Oil Turnaround Shows How US Can Win in Ukraine

When many US taxpayers hear about Ukraine, they ask: what’s in it for us? The story of Ukraine's largest oil company shows why helping Kyiv can put America first.

Source: FREEDOM

In November 2022, nine months after Russia’s full-scale invasion, Ukraine seized Ukrnafta from oligarch Ihor Kolomoisky. The once-mighty petrochemical behemoth was near collapse — with just $10m in the bank, billion-dollar tax debts, and a $14m payroll it could barely meet.  

Yet under reformist management, and despite an unrelenting war, it swung from losing $250m in the previous decade to a net profit for the first half of 2023 of 14.1bn hryvnia ($335m), and in 2024’s first half to over 20bn hryvnia. 

Ukrnafta’s turnaround has been sweeping. The new management, led by CEO Sergii Korteskyi, uncovered hundreds of millions of dollars lost every year through intermediaries and cut them off. Procurement shifted to Ukraine’s electronic contract bidding system, saving further millions by ensuring competition for contracts.

Kolomoisky is being held in pre-trial detention, and denies charges of money laundering, embezzlement, and fraud. 

Audits revealed a further $2.5bn in alleged corruption, and investigations are underway to eliminate or overcome those challenges. At the same time, Ukrnafta’s drilling surged, from one or two new wells a year to nine in 2023, with 50 targeted by the end of 2025.   

Governance has also been modernized, including the installation of an independent board, chaired by Canadian energy executive Duncan Nightingale. A new corporate charter aligned with Western standards is also in the works, and a five-year plan aims to double oil and gas production while expanding into renewables. 

And the results speak for themselves. Ukrnafta paid $375m in taxes and dividends in its first year under new management — more than the previous 10 years combined.  

The company’s gas stations also increased sales by more than 20% in the first quarter of 2025, at a time when the overall fuel market declined.  

This is not just a Ukrainian success story, but proof that when Ukraine implements genuine reforms and adopts Western corporate governance standards, it becomes a profitable destination for American investment. 

US President Donald Trump’s administration has signaled that Ukraine must become economically self-sufficient, and the recently signed US-Ukraine Minerals and Resources Agreement reflects this principle and includes energy production. American companies will get access to Ukraine’s substantial energy reserves, while Ukraine will get the capital and technology to develop them.  

And that’s why Ukrnafta’s transformation matters. It is a model of what’s possible. 

The company has already secured an €80m ($92m) financing package from the European Bank for Reconstruction and Development (EBRD) for gas generation projects, and plans to invest $1bn over three years to build 1,000 MW of gas, solar, and wind generation.  

And with 18bn hryvnias in cash reserves after paying dividends and making investments, Ukrnafta has the financial strength to be a reliable partner.  

US investments — not aid — are a viable commercial opportunity with actual profit potential and a proven track record. 

Ukraine produces 80% of its domestic oil through Ukrnafta and has significant untapped reserves. And every barrel is one less that Europe needs to source from Russia or the Middle East.  

A strong Ukrainian energy sector will weaken Putin’s leverage over Europe and cut the risk of future conflicts that drag in the US. It will also reduce Russia’s ability to interfere in Ukraine’s economy and politics.   

Ukrnafta is transitioning to API (American Petroleum Institute) standards and OECD governance principles, a three-to-five-year process that will make the country compatible through the use of Western equipment, technology, and business practices. 

If Ukraine can turn around a company that had been bled for billions by eliminating intermediaries, implementing transparent procurement, and generating real profits, it can reform other sectors too, making it a viable investment destination rather than a recipient of endless aid.  

Some argue Washington should disengage entirely from Ukraine, but the stakes are clear: if Ukraine fails, China and Russia will gain control of critical resources, including a 5% share of the world’s critical minerals. If Kyiv succeeds, the US gains a profitable partner, Europe sheds dependence on Putin’s oil and gas, and US taxpayers will get value instead of endless bills. 

The Ukrnafta model highlights a third way between aid and total disengagement: conditional support tied to genuine reforms that create commercial opportunities for Western businesses.  

To maximize its interests, the US should make all support conditional on governance reforms like those at Ukrnafta — including independent boards, transparent procurement, Western accounting standards, and zero tolerance for corruption. (It’s notable that Ukraine’s corruption record has significantly improved — it moved up to 105th from 122nd in Transparency International’s index from 2021 to 2024, even as Russia moved in the opposite direction to 154th.) 

It should also prioritize commercial partnerships over grants. The EBRD approach to Ukrnafta, combining loans with technical assistance, is a route to creating sustainable businesses rather than dependency. 

Washington could fast-track American energy companies into Ukrainian joint ventures by using special tax regimes for new projects. And for every dollar of support or market access, US companies should get preferential treatment in Ukrainian energy development in return. 

Ukrnafta’s turnaround, from a vehicle for enriching the few to a profitable, Western-standard company generating billions for Ukraine’s defense, demonstrates that reform-driven investment can help Ukraine while serving US interests. 

The question is whether American companies will lead the transformation or cede the opportunity to China and others who do not share the West’s values or interests.  

When Ukraine adopts American business standards and opens its markets to US companies, supporting that transformation is not foreign aid; it is sound policy. 

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By Stephen Blank. Dr Stephen J Blank is a senior fellow in the Foreign Policy Research Institute’s Eurasia program and has written extensively on Soviet/Russian, US, Asian, and European military and foreign policies. He has testified before Congress on Russia, China, and Central Asia and consulted for the CIA, think tanks, and foundations. Article first time published on CEPA web page. Prepared for publication by volunteers from the Res Publica - The Center for Civil Resistance.