Record-Breaking 13% Increase in Gas Production During Wartime: Key Success Factors Behind the Shebelynkagasvydobuvannya Team
Achieving Energy Independence: Lessons from Maintaining and Growing Gas Production During Wartime
At the current stage of Ukraine’s development, energy independence has become one of the most widely discussed issues among both the public and the expert community.
The realities of the global economic environment and the urgent need to secure natural gas supplies for Ukraine’s economy and households have reinforced the importance of increasing domestic gas production. A key role in achieving this objective belongs to JSC Ukrgasvydobuvannya, Ukraine’s largest natural gas producer.
Over the past three years, while leading the country’s largest gas production enterprise — Shebelynkagasvydobuvannya Production Unit of Ukrgasvydobuvannya JSC, which accounts for approximately 40% of Ukraine’s natural gas production — my team and I gained extensive experience in delivering strong operational results under highly challenging internal and external conditions.
The valuable and unique practical experience, effective management approaches, and crisis-response measures developed during wartime are highly relevant not only to the oil and gas sector but also to manufacturing and industrial enterprises across other sectors of the economy.
Since the beginning of 2022, our enterprise has operated under exceptionally difficult circumstances. The occupation of parts of the Kharkiv region, combined with devastating missile attacks on energy, infrastructure, and civilian facilities, posed significant threats to the normal operation of gas production, processing, transportation, and compression assets.
A substantial share of organizational and human resources had to be redirected toward mitigating the consequences of military actions, evacuating employees and their families, fortifying critical facilities, and safeguarding equipment, vehicles, inventories, materials, and other strategic assets.
Despite these unprecedented challenges and risks, Shebelynkagasvydobuvannya managed to maintain gas production volumes in 2022 at nearly pre-war levels, even while more than 20 production facilities were located in occupied territories. The decline in production amounted to only 1%.
The enterprise’s crisis-management measures implemented during 2022 can be divided into three key categories:
1. Military Risk Management
This work involved measures aimed at protecting the lives and health of our employees, safeguarding production facilities and company assets, and ensuring an effective operational management system across five regions of Ukraine.
2. Ensuring Sustainable Operations During Wartime
The key initiatives focused on stabilizing production from the base well stock and maintaining the operating performance of surface infrastructure facilities.
3. Managing the Risk of Delays in Development Projects
The key factors ensuring the continuity of drilling and infrastructure development projects included maintaining workforce motivation, addressing logistics challenges, and adapting collaboration with contractors and other stakeholders to the changing external environment.
Following the liberation of parts of the Kharkiv region in September 2022, all available resources were mobilized to restore damaged production facilities. Within just two months, two gas treatment plants were fully restored and recommissioned. At the same time, demining and preparatory works were carried out to support new development projects, resulting in the construction and commissioning of a new gas processing facility.
As early as 2023, we achieved the highest gas production volume recorded in recent years, fundamentally reversing the negative trend of previous periods. The company delivered a 13% year-on-year increase in gas production, generating more than UAH 5 billion in additional revenue (excluding VAT), based on the gas sale prices established under Resolution of the Cabinet of Ministers of Ukraine No. 222 dated March 6, 2022.
Particularly noteworthy was the growth in average daily production, which increased by 17% over the year, comparing December 2023 with December 2022. This demonstrates a sustainable upward production trend throughout the year and the successful establishment of a strong foundation for further growth in the years ahead.
The results achieved by Shebelynkagasvydobuvannya Production Unit demonstrate that we successfully reversed the long-standing decline in gas production, delivered record-breaking growth, and established a solid foundation for future development.
Reflecting on our operational journey over the past two years and the management system transformation implemented across the enterprise, our team identified five critical success factors that made these results possible:
- Team. One of the strongest in the industry
- An effective project management system
- Implementation of the Dynamic Production Model
- Maintaining the operating performance of the base well stock
- Implementation of a new production organizational structure
In fact, I am proud of our management team and the dedication and heroism of our field personnel, who have continued to perform their duties with unwavering commitment under extremely challenging circumstances. Their efforts have been the most significant factor behind our achievements. We succeeded in bringing together a strong team of motivated professionals from various industries and regions of Ukraine, united by a common goal. Together, we endured the most difficult days and achieved outstanding results. I am pleased that our achievements and contribution to the Ukrainian people in 2022 were recognized at the state level by the Chairman of the Verkhovna Rada of Ukraine. This recognition reflects the contribution of every member of our team, as well as the employees of our drilling and construction divisions working at our sites.
The establishment of the project management system within the company took place in several stages, beginning in 2021. The first stage involved conducting a comprehensive inventory and analysis of the project portfolio, prioritizing projects, assigning project managers, and formalizing project programs. During the second stage, extensive training was provided to program and project managers responsible for well intervention operations and capital construction projects, based on the Project Management Institute (PMI) methodology. The third stage focused on developing the organizational, staffing, information, and methodological framework of the Project Management Office (PMO) and integrating it into the company’s operations.
The systematic and effective work of the PMO and responsible project managers enabled the successful implementation of a record-breaking drilling program: 56 wells drilled across the company’s fields, the highest figure achieved during the entire period of Ukraine’s independence. It is worth noting that 4% of the production growth achieved in 2023 resulted from exploration and appraisal activities at new fields. At the same time, the largest share of production growth was delivered by fields that have been in development since the 1960s and 1970s.
