Ukraine Launches Two-Year Trial for Underground Storage of Oil and Fuel Reserves

Introducing Ukraine’s Pilot Program for Underground Oil and Fuel Storage

According to 5 канал — Економіка: The Cabinet of Ministers of Ukraine has initiated a two-year pilot project for storing a portion of the country’s minimum oil and fuel reserves in underground facilities. This initiative will run throughout the current martial law period but will not exceed two years. Its goal is to prepare the energy market for permanent underground diesel fuel storage. The Ministry of Energy of Ukraine is overseeing the project, while Ukrtransnafta is designated as the responsible custodian.

Storage Methods and Conditions

Underground storage will take place in two main forms:

• tank reservoirs buried beneath soil layers, equipped with flow meters;
• underground facilities within salt caverns, depleted oil or gas fields, and other geological formations.

The role of specialized custodians is not exclusive-other market participants and operators can develop their own underground storage sites if they meet the established admission criteria, according to LIGA ZAKON. Sections of main pipelines utilized for storage will gain the status of mobile excise warehouses. Flow meters will be installed at entry and exit points of underground tanks to ensure excise accounting.

Participants in the experiment will report data through a dedicated reporting system. Custody agreements will specify storage volumes, durations, and inventory monitoring requirements. Starting in 2027, market actors and operators must keep at least 20% of the total minimum diesel fuel reserves underground. This regulation is also emphasized in LIGA ZAKON’s statement.

Meanwhile, Russia is grappling with severe fuel supply challenges. Due to shortages caused by Ukrainian strikes on refineries, Russia has resorted to importing gasoline from India. This deficit has led to nearly a threefold slowdown in harvesting rates compared to last year, with the agricultural sector in the Rostov region anticipating crop losses around 15%. Fuel scarcity threatens timely grain collection and the survival of small farms. Farmers face a narrow 7-10 day window to harvest mature grains, intensifying the difficulties.

Ukraine’s move to implement underground storage for oil and fuel reserves signals a strategic effort to stabilize its fuel market and reduce reliance on foreign supplies. At the same time, Russia’s ongoing fuel supply disruptions highlight the severe challenges it faces amid the conflict, with significant consequences for its agricultural output and regional food security.