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Naftogaz boss
Yuriy Vitrenko
: "We sat at the conference table with guns. Since then, every day has been about resilience."
Photo: Ievgen Ivanov
Mr. Vitrenko, there has been a war in Ukraine for around eight months. What has your everyday work been like since the Russian troops attacked?
Yuriy Vitrenko:
My working day has changed a lot, and it still changes every day.
Just a few months ago, in times of peace, there were clear procedures and rules in my job as head of the Naftogaz energy company.
Now, in times of war, I am responsible for critical infrastructure that is a clear enemy target and is under attack every day.
I have to make sure it still works.
Emergencies used to be the exception.
Now they are the rule.
The first weeks of the war in Kyiv were particularly turbulent.
How can we imagine that?
When the Russian troops stormed Kyiv, my team and our minister thought about how we could ensure the energy supply on the one hand, but also ensure our security on the other.
We've figured out exactly what to do if there's a bang outside and Russian soldiers storm our operations center.
We sat at the conference table with automatic weapons and bulletproof vests.
Any minute we expected an attack on our building.
Since then, my daily work has primarily been about resilience.
We have to make sure we survive the war.
How exactly do you manage a company that is on the one hand an energy supplier for the population and at the same time a target of Russian missiles?
You have to improvise every day.
You must be able to find solutions quickly.
Every day we reconsider how we can maintain operations and what risks we can take in doing so.
We can repair some damage quickly.
We have to overlook others, then the systems will continue to run despite this damage.
In some cases, however, our systems are so badly damaged that we have to give up locations or regions and find alternative solutions.
For example, we have had to evacuate people from villages or small towns several times because we could no longer take care of them.
As you can see, there is no script, no strategic plan that they work through point by point.
The only goal is: continue to work
.
Your employees are also part of this critical infrastructure and therefore work at the risk of their lives. How do you deal with that?
Our employees know very well that they are important for the supply of the people and are therefore a war target.
But we cannot just stop working: we are working under fire, but people need our gas.
Our country's energy supply depends on us.
Our army needs our fuels, citizens need oil and gas for heating.
That's why our employees work on the systems and lines every day.
I don't have to force them to.
On the one hand, this makes me very proud, but on the other hand it also worries me: As the boss, I am responsible for many thousands of employees who are currently risking their lives at work every day.
And the majority of your employees take this risk?
Some of my associates died while doing their jobs.
At the start of the war we didn't have sirens, so we couldn't even warn them of the attackers.
There were also colleagues who barricaded themselves in their stations and continued to work for a week while Russian troops were on the premises.
It was and still is a very difficult situation.
Has the recent counter-offensive by Ukrainian troops improved the situation in Naftogaz?
We are still at war, there is no security.
There are currently more soldiers than civilian employees at some of our locations.
And of course our military coordinates closely with us.
Air defense systems, including anti-missile systems from the West, have also helped improve our situation.
We are grateful for that.
Now the temperatures are falling and the heating season is beginning. Will Ukrainians get through the winter with enough oil and gas?
It's going to be a very hard winter.
We expect that critical situations will arise several times.
Some people will be without heating at times.
We produce almost as much as before the war and the storage facilities are full.
But we are at war.
The threat of further military attacks is currently my biggest concern as I look ahead to the coming winter months.
It gets very cold in Ukraine in winter.
Heating is not a question of living comfort here, but of vital importance.
We are therefore doing everything we can to avoid such critical situations.
How exactly do you prepare for winter?
We are increasing production wherever possible, such as in the western part of the country.
We fix the infrastructure.
And, as in the summer, we import a manageable amount of gas.
Actually, we should import more, but we just can't afford it.
We therefore need international help this winter.
You mean Naftogaz insolvency. Bond buyers have rejected a proposal to suspend your company's payments for two years.
Yes, that's a challenge.
We rescheduled and restructured part of our debt, but only part.
We are a state company.
We cannot arbitrarily increase the gas price for our customers.
The Ukrainian government has set a maximum price that we are not allowed to exceed.
The problem is: the price at which we buy gas is ten times higher than the price we get from the people of Ukraine.
We know the problem. The German gas supplier Uniper got into financial difficulties as a result and had to be rescued by the federal government.
Our situation is similar.
But unlike Uniper, we are not locked into long-term supply contracts that force us to sell gas at low prices.
In our case, the Ukrainian government has to compensate the price difference.
It needs money for this, and it has to obtain this funding from international partners.
That is why we are currently waiting for money from the state budget.
This means that if the Ukrainian state receives aid from abroad to finance the gas price cap, that will help us directly as an energy supplier.
At the same time, there are also investment opportunities for Western countries that could help us now.
Investment opportunities instead of aid? You have to explain that.
