Former Naftogaz CEO on how Iran war could affect Ukraine and Europe – interview

Andriy Kobolyev set at least four national records while leading one of Ukraine’s largest state-owned companies, Naftogaz of Ukraine. First, he became its youngest head — when he was appointed in March 2014, he was only 35. Second, he led the company for seven years, which is also an absolute record. Third, he was the first and only head who took Gazprom to court, defeated the Russian giant, forced it to pay Ukraine more than $4.6 billion and abandon gas contract terms that had been disadvantageous to Ukraine.

The fourth record, which many still cannot forgive him for, is the bonus of 261 million hryvnias that Kobolyev received for his third record. The case is still being considered by Ukraine’s High Anti-Corruption Court.

“When my case is finished,” Kobolyev said, “and everything is being recorded on video, when it is allowed, all witness statements and all materials will become publicly available. I have a strong interest in that.”

NV invited Kobolyev to the newsroom to discuss this and another of his major interests — and, above all, the interests of Ukraine, Europe, the United States, Iran and ultimately Russia in the current new global disorder.

— When we were expecting you, our security guard asked: ‘Who is coming?’ I said: ‘Andriy Kobolyev.’ He replied: ‘Oh, that’s “our Gazprom.”’ What do you think about that introduction?

— (Pause) It’s fine. Honestly, I am even pleased that the company I led is associated with the phrase “our Gazprom,” because in reality one of Naftogaz’s key functions was to resist Russian gas aggression. If you have a counterparty you cannot avoid and it plays by the rules of hybrid warfare, then you need a counterparty that will stop that hybrid war. So, returning to your question briefly, I am pleased that people have such an association.

Before the interview you asked what I had been doing over the past two years. In addition to various business ideas, there is also the aspect of personal growth in what I would call another dimension — expanding communication with a broader circle of people. I am essentially an introvert. Now I am trying to expand my circle of communication. For me it is a certain challenge.

As a result, I have had several interesting moments when I initiated conversations myself. For example, with a worker at a gas station. Previously I would do that silently; now I start conversations. I discovered that far more people recognize me than I could have imagined. In 99% of cases the reactions are positive.

— Let me continue with what I should probably have started with. The small victorious war in the Middle East is turning into a larger one with an unclear outcome. In response, the price of Brent crude rose in two days from about $60 to $83 per barrel. Gas prices jumped by about 50%. Which figures are you watching? Which of them are temporary phenomena, and which could change our entire future?

— In this conflict, I am most closely following news from inside Iran. I do not think this war will last very long. There are several reasons for that. One of them is my understanding — or rather my reading of real experts on Iran whom I follow.

In addition to public information, I also have access to certain closed sources about what is happening there. It will be very important to see what outcome the Americans and Western partners reach regarding the possible transformation of Iran from an outcast state — under U.N. sanctions, which incidentally were supported by one of Iran’s major partners, Russia.

If all of this is lifted and Iran returns to international engagement, that will be a very important result, with consequences that both Ukrainian geopolitics and Ukrainian businesses must consider.

At present Iran cannot return to the global market because it remains under sanctions. As a result, it is forced to sell its resources primarily to China, which buys them at a significant discount and gains economic benefits from Iran’s outcast status. China is behaving in much the same way with Russia now.

If we assume the war ends with Iran establishing a civilized interface for interaction with the Western world — and that scenario is quite possible, because within Iran there are many forces that would like to restore relations with the West — then Iran will become a major player returning to the global market.

Among other things, this means that within a relatively short time Iran could enter the European gas market. Russia has always pursued a systematic policy to prevent that. If it happens, it would be a major blow to Russia.

If Iran returns, there will also be enormous potential for cooperation between Iran and Ukraine. The potential of our relations is huge. Iran has very high gas consumption in winter and much lower consumption in summer. They use gas very inefficiently because it is extremely cheap there.

This means it would be beneficial for them to export gas in summer and store it somewhere. Ukraine’s underground gas storage facilities could become an ideal location in the future for storing Iranian gas for subsequent export to EU countries. That would be an ideal combination for cooperation. There are many other areas of cooperation as well, and they are all very interesting for us.

