Yaroslav Starovoitenko: The Fuel Market Demonstrates Resilience, Yet the Shadow Segment Remains a Key Challenge

On 11 June, during an analytical session at RAU Expo 2025, Yaroslav Starovoitenko, President of The Ukrainian Oil & Gas Association (UOGA), presented a comprehensive review of the state of Ukraine’s fuel market amid wartime conditions. In his address, he highlighted both the sector’s achievements and the systemic challenges that still require regulatory resolution.

Market Resilience and Fiscal Contribution

Despite large-scale hostilities, Ukraine’s fuel sector continues to demonstrate both resilience and adaptability. In 2024, the consumption of petroleum products reached 10.5 million tonnes — approaching pre-war levels of 12.8 million tonnes. The sector remains a significant source of budgetary revenues: in 2024, the state budget received nearly UAH 200 billion in tax payments, including UAH 92.8 billion in excise duties, UAH 90.77 billion in VAT, and UAH 15.71 billion in operational taxes.

Even at the height of hostilities, petrol station networks served as crucial pillars of the economy, ensuring transport logistics and maintaining public mobility. During blackouts, filling stations functioned as “points of resilience,” providing access to fuel, energy resources, and communications.

Market’s Logistical Transformation

In response to geopolitical challenges, Ukraine has completely reoriented its petroleum imports, discontinuing supplies from Belarus, Russia, and Kazakhstan. The European Union and international markets have become the primary sources of supply. The logistics structure has also undergone significant changes: the share of railway transport decreased from 80% in 2021 to 37% in 2024, increasingly giving way to maritime routes.

The Shadow Segment Challenge

Particular attention was devoted by the President of the Association to the problem of the shadow sector, which continues to distort fair competition and generate significant losses for the state budget. According to Yaroslav Starovoitenko, the shadow market is comprised of three principal components:

• Tax evasion through artificial loss declarations, payment of wages in cash (“envelope schemes”), and unregulated cash turnover outside government control;
• The operation of more than 400 illegal petrol stations nationwide;
• The functioning of illicit mini-refineries, which account for up to 10% of total market turnover.

Fiscal Potential of Market De-Shadowing

According to the Association’s estimates, in 2024 alone, tax shortfalls attributable to the shadow segment exceeded UAH 8 billion. Overall, factoring in higher excise rates and partial de-shadowing, tax revenues from the fuel sector in 2025 may reach UAH 250 billion — a particularly critical contribution towards financing defence needs in wartime.

Position of The Ukrainian Oil & Gas Association

The Ukrainian Oil & Gas Association consistently advocates for the unification of regulatory frameworks for all market participants, enhanced oversight of illegal petrol stations and mini-refineries, and the establishment of transparent taxation and fiscal accountability for every operator. Simultaneously, the Association supports the creation of favourable conditions for legitimate businesses, which secure stable tax revenues, create employment, and strengthen the country’s economic resilience amid the ongoing war.

Reference

The Ukrainian Oil & Gas Association is an industry association representing the interests of the largest players in Ukraine’s oil and gas sector. Its membership includes leading wholesale, retail, extraction, and processing enterprises from national, international, private, and state-owned segments: WOG, OKKO, AMIC Ukraine, SOCAR, KLO, UPG, Orlen, Parallel, Ukrgazvydobuvannya, and Ukrnafta. The Association actively cooperates with government authorities, consulting agencies, expert communities, and the media with the aim of advancing legislation, introducing European quality standards, and safeguarding the interests of market participants.