Failed U.S.-Ukraine resource deal doesn't mark end of Ukraine’s resource diplomacy — CDI analysis

Contents:

1. What Ukraine’s resource diplomacy entails
2. How production sharing agreements work
3. Interest in shale and offshore gas in 2012-2013
4. Ukrainian businesses invest millions in lobbying their interests in the U.S.
5. What the critical minerals agreement with the U.S. included
6. Global competition for Ukraine’s resources

This material was prepared in collaboration with the Consortium for Defense Information (CDI)—a joint project of Ukrainian analytical and research organizations aimed at strengthening information support and analytical resources in the fields of national security, defense, and geopolitics.

What Ukraine’s resource diplomacy entails

Ukraine possesses significant reserves of strategic resources that are critical to the global economy. Some of these deposits have been well explored and are already being extracted. Others are promising but are only partially exploited or remain untapped for various reasons. Consequently, numerous global players are interested in gaining access to Ukraine’s natural resources.

Ukraine’s resource diplomacy involves signing production sharing agreements (PSAs) in the oil and gas sector and integrating into global supply chains of critical minerals. Currently, a resource-sharing agreement with the United States, which has sparked significant debate, remains unsigned due to unfavorable revenue-sharing terms.

How production sharing agreements work

Ukrainian legislation provides a framework for production sharing agreements between the state and private investors. Under this mechanism, investors cover all costs associated with exploring and developing deposits. Once commercial extraction begins, the investor shares net profits with the state. Depending on the terms of the contract, Ukraine’s share of net profit can range from 40% to 70%.

As of 2024, 12 production sharing agreements were in place in Ukraine for hydrocarbon extraction. However, only two agreements were actively being implemented: the Uhnivska site, where the investor is Well Co LLC and the Ivanivska site, developed by Ukrgazvydobuvannya JSC.

The total hydrocarbon production under these agreements exceeded 100 million cubic meters. The other 10 agreements remain inactive due to bureaucratic hurdles and ongoing military actions.

In spring 2025, Ukraine plans to launch tenders for production sharing agreements related to deposits of critical minerals, including titanium and uranium ores. Meanwhile, Ukrnafta PJSC is initiating 15 production sharing agreements for the development of its own fields.

At the same time, private companies can extract minerals in Ukraine without production sharing agreements by purchasing a license. A well-known example is Burisma Holdings, which owned significant assets and licenses for deposit development in Ukraine.

The company gained notoriety in the U.S. due to the involvement of Hunter Biden, the son of U.S. President Joe Biden, who was on Burisma’s board of directors. However, Burisma never had a production sharing agreement with the Ukrainian government and operated under standard licensing agreements for mineral extraction.

Interest in shale and offshore gas in 2012-2013

In 2012-2013, Ukraine signed several large-scale production sharing agreements (PSAs) for the exploration and extraction of shale and offshore gas. The expected investment volume exceeded $25 billion, and the projected extraction levels were set to fundamentally alter the country’s energy balance and reduce its dependence on Russia.

Shell received approval to develop the Yuzivska field, covering areas in Donetsk and Kharkiv regions. The investment was projected to reach $10 billion, with an expected annual production of 20 billion cubic meters of gas. A similar agreement was signed with Chevron for the Oleska field in Lviv and Ivano-Frankivsk regions, where the annual gas production was expected to reach 15 billion cubic meters. Additionally, Italian energy giant Eni and French company EDF signed agreements to develop four blocks on the Black Sea shelf.

However, the majority of these projects were disrupted following Russia’s aggression in 2014. Chevron and Shell withdrew from their projects, citing unpredictable political and security risks. The only 2013 agreement that remains in force is the contract with ExxonMobil for the Skifska field on the Black Sea shelf.

Ukrainian businesses invest millions in lobbying their interests in the U.S.

Ukrainian companies spent over $3.2 million on lobbying efforts in the U.S. between 2023 and 2024. This reflects a strong interest in strengthening ties with the U.S. through resource diplomacy. Both state-owned and private companies are seeking to integrate into critical material supply chains for the American industrial sector.

Naftogaz spent over $1.2 million on lobbying efforts focused on securing preferential terms for natural gas supplies and expanding cooperation with American energy firms.

Energoatom allocated $850,000 to lobby projects related to modernizing Ukraine’s nuclear power plants and integrating into joint programs with Westinghouse.

Several private business groups, including DTEK, Ferrexpo, and BGV Group, invested over $1.1 million in lobbying for their interests in the mining sector, particularly in rare earth metals, lithium, graphite, and titanium.

Prominent Ukrainian oligarchs such as Rinat Akhmetov, Kostyantyn Zhevago, and Gennadiy Butkevych also engaged in lobbying efforts through their own networks to influence U.S. policy on critical minerals.

Ukrainian companies focused particularly on negotiations with Donald Trump’s administration regarding a critical minerals agreement. Key stakeholders included BGV Group Management, which owns assets in titanium, graphite, and beryllium extraction, and Ferrexpo, which controls a significant share of Ukraine’s iron ore industry. These firms aimed to secure U.S. investments and integrate Ukraine into America’s strategic resource program, which would have guaranteed long-term contracts for raw material supplies to the defense, aerospace, and high-tech industries.

What the critical minerals agreement with the U.S. included

In 2025, the U.S. administration proposed a new production sharing agreement with Ukraine, focusing on the extraction and processing of critical minerals. This proposal went beyond mining—it also included building processing plants in Ukraine.

The initial investment was projected at $5 billion, with the potential to increase to $10 billion.

The agreement covered lithium, graphite, titanium, and zirconium—key materials for battery production, aerospace applications, and military technology.

One of the key provisions was the creation of a special fund, where Ukraine would transfer 50% of the profits from mineral extraction. This fund would be managed by a joint U.S.-Ukraine council and used for infrastructure projects and investor compensation.

However, the agreement also included an exclusive export clause, giving the U.S. sole rights to Ukrainian strategic minerals, effectively limiting Ukraine’s ability to trade with alternative partners like the EU and China.

Ukraine’s decision to reject the agreement helped preserve its independence in decision-making, but it left open questions regarding the attraction of new investments in the mining sector and the security guarantees that such a deal could have provided.

Global competition for Ukraine’s resources

The United States views Ukraine as a key factor in countering China’s growing influence in the rare earth metals sector. Consequently, American corporations are keen on securing stable access to Ukraine’s lithium, titanium, graphite, and uranium deposits.

For Russia, the war is a means of retaining control over Ukraine’s resources and preventing their integration into Western economic structures. A revealing statement came from Russian warlord Yevgeny Prigozhin, who, before launching his “march on Moscow,” claimed that one of the hidden objectives of Russia’s invasion was to establish control over Ukraine’s strategic resources in the interests of Russian oligarchs.

The European Union depends on Ukrainian resources to meet its industrial needs, particularly in the electric vehicle, aerospace, and defense sectors. Germany and France, in particular, have expressed support for direct bilateral agreements with Ukraine for resource extraction.

The failure to finalize a resource agreement with the U.S. does not mark the end of Ukraine’s resource diplomacy. The U.S. continues its efforts to integrate Ukraine into its resource supply network, Russia wages war to reclaim control over Ukrainian assets, and the EU seeks ways to secure direct access to key materials. Meanwhile, Ukrainian businesses remain primarily oriented toward the U.S. market, positioning themselves within Western economic and industrial structures.