This demonstrates a fundamental reassessment by our team of geologists and reservoir engineers of the approaches used to justify and implement development drilling and appraisal programs across the licenses within the portfolio of Shebelynkagasvydobuvannya. These initiatives delivered strong production results:
- 1 billion cubic meters of annual gas production achieved at one of the company’s mature fields;
- 3 new fields brought into commercial operation;
- 400 thousand cubic meters per day achieved as record flow rates from two wells.
The implementation of such an ambitious drilling program required the optimization of all available resources and more than a twofold increase in preparatory and support activities, including: geological justification and selection of new drilling candidates; land acquisition for drilling pads and gathering system construction; organization of Environmental Impact Assessment (EIA) procedures and public hearings; construction of well pads, access roads, and tie-in pipelines for well connection. One of the most significant challenges was the integration of multiple business functions. The PMO successfully addressed this challenge, demonstrating both the practicality and effectiveness of project management methodologies.
Another key success factor was the establishment of a transparent system for planning and controlling operational performance indicators and overall financial and business activities. This stage was implemented through the development and deployment of a dynamic production model based on the principles of results-oriented planning and program-target modeling. The team conducted a comprehensive retrospective analysis of all factors influencing operational performance in previous periods.
Each factor was assigned both quantitative and qualitative characteristics. Following their systematic integration into the model, a digital twin of the company’s operating model was created. This tool enables daily assessment of the impact of identified factors and provides updated forecasts regarding the achievement of target operational and financial performance indicators within the planning horizon.
For example, in 2023, a total of 682 factors affecting natural gas production performance were identified. The factor register was subsequently decomposed by functional area across the organization, and accountable managers and executives were assigned to each domain. Their areas of responsibility included monitoring and minimizing the impact of adverse factors, optimizing resource utilization, and maximizing the effect of performance-enhancing factors. This approach established an effective mechanism for planning, performance management, and operational control.
Another important factor behind our success was the diligent and highly effective work focused on sustaining the performance of the base well stock. The company operates more than 1,300 wells across mature and depleted fields, of which approximately 60% have been in operation for more than 35 years. Under such conditions, maintaining production performance becomes an increasingly critical challenge.
To ensure the ability to respond promptly to changes in the operating conditions of the base well stock, we made the strategic decision to transform the organizational structure of the production function. A key objective of this transformation was to delegate authority, resources, and accountability for production, gas treatment, transportation, and compression processes to operational leaders at the regional level.
As part of this initiative, we established two regional production divisions. Each division was designed as a fully integrated operating unit responsible for end-to-end management of the production process, as well as for ensuring the technical and mechanical integrity of operations.
The regional divisions incorporated production operations teams, compressor stations, and transportation units, together with dedicated mechanical, geological, metrology, and power engineering services. They also included capital construction and maintenance departments, enabling each division to manage the full spectrum of operational activities and support functions required for efficient and reliable production.
These measures significantly increased the engagement of engineering and technical personnel in the execution of production targets and the integrated production plan. The quality of base well stock management and production optimization practices improved substantially. The transformation also accelerated operational decision-making, enabled a more efficient allocation of resources between regional production divisions, and enhanced overall resource utilization.
In addition to strengthening management practices and maintaining a strong focus on the key drivers of operational success, the company has implemented a number of innovative initiatives over the past two years aimed at developing human capital and ensuring the long-term sustainability of the business.
Among the most impactful initiatives were a talent development program, the establishment of a mentoring and coaching culture, and an unprecedented portfolio of corporate social responsibility projects designed to strengthen engagement and partnership with local communities.
These initiatives have not only contributed to operational excellence but have also laid the foundation for sustainable growth, organizational resilience, and the development of the next generation of leaders within the company.
Since 2021, we have traveled a challenging path both professionally and personally. Today, however, we can point to significant achievements, a highly motivated workforce, and a resilient organization capable of delivering results under extraordinary circumstances.
Ensuring Ukraine’s energy security through domestically produced natural gas and increasing production volumes in the years ahead depends, first and foremost, on the performance of JSC Ukrgasvydobuvannya. Sustaining long-term growth is a challenge for any large organization, particularly under the unprecedented constraints imposed by wartime conditions. A state-owned company is no exception and today faces a number of complex operational and corporate challenges, including mitigating wartime risks; accelerating seismic exploration activities; increasing exploration and appraisal drilling and reserve replacement; modernizing in-house service and construction capabilities; attracting advanced international technical expertise; renewing fixed assets, specialized equipment, and transportation fleets; driving organizational transformation; eliminating inefficiencies in selected processes and management layers; establishing transparent and effective relationships with project stakeholders; ensuring workforce development and succession; defining clear operational objectives; and formulating a robust long-term development strategy.
Achieving these ambitious goals and addressing the critical challenges ahead requires an exceptional concentration of intellectual, organizational, and financial resources—resources that the company and the industry possess today. The results achieved by the Shebelynkagasvydobuvannya team demonstrate that no objective is unattainable when people are united by a common purpose. At the same time, our experience confirms that the most critical factors behind sustainable success are a strong team and the trust that exists within it.
