Capital investments in the energy sector more than doubled in 2023
According to Energy Map, a portal of official data on the energy sector of Ukraine, capital investments in the production, processing and supply* of energy resources in 2023 amounted to UAH 109.3 billion, which is 2.2 times more than in 2022 (UAH 49.7 billion) and 13% more than in 2021 (UAH 97.0 billion).
At the same time, in dollar terms, investments increased by 95% compared to 2022, but decreased by 16% compared to 2021.
The most significant increase in investment is in the extractive industry, in particular:
- natural gas extraction – UAH 36.7 billion (almost 8-fold increase by 2022 / +89% by 2021);
- coal mining – UAH 11.5 billion (+64% / +31%);
- crude oil extraction – UAH 2.9 billion (+110% / +79%);
- support activities for oil and natural gas extraction – UAH 1.9 billion (+239% / +264%).
Investments in the refining industry increased compared to 2022, but decreased compared to 2021: UAH 0.13 billion was invested in the production of oil refined products (up more than 4 times by 2022, but -52% by 2021); UAH 0.69 billion was invested in the processing of coke and coke products (+85% by 2022 and -78% by 2021).
Among the energy supply segment, the most significant increase in investment was recorded in the supply of steam, hot water and air conditioning – UAH 8.7 billion (+95% by 2022 and +83% by 2021). Investments in electricity generation, transmission and distribution amounted to UAH 43.9 billion (+56% / -21%). In 2023, investments in gas production and distribution through local pipelines decreased by 2% to UAH 3 billion (however, an increase of 9% compared to 2021).
In 2023, almost 98% of all investments were made in tangible assets. Most of the funds were invested in engineering structures – about UAH 67.5 billion, or 62% of the total amount. Machinery, equipment, and tools accounted for UAH 31.5 billion (29%), and residential and non-residential buildings, vehicles, land, and other tangible assets for about UAH 8 billion (7%). Investments in intangible assets, such as software, databases, patents, etc., amounted to UAH 2.3 billion, which is 2% of total investments.
Distribution of capital investments in 2023 by types of assets, %
Name and code of the NCEA division | Tangible assets | Intangible assets (software, databases, trademarks, patents, licenses, copyrights, concessions, etc.) | |||
machinery, equipment, tools | non-residential buildings | engineering structures | other | ||
Mining of coal and lignite (05) | 62,6 | 0,6 | 35,4 | 0,9 | 0,5 |
Extraction of crude oil and natural gas (06) | 7,7 | 3,3 | 85,6 | 1,7 | 1,7 |
Support activities for oil and natural gas extraction (09.1) | 75,0 | 0,9 | 24,0 | 0,03 | |
Manufacture of coke and refined oil products (19) | 75,2 | 4,1 | 15,2 | 4,8 | 0,6 |
Electricity, gas, steam and air-conditioning supply (35) | 34,7 | 4,2 | 52,8 | 5,3 | 2,9 |
In terms of use, the majority of investments, namely 63%, were directed to the acquisition and creation of new assets. Investments in reconstruction and modernization amounted to about 25% of total investments. Major repairs accounted for about 10% of investments, while the acquisition of assets that were already in use accounted for about 2%.
Distribution of capital investments in 2023 by directions of use, %
Name and code of the NCEA division | Acquisition and creation of new assets | Acquisition of assets that were in use | Improvement, reconstruction, modernization | Overhaul |
Mining of coal and lignite (05) | 42,3 | 27,8 | 29,9 | |
Extraction of crude oil and natural gas (06) | 94,1 | 0,01 | 3,2 | 2,7 |
Support activities for oil and natural gas extraction (09.1) | 46,3 | 52,0 | 0,7 | 1,0 |
Manufacture of coke and refined oil products (19) | 27,1 | 1,0 | 5,5 | 66,4 |
Electricity, gas, steam and air-conditioning supply (35)м | 46,4 | 0,4 | 42,4 | 10,8 |
According to Energy Map analysts, in 2023, in dollar terms, investments in electricity, gas, and heat supply amounted to $1.52 billion, in coal, oil, and natural gas production – $1.45 billion, and in production of coke and oil products – $22.4 million.
Capital investments in Ukraine’s energy sector during 2010-2023 were primarily driven by macroeconomic and political factors. After a period of growth until 2013, investment volumes sharply declined due to the annexation of Crimea and russia’s armed aggression in eastern Ukraine. In 2016-2019, there was a recovery, but the COVID-19 pandemic in 2020 caused a temporary downturn.
With the onset of Russia’s full-scale invasion in 2022, investments in the energy sector again decreased. However, 2023 shows signs of stabilization and growth, likely indicating adaptation to wartime conditions and the influx of international aid for energy infrastructure restoration.
* the sample includes separate types of activities for each NACE section: mining and quarrying – codes 05.1, 06.1, 06.2, 09.1; manufacturing – 19.1, 19.2; electricity, gas, heat supply – 35.1, 35.2, 35.3.
The preparation of this material was made possible thanks to the support of the American people, provided through the United States Agency for International Development (USAID) within the framework of the project «Energy Sector Transparency», implemented by the DiXi Group NGO. The information presented in this material is the sole responsibility of the DiXi Group NGO and under no circumstances can be considered as reflecting the position of USAID or the US Government.