Challenges of transformational changes in Ukraine's oil and gas production sector in the context of decarbonization

The process of decarbonization presents a key challenge for Ukraine’s oil and gas extraction sector, as it involves reducing greenhouse gas emissions while maintaining the economic sustainability of the industry. As a signatory to the Paris Climate Agreement, Ukraine has committed to achieving climate neutrality by 2060, which exerts significant pressure on traditional energy industries. The core problem lies in the fact that the oil and gas sector remains a major source of public revenue, yet its operations lead to considerable environmental consequences. Transitioning to low-carbon technologies requires substantial investment, modernization of equipment, adoption of new management approaches, and changes in national energy policy. Another pressing issue is the need to implement modern environmentally safe technologies. Many oil fields in Ukraine still rely on outdated equipment, characterized by high energy consumption and adverse environmental impact. Additionally, the underdevelopment of alternative energy sources and limited access to innovative solutions create further barriers to decarbonization. Regulatory incentives are also insufficient, as current mechanisms supporting environmental initiatives lack the effectiveness required to drive large-scale transformation in the sector. Socio-economic factors further complicate the decarbonization of Ukraine’s oil and gas industry. On the one hand, the growing demand for energy resources in Ukraine calls for increased production volumes, which runs counter to decarbonization goals. On the other hand, the absence of a coordinated strategy among the government, businesses, and civil society creates risks for achieving climate objectives. A successful transformation of the industry requires a comprehensive approach that includes innovation incentives, investments in clean technologies, international cooperation, and the strengthening of environmental standards. The purpose of this study is to identify the key obstacles hindering the decarbonization process of enterprises in Ukraine’s oil and gas extraction sector. To achieve this objective, the study employs general scientific methods of synthesis, analysis, and systematization. The paper analyzes investment volumes in Ukraine's oil and gas sector and identifies the main challenges for its decarbonization-oriented transformation.