Ukraine’s changing energy role: can it become a ‘parking space’ for European gas?

But Ukraine’s role may be changing rather than disappearing. As Europe moves away from Russian supply, the country’s extensive pipeline network and underground storage facilities could give it a very different place in the regional energy market.

To explore what this transformation could mean in practice, Risk Advisory spoke to Dr Aura Sabadus, a leading expert on Ukrainian and regional energy markets at ICIS, for our Without Compromise podcast. This article draws on that conversation and her analysis of the opportunities and obstacles shaping Ukraine’s future role in Europe’s energy system. 

From transit corridor to regional flexibility

Ukraine’s opportunity lies in using its pipelines and vast underground storage facilities as a single regional system: bringing in gas from the north and south, holding it until it is needed, and supplying neighbouring markets when demand rises.

The scale of Ukraine’s infrastructure gives the idea commercial credibility. Ukrtransgaz, the storage operator within the state-owned Naftogaz Group, has over 30 billion cubic metres of underground storage capacity, the largest amount in Europe. Foreign energy companies can keep imported gas there for up to three years without going through the normal import process or paying duties, provided it is subsequently re-exported. This allows them to store gas when demand and prices are lower and take it out when the market becomes more attractive. 

New routes are also making it easier to bring gas into Ukraine. In June 2025, the companies that run the national gas networks in Greece, Bulgaria, Romania, Moldova and Ukraine launched Route 1. The service is intended to simplify the process of transporting gas across all five countries. In practical terms, LNG arriving in Greece can be converted back into gas and sent north through the Trans-Balkan pipeline to Ukraine. Work is also under way to strengthen access from the north. In June 2026, Poland’s ORLEN and Ukraine’s Naftogaz agreed to explore increased LNG trading and the shared use of terminals and pipelines across the Baltic region and Central and Eastern Europe. 

Together, these northern and southern routes could allow gas to enter Ukraine from different directions, remain in storage until it is needed and then be supplied at short notice to whichever market offers the greatest demand. In Dr Aura Sabadus’ words: 

‘Ukraine is really becoming a sort of bridge, a parking space for gas, where gas is parked and then taken out to cover the needs elsewhere.’ 

Can a country at war become an energy hub?

Pipelines and storage facilities alone do not make Ukraine an energy hub. The country remains at war, and Russia can attack the pipelines, compressors, and other above-ground equipment required to move gas into and out of storage.

The gas itself, however, is held deep underground and is much harder to damage. Ukraine also has an extensive network, meaning that operators may have other ways to keep gas moving if one part of the system is hit. The war therefore remains a serious risk, but it does not necessarily make the storage system unusable.

For energy companies, the question is whether the commercial opportunity is attractive enough to justify taking that risk. As Dr Sabadus told us:

‘If the market conditions are right, companies are actually ready to override that risk.’

The harder challenge: improving Ukraine’s investment environment

Persuading companies to use existing pipelines and storage facilities is one thing. Attracting the capital needed to rebuild and modernise Ukraine’s energy system is considerably harder. The war is part of the problem, but so are long-standing concerns about political interference, regulation and corruption. 

There has been progress. As Dr Sabadus noted, independent boards have been introduced at major state-owned energy companies, while financial support from the EU, the International Monetary Fund (IMF) and other international institutions has been tied to further reform. Ukraine continued to strengthen the boards overseeing its gas and electricity networks during 2026.

Nevertheless, creating a board does not guarantee that a company will be protected from political interference. Investors will want to know whether those boards can genuinely appoint managers, oversee spending and make commercial decisions without being overruled by the government. They will also look for an independent energy regulator, transparent procurement and credible action against corruption. 

Finally, the way energy prices are set presents another obstacle. The government has kept household prices below the cost of supplying energy to protect people during the war. But it also means that state energy companies lose money, leaving less available for repairs and investment, which, in turn, makes them more dependent on international support. The IMF estimates that keeping prices artificially low costs the equivalent of at least 2.2 percent of Ukraine’s GDP each year.

Is Russian gas really gone for good?

Ukraine’s potential new role rests partly on the assumption that Europe’s break with Russian gas will last. A return cannot be ruled out: if the war ends and Russia offers steep discounts during a supply shortage, some European buyers may be tempted. But Russia would return to a market that has changed significantly since 2022.

The EU has adopted a phased ban on Russian gas and introduced checks intended to prevent it from being relabelled elsewhere. New rules requiring suppliers to provide reliable information about methane emissions could present another obstacle for Russian producers, particularly because of the extent of gas flaring in the country.

Europe now also has more alternatives. It can import LNG from a wider range of suppliers, while greater use of renewable energy has reduced its need for gas. A disruption such as the recent crisis around the Strait of Hormuz could still make discounted Russian gas attractive. Under more normal market conditions, however, Russia would be competing with numerous suppliers for fewer European customers, limiting its former advantage.

Some Russian gas may therefore return if political and market conditions allow it. But a return to its former scale appears unlikely.

Looking ahead: Ukraine in Europe’s energy market in 2030

By 2030, Ukraine could play a much broader role in Europe’s energy market. Reconstruction could make it a major energy consumer in its own right, while its pipelines and storage sites could connect gas arriving from northern and southern Europe, support neighbouring markets and potentially hold strategic reserves. The war, however, still hangs over all of these possibilities. Its outcome will shape Ukraine’s ability to rebuild, attract investment and make full use of its energy infrastructure.