Lithium, hydrocarbons and more: what Ukraine is ready to share for the sake of Ukrainian-American friendship
1 September 15:27
ANALYSIS
The Ukrainian leadership is very eager to please the Republican administration in the United States or at least to establish a partnership with it. This applies not only to political and military issues, but also to economic ones. The signing of the “mineral” agreement between Ukraine and the United States is about that. The first steps towards its implementation are already being taken. "Komersant Ukrainian" investigated which ones.
The first three projects under the U.S.-Ukraine Reconstruction Investment Fund should be launched within 18 months. This is how Prime Minister of Ukraine Yulia Svyrydenko set the task for the Ukrainian side before the first meeting of the fund’s board of directors scheduled for September. The same intentions are actually recorded in the government’s program presented recently. Moreover, it appears that the government has already determined which deposits will start the “new era” of Ukrainian-American economic cooperation.
Lithium in the first place
The preparation of the first pilot project within the framework of joint US-Ukrainian investment was announced in early July. On July 3, Yulia Svyrydenko, who was still the First Deputy Prime Minister, announced that the Commission for the Organization of Conclusion and Implementation of Production Sharing Agreements had decided to announce a tender for the Dobra lithium deposit in Kirovohrad Oblast. According to her, this deposit potentially falls under the mandate of the investment fund. She also emphasized that all interested investors should have access to the tender to ensure that everything is competitive and in compliance with the law. This statement was made following a meeting between President of Ukraine Volodymyr Zelenskyy and representatives of American business in Ukraine. It was at this meeting that a representative of the American company TechMet said that if it wins the tender, his company is ready not only to search for and mine lithium in Ukraine, but also to build facilities for its enrichment.
The New York Times previously wrote that this particular group had long expressed interest in the lithium deposit and at the end of 2023 called on the President of Ukraine to open the auction. This happened in mid-2025. The American publication also revealed who exactly claims the Ukrainian deposit. As it turns out, it is a consortium of investors, including TechMet, an energy company partially owned by the US government, and Ronald S. Lauder, a billionaire and friend of President Trump.
The cooperation is to be carried out under a Production Sharing Agreement (PSA). This is an investment mechanism that allows investors to extract minerals in exchange for sharing production with the Ukrainian government. As explained by the NYT, this type of agreement attracts investors because it has a long term and provides long-term stability, as well as offers tax benefits and allows disputes to be resolved through international arbitration courts.
According to Ksenia Orynchak, executive director of the National Association of Extractive Industries of Ukraine, the presence of such influential players can significantly accelerate the project’s implementation by providing it with political support at the highest level in the United States. At the same time, this creates certain challenges. Ksenia Orynchak continues.
“The association of the project with specific politically significant figures can make it vulnerable to changes in the political environment both in Ukraine and the United States. Therefore, to ensure the long-term sustainability and legitimacy of the project, it is critical that the Ukrainian government conducts the competition as transparently, competitively, and in accordance with international best practices as possible, preventing any accusations of favoritism,”
– says the expert.
So what is the Dobra lithium deposit in Kirovohrad region, which could become the first joint project under the subsoil agreement between Ukraine and the United States? Ksenia Orynchak explains.
“The Dobra lithium ore deposit (also known as Novostankuvatske) in Kirovohrad region is one of the most promising investment projects in Ukraine in the field of critical minerals. Located on an area of more than 1700 hectares, it was discovered in 1989, but commercial production has not yet begun, making it a greenfield project with great potential,”
– says the expert.
According to her, the strategic importance of the field is determined by several factors:
- Economic value. Lithium is indispensable in the production of batteries for electric vehicles, consumer electronics, and energy storage systems. Global lithium prices are showing a long-term upward trend, reaching more than USD 24,000 per ton, which promises huge profits for the state and investors.
- Not just lithium. The value of the Dobra deposit is not limited to lithium alone. Geological studies indicate the presence of other rare earth metals in the ores, such as tantalum, niobium, and scandium, which are critical for the aerospace industry and the military-industrial complex.
