Despite having the capacity to increase domestic gas production, Ukraine continues to leave hundreds of gas fields outside active development. The issue is not geological — it is institutional. The resource base exists, the market interest exists, and the legal framework for allocation exists. What is missing is the decision to bring these elements together.
According to energy entrepreneur Oleksandr Katsuba, owner of Alfa Gas, between 200 and 300 subsoil licenses are effectively inactive.
“Their holders are doing nothing — no drilling, no seismic work. These are assets that exist only on paper,” he says.
This gap between formal ownership and actual production has become one of the defining features of the Ukrainian gas sector. It limits the country’s ability to respond to demand cycles, constrains investment in exploration, and weakens the overall case for energy independence at a moment when that case is being made more loudly than ever.
Dormant Licenses as a Systemic Risk
Katsuba argues that the problem is not episodic, but structural. A significant share of licenses has remained dormant for years, limiting access to resources and constraining the sector’s development.
In practice, a dormant license is not a neutral document. It blocks access to a specific territory, prevents other operators from entering, and removes a potentially productive asset from the active part of the market. Multiplied across hundreds of cases, this creates a substantial drag on the entire sector.
At a time when Ukraine publicly emphasizes reduced reliance on gas imports, this creates a contradiction: the resource base exists, but it is not being translated into output. The country positions itself as moving toward greater energy autonomy, yet the mechanism that would actually support such a trajectory — full utilization of existing reserves — is not functioning.
The cost of this contradiction is not only economic. It shapes how investors, partners, and international institutions read the sector’s long-term prospects. A resource base that is not being worked is not a reserve in any meaningful sense — it is a signal of institutional inertia.
The Case for Reallocation
In Katsuba’s view, the current model requires revision. He argues that the government should conduct a full review of inactive licenses and return them to the market through transparent auctions.
“The market is ready to invest in these assets. The question is political will — whether to transfer them to operators who are actually prepared to develop them,” he notes.
The argument rests on a simple observation: capital is not the bottleneck. Expertise is not the bottleneck. Operators exist who can take these licenses and begin work within a reasonable timeframe. What is missing is a formal process to separate active holders from inactive ones and to return unused assets to circulation.
Such a move, he says, could generate several measurable outcomes:
- Increased domestic production, reducing pressure on imports during demand peaks
- Job creation in regions that host production infrastructure
- More efficient use of the country’s resource base, aligning legal ownership with actual economic activity
- Additional tax revenue, both from production itself and from the auction process
- A stronger signal to investors that the Ukrainian subsoil market is governed by performance rather than inherited positions
None of these outcomes requires new legislation in the strict sense. The tools are already in place. What is required is the willingness to apply them consistently to the legacy portfolio.
Where the Market Works — and Where It Doesn’t
Katsuba notes that new licenses in Ukraine are already allocated through auction mechanisms, which are broadly functioning. The auction system has proven that transparent allocation is feasible in Ukrainian conditions, and that operators are willing to compete on clearly defined terms when the process itself is credible.
The issue lies within the legacy system — licenses issued in earlier periods that remain inactive and outside effective market circulation. These were granted under different conditions, often with weaker performance requirements and limited monitoring of subsequent activity. The result is a two-track market: one where new entrants face a functional, competitive process, and another where older licenses sit untouched without consequence.
This split undermines the credibility of the overall system. For the auction mechanism to reach its full potential, it needs to be extended retroactively — not to revoke licenses arbitrarily, but to verify whether they are being used for their stated purpose and to reallocate those that are not.
What Reallocation Would Actually Look Like
Reallocation does not mean confiscation. It means applying the performance criteria that should have been in place from the beginning — clear work programs, defined timelines, and measurable indicators of activity such as drilling, seismic surveys, or infrastructure development.
Licenses that meet these criteria remain with their current holders. Licenses that do not are returned to the state and offered through the same auction process used for new allocations. The logic is straightforward: a license is a right to develop a resource, not a right to hold it indefinitely without action.
Applied consistently, this approach would reset the structure of the market without disrupting operators who are actually working. It would also send a clear signal that subsoil rights carry obligations — a signal that is currently weak.
Context
Oleksandr Katsuba is an energy entrepreneur and owner of Alpha Gas, an oil and gas company focused on the production of natural gas and gas condensate. His assessments of the Ukrainian gas market draw on direct operational experience as well as earlier work within the state energy system, which gives him visibility into both how decisions are made and how they play out on the ground.
Conclusion
Ukraine has the resource base to expand gas production but is not fully utilizing it. The primary constraint is not access to reserves, but how those reserves are allocated. Geological potential is not the limiting factor — institutional design is.
Without revisiting inactive licenses, the sector risks remaining in a state of underutilized potential rather than moving toward growth. The tools for change exist. The question is whether the system is prepared to use them — and whether the political logic that has preserved the current arrangement will give way to the economic logic that demands a different one.
In a period when every additional cubic meter of domestic gas reduces pressure on imports, supports industrial recovery, and strengthens fiscal stability, leaving hundreds of licenses dormant is not a neutral policy choice. It is a decision with direct consequences — and one that becomes harder to justify with each passing year.
