History of the industry

History of the industry

History of the oil and gas industry of Ukraine

The oil and gas industry of Ukraine has an interesting and multifaceted history of development, which is an inseparable part of the history of establishment and building of Ukraine’s fuel and energy complex.

Within the boundaries of modern Ukraine oil and gas have been extracted and used since time immemorial. According to ancient chronicles, oil was extracted on the Crimean peninsula and used for economic purposes as early as in the 3rd century AD.

However, a special place in the formation and development of Ukraine’s oil and gas industry is held by the Carpathian Mountain region. In fact, the first oil fields in Europe were located here. The commercial development of oil in Sloboda-Runhurska (Ivano-Frankivsk Oblast) began in 1771, or a quarter of millennium ago. Half a century later, in 1820, intensive oil production began near the town of Boryslav.

The late 19th and early 20th centuries saw a period of rapid development of oil production at the Boryslavske field that yielded 2 million 75 thousand tons of oil in 1909. At the time, it was the largest oil-producing region in Europe and third globally in terms of oil production after the United States and Russia.

Dashavske field

Mechanical insulation of Dashava-Kyiv gas pipeline, 1947

The Dashavske field became one of the most efficient gas fields in the world at that time, and in 1924 commercial operation of the field began, which is rightly considered the year of birth of the gas industry of Ukraine.

Putting Dashavske field gas into commercial production initiated not only natural gas production but also transportation in our country. During these years, the gas pipelines Dashava – Stryi – Drohobych (1927) and Stryi – Mykolayiv – Lviv (1929) were built.

Evolution of oil transportation via oil pipelines

Ukraine’s first main gas pipeline, Dashava – Kyiv, built in 1948 with a diameter of 500 mm and a length of 509 km, was the most powerful and longest in Europe at that time.

Its capacity was about 2 bcm per year. In 1951, the pipeline was extended from Kyiv via Bryansk to Moscow.

1948 is considered the starting point for the formation, establishment, and development of the modern gas transportation system of Ukraine.

It is noteworthy that the world’s first interstate export supplies of natural gas began from Ukraine. In 1945, during the post-war reconstruction of Europe, Ukrainian gas supplies began from Dashavske and Oparske fields to Poland. Gas from Ukrainian fields was supplied to Russia, Belarus, Czechoslovakia, and Austria.

The modern history of the Crimean oil and gas industry began in 1960, when the first onshore gas field – Zadornenske – was discovered. 11 years later, the first “marine” gas condensate field – Holitsynske – was discovered in the Black Sea.

History of underground gas storage in Ukraine

The history of underground gas storage in Ukraine begins in 1964. Back then, the injection of natural gas into the deposits of the first Ukrainian gas storage facility – Olyshivske – began. In 1983, the Bilche-Volytske underground gas storage facility was put into operation, which is still one of the largest in the world.

Advanced technologies

Ukraine’s oil and gas industry has always embraced state-of-the-art technologies. It was in Ukraine at the Boryslavske oil field in 1954 that the then-advanced technology of injecting water into oil deposits was used for the first time in the former USSR. This made it possible to significantly improve the oil recovery ratio.

In 1981, the introduction of a cycling process – for the first time in Europe – began at the Novotroyitske gas condensate field. This advanced technology makes it possible to significantly increase the condensate recovery rate.

In 1996, the gas transmission system began to implement in-pipe diagnostics of main gas pipelines using so-called "intelligent" pistons, which allows to ensure high reliability of gas pipelines.

The almost 200-year history of Ukraine’s oil and gas industry is impressive and fascinating. It has helped the country to earn a prominent position in the global energy industry today.

Establishment of the company

Given the important role played by the oil and gas industry in the structure of the national economy, as well as the unique features of its functioning as an “energy bridge” between the two regions of the Eurasian continent, May 1998 saw the establishment of National Joint Stock Company “Naftogaz of Ukraine” via Ukrainian Cabinet of Ministers resolution.

Over the years, the сompany has passed through hurdles of formation, production capacity development, and governance improvement, while successfully addressing numerous challenges in the domestic oil and gas market and relations with Russia. Today, Naftogaz is one of the largest companies in Ukraine, the mainstay of the state budget, the driver of gas market reforms, and a key element of the Ukrainian economy.

The establishment of the сompany was aimed at securing the efficient operation and further sustainable development of an important sector of the economy, strengthening Ukraine’s role as an important contributor to European energy security, and better meeting the fuel and energy resource needs of industrial and household consumers.