- No alternative. Under the temporary occupation by Russia of the territories of Donetsk and Zaporizhzhia regions, where other significant lithium deposits are located, the deposits of Kirovohrad region (Dobra and Polokhivske) are gaining the status of having no alternative for the development of Ukraine’s own raw material base of critical minerals.
on August 27, the Cabinet of Ministers decided to hold an open tender for a production sharing agreement for Dobra field and approved the tender terms. The tender is open to Ukrainian and foreign companies, associations of legal entities and private participants. It is scheduled to be held by the end of December. The winner of the tender is expected to enter into a 50-year production sharing agreement with the state and commit to at least USD 179 million in investments. USD of investments.
In total, Ukraine has four lithium deposits: in addition to two deposits in Kirovohrad region (Dobra and Polokhivske deposits), there is also Shevchenkivske in Donetsk region and Kruta Balka in Zaporizhzhia region. Both are located in the temporarily occupied territory. Ukraine’s lithium deposits are estimated at 500 thousand tons, which is 2% of the world’s reserves and 5th place in Europe.
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Where to without hydrocarbons
The next projects that can be implemented under the U.S.-Ukraine Reconstruction Investment Fund became known a few days ago. The Prime Minister of Ukraine Yulia Svyrydenko announced the decision to restart tenders for the distribution of hydrocarbons in the Mezhyhiria and Svichanska fields. Applications for participation in the new tender will be accepted for three months from the date of the announcement. Artem Petrenko, Executive Director of the Association of Gas Producers of Ukraine, explains further.
“The tenders have been restarted to fulfill the provisions on the establishment of the investment fund for reconstruction. The American side, regardless of whether they directly participate in PSA tenders or not, will be directly involved in these projects and their implementation. The updated terms of the tenders already provide for the right of the US partner to buy out the products, as well as a guarantee that other participants will not be offered more favorable terms. In addition, investors will have to notify the fund of their decision to attract investment,”
– the expert notes.
So what are the hydrocarbon deposits at Mezhyhirska and Svichanska blocks and what can they offer to investors? Artem Petrenko continues.
“Firstly, they are located within Lviv, Ivano-Frankivsk and Chernivtsi regions, which is quite far from the borders with the aggressor country. Secondly, these are large blocks offered for development: Mezhyhirske covers 1,515.6 km2 and Svichanske – 872.6 km2. The blocks contain deposits of conventional gas, shale gas and tight gas, as well as oil and condensate. According to official state data, the resource base of Mezhyhirske field is about 21.9 million tons of hydrocarbons, and Svichanske field – 33 million tons of hydrocarbons. Third, the western region is developing rapidly. There are examples when companies managed to increase production many times over thanks to investments and modern technologies,”
– the expert noted.
According to him, this region already has experience in implementing the first production sharing agreement in Ukraine. Artem Petrenko reminded that since the spring of 2022, Well Co. of the Zakhidnadraservice group has been successfully producing gas at the Uhnivska field, which was granted to it under the PSA, and the state, in turn, receives a share of the production.
Three projects are just the beginning
The Ukrainian authorities, perhaps not least because of their interests in cooperation with the Americans, are persistently willing to inspect subsoil licensees. The Ministry of Economy and the State Service of Geology and Subsoil of Ukraine (Derzhgeonadra) have been instructed to audit all subsoil users who have received permits for strategically important fields. The officially announced purpose of the audit is to find out who is actually working and who is holding licenses without producing. In other words, as Prime Minister Yulia Sviridenko explained, strategically important fields “must produce results or return to the auction for bona fide investors.” It is not difficult to predict that in this case the requirements of the US-Ukraine investment agreement will be taken into account.
How do representatives of subsoil users assess the prospects of such an audit? Especially since this is not the first such attempt. This year, the State Service of Geology and Subsoil of Ukraine has already proposed to update the Cabinet of Ministers’ Resolution No. 303, providing for the resumption of scheduled and unscheduled inspections of subsoil users whose activities are classified as high-risk. However, in early July, the State Regulatory Service of Ukraine did not approve the draft amendments, explaining that the current version of the government resolution already allows for unscheduled state supervision measures in case of justified need.