— Before we met, I asked an AI the following question: is it fair to call Andriy Kobolyev the first Ukrainian who challenged Gazprom and defeated it? Would you like to hear the answer?

— Yes.

— “Calling Andriy Kobolyev the first Ukrainian who challenged Gazprom and defeated it is entirely justified in terms of the scale and legal outcome of that victory. Under his leadership, Naftogaz of Ukraine implemented the most successful strategy in the company’s history in confronting the Russian gas monopolist. The arbitration tribunal ordered Gazprom to pay Naftogaz $4.63 billion for failing to deliver agreed volumes of gas for transit. Kobolyev’s team succeeded in canceling the burdensome ‘take-or-pay’ clause in the 2009 contract. Had this lawsuit been lost, Ukraine would have been obliged to pay Russia tens of billions of dollars, which would effectively have meant a state default.” Is that accurate?

— I do not think there was a high risk of a state default, but the risk of losing Naftogaz was significant.

— So you were the first Ukrainian who began the “disarmament” of Gazprom, while the second person effectively killing Gazprom is Vladimir Putin. Even before the full-scale invasion, in April 2021 he ordered Gazprom to scale back its activities in Europe. Gazprom stopped booking additional transit capacity through Ukraine’s gas transmission system and the Yamal-Europe pipeline, which led to resource shortages in the EU. Gas storage facilities in Europe controlled by Gazprom were not filled throughout the summer of 2021. That was when Gazprom began losing its largest export market. Why did Putin do this, where did he miscalculate, and what has it cost him?

— There are two possible explanations for his logic. The first is that Putin believed Europe could not exist without Gazprom and Russian gas. The former KGB officers who run the Kremlin became so immersed in their propaganda about Russia’s greatness that they started believing the myths they created themselves. This story that Europe would freeze and collapse without Gazprom became part of Putin’s worldview. And he decided to test it.

There are actually many examples where he believed something that did not correspond to reality. In 2016, Putin ordered Gazprom to reduce gas supplies to Europe so that the gas could not be resold to Ukraine. They lost at least $6 billion from those reductions alone, not counting penalties for failing to meet minimum supply obligations.

The assumption that Naftogaz was buying Russian gas in Europe was far from reality. But Putin believed it so strongly that he forced Gazprom to try it.

There is another hypothesis now being discussed by many credible people in intelligence services across different countries. According to it, Putin is acting in China’s interests. He wants to turn Russia away from the West and Europe and toward cooperation and integration with China. This has become his new ideology, because Europe does not accept him, respect him or share his ambitions.

I personally lean more toward the first hypothesis, but recently I have heard from many very credible people that there are increasing signs Putin is consciously pivoting Russia toward the Eastern world — toward cooperation and integration with China.

— The Chinese direction means the Power of Siberia pipeline, with a maximum transit capacity of 38 billion cubic meters of gas per year. Toward the European Union, Gazprom used to sell up to 155 billion cubic meters through various corridors. Now that figure has fallen to about 40 billion cubic meters. From next year, the EU plans to reduce that number to zero. So how can such an idea be sold domestically in Russia with such obvious figures?

— Very easily. Remember the quote from Patriarch Kirill: we had years of abundance, and now there will be difficult years, and we must get through them. People are told to endure. The message is that over time China will see that Russia has turned toward it and will open its market, which has enormous consumption.

There is also another problem with the Power of Siberia pipeline: it runs into the northwestern segment of China. Those are poorer regions where gas is a very expensive commodity. The Chinese deliberately push the Russians into those regions, telling them they must develop and expand the market there. That will take 20–30 years.

Gazprom has always been Putin’s favorite toy. Through gas, you can see whom Putin likes and respects, with whom he negotiates and whom he punishes.

— I believe you once defined this phenomenon in the Russian mindset: gas is the business of presidents.

— That is not my definition. It was actually a phrase once used to me by Gazprom chief Alexei Miller. In addition to being the business of presidents, gas is a tool Putin uses to turn other presidents into his friends.

Look at Slovak Prime Minister Robert Fico and Hungarian Prime Minister Viktor Orbán. They stand ready for anything. Just give us a bit of cheap gas so we can profit from it. Then they can tell their voters: everyone else is foolish, but I went to Moscow, kissed the ring, and we received cheap gas.

