The West cannot surmount today’s energy crisis by a single move. Even if the Iran war ended immediately reconstructing damaged and/or destroyed infrastructure will take a considerable time. But Ukraine, specifically its Naftagaz energy company, can help mitigate this crisis. Admittedly, investors must figure war-risks and engage in contingency planning because Russia’s aggression has led Russia to attack Naftagaz repeatedly. Nevertheless, Naftagaz can offer Europe tangible measures of relief from the Iranian war crisis.
Naftagaz can exploit its large underground gas storage assets and significant cross-border ties to Eastern and Central Europe to give Europe’s energy economy greater flexibility. It can store gas that can be sourced and release it when supplies become tight, lending gas to European clients when the market becomes stressed, thereby reducing that pressure and scrambles on spot markets. At such times Naftagaz can also utilize existing cross-border capabilities to deliver gas to its neighbors or even beyond through European pipelines.
Over time Western investments in Ukrainian energy firms like Naftagaz will, once hostilities end, ensure Central and East European governments’ transitions to a Ukraine whose firms, like Naftagaz, are committed to purely commercialized energy business. Unlike Russian energy deals, contracts with Naftagaz will remain business deals, not pretexts for subversion. Naftagaz has reformed itself and functions as a corporation along Western standards.
The war in Ukraine won't be decided only on the battlefield. It also will be determined by whether or not Washington helps build an energy sector that makes Ukraine economically viable and strategically independent. Right now, Washington is making the wrong bet, distracted by a corruption scandal at Energoatom, while ignoring the transformation happening at Naftagaz.
The late-2025 crisis involving Energoatom—Ukraine's state nuclear energy company—has fueled American instincts to conclude wrongly that Ukraine’s entire energy sector is too compromised to merit deeper Western engagement. At a time when Americans increasingly question open-ended commitments to Ukraine, the country's energy sector offers a self-financing asset that can generate returns for U.S. companies—not just absorb aid. Ukraine's energy sector should not be judged by its weakest institution, but by its strongest, i.e. Naftogaz.
Unlike Energoatom Naftogaz operates under Organization for Economic Cooperation and Development (OECD) corporate governance standards—the benchmarks used by developed Western economies. It has undergone deep reform, operates transparently under wartime conditions, and maintains the confidence of European development banks. Naftogaz's performance demonstrates that Ukraine's energy sector represents an opportunity, not a liability.
Ukraine's own anti-corruption institutions, including the National Anti-Corruption Bureau of Ukraine (NABU) uncovered the alleged corruption at Energoatom, leading to the forced departure of senior officials and international pressure for systemic reform. That process worked as intended, showing that accountability mechanisms function even under the strain of war and did not implicate Naftogaz. Naftogaz had already undergone transformation years earlier: an independent supervisory board aligned with OECD standards, transparent procurement, and disciplined financial management. It has received sustained support from the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB)—making all payments on time. Even as Russia systematically targets Ukraine's energy infrastructure, Naftogaz continues delivering gas to households and industry.
Further demonstrating Naftogaz’s financial resilience, it issued over $1.5 billion in Eurobonds in 2019. Despite Ukraine’s sovereign debt restructuring following Russia’s invasion in 2022, Naftogaz has remained current on all Eurobond obligations and repaid one of its three bond tranches held by major U.S. investment firms in 2025, underscoring continued market confidence in Naftogaz’s creditworthiness as U.S. investors continue to buy and hold the company’s Eurobonds.
Corporate governance only works when leadership enforces it. The record of Naftogaz CEO Sergii Koretskyi is decisive. Before leading Naftogaz, Koretskyi transformed Ukrnafta, Ukraine's state oil company, after it was wrested from oligarch Ihor Kolomoisky, who was previously sanctioned by the U.S. State Department. Ukrnafta swung from chronic losses of roughly $250 million over the previous decade to net profits exceeding $380 million in the first half of 2023 and $500 million in the first half of 2024. Under Koretskyi, Ukrnafta adopted Western-style oversight, installed an independent supervisory board with international expertise, rooted out corrupt intermediaries, and dramatically expanded domestic drilling—from one or two wells per year to nine in 2023.
Following the Energoatom crisis, the Ukrainian government replaced Energoatom's supervisory board through an open, competitive process. By the end of 2025, the European Union welcomed the appointment of independent board members with expertise in nuclear safety, finance, and regulation. This is an explicit attempt to replicate the Naftogaz model across Ukraine's energy sector.
Ukraine controls Europe's largest underground gas storage facilities representing a multibillion-dollar market in liquefied natural gas (LNG) imports, infrastructure rebuilding, and technology exports. A reformed Ukrainian energy system can anchor European energy security, absorb U.S. LNG, and deploy American drilling technology.
It can also counteract Russian energy coercion in Central and Southeastern Europe. A Ukraine at peace will not only meet domestic energy demand but also export resources to neighbors ensuring an end to their dependence on Russian energy. Whatever the shape of any future peace settlement, a Ukraine that cannot power itself remains vulnerable to Russian pressure. If American companies do not engage, Russian and Chinese investors will and seize strategic and commercial ground. Major European energy companies are already positioning themselves for Ukraine's reconstruction. The window for American firms to establish partnerships and secure contracts is narrowing. Waiting for perfect conditions means arriving too late.
Naftogaz has earned external validation from Europe's most rigorous financial institutions, undergone independent audits, and maintained operational discipline under Russian bombardment. That track record deserves serious consideration — not dismissal because of failures elsewhere. The current energy crisis shows what happens when we neglect to strengthen the global energy architecture.
Dr. Stephen J. Blank is a Non-Resident Senior Fellow in the Foreign Policy Research Institute’s Eurasia Program.