The National Association of Extractive Industries of Ukraine called the essence and mechanisms for implementing the government’s initiative to fully restore scheduled and unscheduled inspections of subsoil users “inappropriate, disproportionate, and potentially harmful to the industry.” They explain that the need to resume inspections was justified by the risk of turning 29 suspended special permits into “dormant” ones. In order to prevent this risk, it was proposed to restore total control over all subsoil users without exception, which would involve 486 scheduled inspections of 375 business entities. This approach is called “obviously disproportionate.”
In addition, according to Ksenia Orynchak, Executive Director of the National Association of Extractive Industries of Ukraine, the statement that without the resumption of physical inspections on the ground, the state is unable to control the industry and detect violations is false.
“The State Service of Geology and Subsoil of Ukraine, as well as other government agencies, already have a full set of modern, effective and non-invasive tools for comprehensive on-site control. These mechanisms allow to obtain comprehensive information about the activities of each subsoil user in real time without the need to send inspectors to the enterprises,”
– says the expert.
According to her, the key existing tools include: annual reporting on the implementation of the work program, annual reporting on inventory accounting, tax reporting, and electronic monitoring systems.
“The unified state electronic geoinformation system for subsoil use and monitoring system SOTA integrates data from the State Service of Geology and Subsoil, the Tax Service and the Ministry of Justice, providing a comprehensive picture of each special permit, including information on beneficiaries, production volumes and rent paid,”
– states Ksenia Orynchak.
For his part,Artem Petrenko, Executive Director of the Association of Gas Producers of Ukraine, reminds that since the end of March 2023, the country has been in force with a deregulation law that has made the subsoil use system transparent and understandable.
“As for oil and gas companies, at each stage of their activities, they regularly report on their work. That is, they provide detailed information on the work program, production volumes, drilled wells, balance reserves, etc. This process is as clear and transparent as possible. And the state is in full possession of all the information on each issued special permit,”
– emphasizes the expert.
The effectiveness of these tools is confirmed by the official statistics of the State Service of Geology and Subsoil. According to the National Association of Extractive Industries, even under the moratorium on scheduled inspections, in 2022 the agency made almost 1000 decisions on the further validity of special permits, in 2023 – 928 decisions, and in 2024 – 433 decisions. Among them are hundreds of decisions to suspend and revoke licenses. This proves that the state has not lost control over the industry and is able to effectively respond to violations using available reporting and analytical data.
The National Association of Extractive Industries also draws attention to the manipulation by government officials of the term “sleeping license,” which still has no legal definition in Ukrainian law. Ksenia Orynchak, Executive Director of the National Association of Extractive Industries of Ukraine, explains.
“A ‘dormant’ license is a license under which mining operations have never started. These are permits obtained for the purpose of speculative resale or blocking competitors’ access to the field,”
– she said.
However, the expert adds, the regulatory impact analysis of the draft resolution proposed to significantly expand this concept, classifying as “dormant” also those permits under which work has not been carried out in violation of the work program for more than one year.
“Such an approach is absolutely unacceptable in times of war, as it does not take into account the objective force majeure circumstances faced by bona fide subsoil users: destruction of infrastructure, problems with logistics and energy supply, mobilization of personnel, inability to attract foreign equipment and financing. A working quarry that has reduced production due to shelling is not a “sleeping license”,”
– notes Ksenia Orynchak.
According to her, the idea of transferring licenses through an auction to other investors is correct only for truly “dormant” assets where the owners have never intended to produce. Applying this mechanism to companies affected by the war, as emphasized by the National Association of Extractive Industries, would be tantamount to expropriation and send an extremely negative signal to all existing and potential investors.
It’s another matter if the goal is to release as many “fat” licenses as possible to fill the US-Ukraine Reconstruction Investment Fund with content and send a signal to the main investor. There is no room for any emotions here. Well, the Ukrainian government wants to please the American government very much.
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Serhiy Vasylevych
