Ukraine's energy industry has gone through huge changes since new management took over national energy company Naftogaz in 2014. Market reforms were implemented, governance became more transparent and financial performance improved dramatically.
This has gone a long way to lift both the company's and Ukraine's image among international experts and potential investors. But political roadblocks and a lack of decisive steps in areas like unbundling or boosting domestic extraction have tempered optimism.
The election of President Volodymyr Zelensky, and upcoming snap elections, have raised expectations for a fresh start. Successful reforms could open Ukraine's energy market to international firms and integrate the country into the European gas market. Yet some experts fear the temptation to return to bad old ways.A bumpy road to accomplishments
The management team that came in after the 2014 revolution inherited a company with a complicated legacy — for years Naftogaz was used by Ukrainian politicians for personal enrichment and political horse-trading.
The turnaround started after CEO Andriy Kobolyev and Executive Director Yuriy Vitrenko took over in 2014. The company soon became profitable (by 2018 taxes paid accounted for 19 percent of the state budget), and key internal policies, anti-corruption regulations and a code of ethics were adopted.
Naftogaz started publishing comprehensive annual reports with detailed financial statements. Corporate social responsibility came next, with support for charities and local communities (in 2018 a Naftogaz subsidiary spent $1.5 million on rural infrastructure development).
"Naftogaz changed heavily since 2014," said Wojciech Jakobik, an analyst at the Warsaw-based Jagiellonian Institute think tank and chief editor of BiznesAlert.pl
. "We see greater transparency, communication activity. It's easy to get information about the company, and this is crucial for potential western partners."