Underground fuel storage facilities require simplified permits and long-term loans – ZPEK
To build underground fuel storage facilities in Ukraine, cooperation between the government and the private sector must be established. Specifically, this involves streamlining permitting procedures and providing accessible long-term financing for such projects.
“We need to bring the government and the business sector to the table and find a compromise: to safeguard the country’s strategic interests and create realistic economic conditions for private companies to build up reserves. As of now, I don’t see such a compromise yet,” he said.
According to the CEO, from the government’s perspective, reserves of oil and petroleum products are clearly necessary, but the conditions for the private sector to build the required storage facilities have not yet been established.
“The first problem is financial. Building reserves means that a company must effectively tie up a significant amount of working capital. For ZPEK, this could amount to more than one million dollars,” Chikida noted.
As he explained, an underground storage facility with a capacity of approximately 10,000 metric tons may require an investment of $10 million, which is a very significant amount for a private company; therefore, affordable long-term financing is necessary to implement such projects.
“Programs are being discussed through state-owned banks at an interest rate of approximately 12% per annum in hryvnia for five years. This is a step in the right direction, but it will not meet the industry’s needs,” the CEO believes.
The second problem, he says, is infrastructure-related. Since a significant portion of the storage tank fleet was destroyed or damaged during the war, the question arises: where to store this resource, and who will bear the risk if the storage facility becomes a target of attack again?
“Specifically, we have a site where an underground storage facility could be built. But obtaining all the permits could take about a year and a half, and the construction itself, according to our estimates, is about three times more expensive than an above-ground facility,” Chikida noted.
He added that ZPEK is prepared to invest even under these conditions.
“But if we start the permitting process in September 2026, we’ll be lucky to get the documents in 2027, and construction won’t be completed until 2028. How will market demand change by then, and how can we recoup these investments?” the CEO asked.
As previously reported, starting in early 2027, Ukraine is set to launch a pilot project for the underground storage of petroleum products from the minimum stockpile of crude oil and petroleum products (MZN) in accordance with Cabinet of Ministers Resolution No. 1037 of August 13, 2026.
Oleg Chikida, CEO and co-owner of the Western Fuel and Energy Company (ZPEK), expressed this opinion in an interview with the Interfax-Ukraine news agency.
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