And this is very important in terms of security and maintaining the frequency of generation.
The war will create a new modern generation in Ukraine. Renewable energy is important, and wind has an advantage over solar, which works more in the summer. It is time to develop hydrogen energy. According to IRENA (International Renewable Energy Agency) estimates, Ukraine has the potential to build 320 GW of renewable energy, while Ukraine needs four times less. There is an opportunity to produce hydrogen and transport it to Europe and fill our own storage facilities.
Small modular nuclear reactors should also be built. We expect the first one to start operating in 2027 in Canada, and after that, the scaling of these projects will begin in various countries, including Ukraine.
– It is clear that both a person and a company that invest so much money and effort in development believe in the future and are confident in it. What would be your first advice to other entrepreneurs in the energy sector who continue to work in Ukraine during the war?
– The most important thing is to believe in yourself and believe in the country. Do not stop, work actively and invest in innovation, thus making your contribution to victory. The result will be unequivocal. Today Ukrainian companies are much more competitive than foreign ones.
