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Naftogaz boss Oleksiy Chernyshov
:
"We still need more financial and technical assistance to keep our population supplied with electricity."
Photo: Naftogaz
Last November,
Oleksiy Chernyshov
(45) took on one of the currently most difficult CEO jobs in the world.
Instead of being in the ministry, he suddenly found himself in the executive chair of Ukraine's largest state-owned energy supplier, the oil and gas company Naftogaz.
He was responsible for critical infrastructure - and the well-being of people across the country.
"It was the beginning of the heating season when I was appointed CEO," Chernyshov tells manager magazin.
"So my job was to keep the heating going in the country."
In a country at war, that's no easy task anyway.
But Chernyshov has endured dramatic months since taking office.
Ukraine's energy infrastructure has become a clear target of the Russian enemy.
Since October, the Russian military has expanded massive rocket attacks on substations and other power and water supply facilities.
At the beginning of February, around 40 percent of the country's energy infrastructure was destroyed, and the Naftogaz gas pipelines were also repeatedly hit.
Some employees have even died while working on the systems and lines.
And economically, the company is missing many billions.
"Life for the people of Ukraine and the employees of Naftogaz has changed dramatically," says Chernyshov.
"Russian missiles are constantly hitting our facilities, leaving millions of Ukrainians with sub-zero temperatures in the middle of winter without electricity and heating."
Just two weeks ago, a new wave of attacks reached Kiev, hitting important infrastructure facilities.
Naftogaz also has its headquarters in the capital.
The job of a war manager
Much of what Chernyshov's predecessor
Yuriy Vitrenko
(47) feared in the mm interview in October has happened.
Back then, he already reported how difficult it was to be responsible for thousands of employees who risk their lives every day on the job.
His motto was: improvise every day and keep working.
After only a year and a half as head of Naftogaz, including ten months during the war, he resigned.
The government had publicly criticized his handling of the company's debt restructuring.
The previous Development Minister of Ukraine, Oleksiy Chernyshov, took over as the new boss in November 2022.
The graduate economist and lawyer began his career in the IT sector before switching to the real estate industry and dedicating himself to infrastructure development.
In 2019 he went into politics, became head of the state administration of the Kiev region and in 2020 finally Minister under President
Volodymyr Zelensky
(45).
Now he leads a group with 52,000 employees and almost 6 billion euros in sales in 2021.
It's a war manager's job.
"Our brave employees are working tirelessly to repair the damage to our energy infrastructure," he says.
Without their "heroic" commitment, it would not have been possible to continue producing gas and filling the underground storage facilities.
"As Naftogaz, we do everything possible to provide our customers with stable and reliable supplies."
The group supplies gas to more than 12 million households in the country, including 200,000 households in Donbas, in the far east of the country.
In the meantime, the heating season is gradually coming to an end.
A first stage has been reached for Chernyshov.
"Despite the constant attacks, we have mastered the heating season well," he says.
But the group is already preparing for next winter.
To ensure Ukraine's energy security, the Naftogaz boss wants to increase gas production by one trillion cubic meters by next winter, to 13.5 trillion cubic meters.
To this end, the company put 47 new wells into operation last year, so that new drilling records are being set every day.
Production is expected to increase, particularly in western Ukraine, which was relatively spared from the war, where operations are currently the safest and gas reserves are large.
The group not only supplies households with gas, but also large parts of the economy.
The attacks on the plants and lines severely restrict the economic activity of the entire country.
In addition, many factories have been destroyed or, if at all, are only running on the back burner and there is a shortage of workers.
In addition, the Ukrainian government has temporarily nationalized some strategically important economic sectors under martial law, for example the engine manufacturer Motor Sich, the oil and gas company Ukrnafta, the transformer manufacturer Zaporizhtransformer and the commercial vehicle manufacturer AvtoKrAS.
They are supposed to work "round the clock" for defense needs, Ukrainian Prime Minister
Denys Shmygal
(48) said in November.
The gross domestic product shrank by 30 percent in 2022.
While less than expected, the government says it is the biggest loss for Ukraine's economy since independence from the Soviet Union in 1991. Inflation in January was 26 percent.
Heavy debt burden
It is already clear that Naftogaz will not be able to get by without help.
The group is highly indebted and has defaulted on its Eurobonds 2022 and 2026.
Already in the summer of last year, long before the destructive attacks, the company's management at the time had claimed a financial requirement of the equivalent of 7.6 billion euros in order to be able to buy additional gas for the winter from foreign suppliers.
On the same day, the Ukrainian government asked international lenders and bondholders for a two-year moratorium on debt and interest payments.
But there is no real agreement.
Just last week, creditors again rejected a debt restructuring plan that would have provided for a deferral of principal and interest payments.
Vitrenko had already failed at that.
"We still need more financial and technical help to keep our population supplied with electricity," says Chernyshov.
At the moment, more replacement transformers, compressors and separators are needed.
Manufacturing these components in-house would take more than six months.
A "game changer", as Chernyshov calls it, would also be the exchange of knowledge between Germany and Ukrainian engineers.
Meanwhile, the country's electric utilities plan to relocate two of a total of 90 large substations in underground bunkers by next winter to protect the facilities from rocket attacks.
This was recently reported by the Ukrainian edition of Forbes magazine.
According to estimates, relocating them all would take five years and cost more than three billion euros.
Chernyshov doesn't let all the problems slow him down.
As befits a CEO, he is already looking back to the time after the war.
The group is also preparing for this.
Naftogaz will play an important role in the country's reconstruction if - not if - Ukraine won the war, he says.
In order to be able to work better with international and national partners in the long term, Chernyshov restructures the state-owned company, professionalises the structures and trims it more towards corporate governance.
He has already reached a first milestone: last month the Ukrainian government installed a new supervisory board.
According to the Reuters news agency, the body consists of four independent members and two representatives of the state.
In the long term, Chernyshov wants to integrate the oil and gas group more closely into the European energy system.
He is also aiming for cooperation between Ukrainian energy suppliers and European companies.
"Ukraine has the third largest gas reserves in Europe," he advertises, hoping for Western support in the form of loans, insurance and government guarantees.
He is certain: Russia's strategy of forcing Ukraine to surrender will not work.
It only strengthens Ukrainians' determination to win this war, says Oleksiy Chernyshov, the wartime CEO.
"We are resilient and will not only win on the battlefield, but also build a new and improved energy system in a free Ukraine."