We are working on producing more and more green energies in addition to fossil energies.
For example, we are currently converting a plant near Lviv.
There we produce biogas from biomass and wood pellets.
With the current absurdly high gas prices, we refinanced the costs for the conversion of this plant within two months.
This usually takes 10 to 15 years.
A switch to biogas plants that pay for themselves within a few weeks?
Many projects that we are now planning in the direction of sustainable energies make great economic sense.
Not yet for this winter, at the moment we are mainly using it to fill gaps in supply.
But things will be very interesting for the time after that: If we expand such plants on a large scale, we can become a gas exporter in the foreseeable future and also supply gas to Germany.
When it comes to solar energy and wind power, we can also implement large projects more quickly than is currently possible in Germany.
I was often in Germany.
I know what I'm talking about.
So you need money and the best possible protection against further military attacks so that the people of Ukraine survive the winter?
It's not just about money.
It's also about spare parts and it's about technologies.
When power plants and supply stations are regularly pounded by Russian missiles and constantly in need of repairs, it is only logical that certain parts are regularly missing.
We asked potential partners and suppliers if they could help us out.
Some have also volunteered to help.
Fortunately, I also have a few personal contacts with German energy companies that help us.
That's very valuable.
The other crucial factor is that your infrastructure remains intact. How do you protect your systems from bullets?
Our soldiers patrol near our facilities, our tank farms and pipelines.
Not directly on the surfaces, but in the surrounding area.
It is not safe to be on the premises.
I can't tell you all the secrets.
But our biggest threat is missiles, and that's why air defense is so important.
The same applies here: the more we get from our western partners, the safer it will be.
The West has superior technologies.
That's what we really need.
Russian gas is still flowing through Ukraine, although volumes have fallen sharply. Why did you maintain trade relations with Russia despite the war?
Our European partners have asked us not to stop the transits.
Many people in Europe are still dependent on Russian gas.
If we stopped the transits, we would massively damage them.
And we're not talking about the transit revenue.
They are, frankly, quite minor compared to the damage Russia has done to Ukraine.
Russia benefits much more from gas transit and uses the proceeds to finance the war.
The EU states are currently discussing a price cap for Russian oil in order to limit the Kremlin's income and make oil affordable again. In your opinion, should the EU resort to this instrument and risk Russia completely withdrawing its oil from the market for a certain period of time?
The risk is there, no question.
The past few months have shown that Putin is ready to go all out.
To harm the West, he would cut off his own oil and gas supplies entirely.
I think the idea of a price cap is fundamentally reasonable.
But perhaps it would make more sense to limit not the price, but the amount of money that can be transferred to Russia.
The companies would basically still pay the contract price, but the banks would only be allowed to transfer up to a certain amount per barrel or per megawatt hour to Russia.
The rest of the money would be frozen or impounded until Russia ended the war.
The advantage would be that the companies would continue to honor their contracts with the Russian suppliers.
And Russia would have no excuse to stop deliveries.
After all, nobody violated the contract.
And with the frozen money, the West would once again have a means of exerting pressure on Gazprom and Putin.
You also negotiated personally with Putin. How did you experience the Kremlin boss doing this?
In my experience he is very rational.
But the Western negotiation strategy of achieving a "win-win solution," that is, achieving the best possible result for both sides, is completely alien to him.
He's all about exploiting the other side's weaknesses and gaining the upper hand.
Can you give an example?
For example, when we were negotiating the transit fees and he didn't want to pay, we explained to him in detail how we would then get the money in another way - and that we would have no problem breaking the contract.
Only when he understood that I was serious did he give in and instructed
Miller
to find a compromise with us.
What conclusion did you draw from this?
It's clear to me: you can only negotiate with Putin from a position of strength.
You have to credibly make it clear to him that you have strategic alternatives and that you will use them.
If you are not strong and have no alternatives, then he will see you as a weaker partner and constantly exploit your weaknesses.
Gazprom is once again refusing to pay transit fees. At the beginning of September you filed a lawsuit with a Swiss arbitration court in order to receive the fees for the maximum contractually agreed delivery volume despite the lower throughput. Do you see a chance that you can still get the money?
Yes, because we didn't stop the transit.
But Gazprom is not paying the full amount.
We have won arbitration proceedings against Gazprom several times.
You, as the head of Naftogaz, are not alone in worrying about your critical infrastructure. In Europe, too, the debate about the best possible protection for the so-called "Kritis" has been in full swing since there were several leaks in the two Nord Stream pipelines. Do you have any idea who is behind this?
I have a very specific idea.
But as CEO of Naftogaz, now is not the right time to talk about it.
One day, when this war is finally over, we can gladly discuss it over a good glass of wine.
Mr Vitrenko, thank you very much for the interview and all the best.