Putin actively uses gas to cultivate local elites, especially corrupt ones. He seeks people willing to take bribes, and gas makes it very easy to give them. A $20 discount per 1,000 cubic meters on volumes of 100 million cubic meters already generates profit. And the discount can become even larger.

In Ukraine, the Russians used this tool to influence a large number of law enforcement officials, because they participated in distributing money from bribes paid by gas traders. Many of them still nostalgically remember those times.

— Now we are at a historical point where the European Union has begun killing Gazprom. Europe has announced a complete halt to Russian gas imports by the end of 2027. Short-term LNG contracts will end from late April 2026, and pipeline gas contracts from June 2026. So the Russian meme “they won’t come” now applies to Gazprom itself. How determined are Europeans to eliminate the last molecule of Russian gas, and what role do the United States play in this “away from Moscow” operation?

— I speak with many people in Europe, including major German business leaders and representatives of the German political establishment. There is a huge group of people there who dream of returning to the time when they could receive Russian gas and their companies — particularly the chemical industry — could again show the outstanding results they had before 2014. The reason is simple: the Russians gave them better conditions than anyone else.

There is a tool called price preference or price discrimination. Through gas prices you can create conditions where BASF in Germany can produce a wide range of complex chemicals, while companies in France cannot. This discrimination was the tool Putin used to open doors in Western Europe.

Returning to the question of Europe’s determination: what Ukraine managed to do, primarily by influencing public opinion there, was to create at least a sense of guilt. That feeling now exists.

Many people there sincerely say: we understand that we are feeding the Russians, and that money goes into weapons used against you and later against us.

I think the second realization is more important to them than the first. But it is still huge progress compared with 2014, when European commissioners told me directly: Andriy, Russian gas is one of the cornerstones of our European economy — it has always been here and it always will be.

I remember those conversations when we warned that Nord Stream would open the door to war. At one private dinner my colleagues were told: don’t worry, we have calculated everything. We will take in 3 million refugees from Ukraine, the war will end in three days, and everything will return to normal.

— What year was that?

— That was in 2016 or 2017. And there is another point. Europeans found themselves between a rock and a hard place. On one side there is public opinion, which our PR campaign is influencing. On the other side there is Trump.

During his first presidency he had an argument with German Chancellor Angela Merkel. He told her: how can it be that you come to us and say that we, Americans, should finance NATO more than you do, while you send your money not to NATO but to Russia’s Gazprom, so that they can buy weapons to attack you — weapons from which we are supposed to defend you? Mrs. Merkel, don’t you think there is a huge logical problem here? Why should we defend you from someone to whom you are paying money?

Merkel reacted strongly, saying it was not that simple and that everything was more complicated. Trump replied: how is it more complicated? Explain to me where the mistake in my logic is.

— In one of your earlier interviews with our colleague Dmytro Tuzov, you said that Russia’s postwar return to the European gas market is entirely possible, likely and even inevitable. Do you still think so?

— I still think so. I believe the Russians will do a lot to return to the market they left. Ukraine will have two possible responses.

The first option is to take a firm stance and say we are categorically against it. Will we be able to maintain that position? I have serious doubts. Such a stance can only be maintained with strong partners who share it. With a high probability some European countries, such as Poland, would support us. But I would say the decisive position will be that of the United States.

If the Americans take the view that Russian gas should return within some broader agreements — and that seems very likely — then confronting both Europe and the United States at the same time would probably be impossible for us.

There is a very good English phrase: “choose your battle.” You should not accept every conflict and rush into it. You should go where you have a strong chance of winning. That rational approach is very important.

There is also a second option. We could say: if there is indeed some global agreement, then safeguards should be created to ensure that gas can no longer be used as a tool of bribery.

A company could stand between Russia and European buyers, setting the same economic conditions for all European countries purchasing Russian gas. In other words, we remove the instrument of price preference and discrimination — the very tool Russia uses to reward or punish countries. That would not be difficult to implement. I would strongly insist that Ukraine should be one of the shareholders of such a single buyer.

If Western partners decide to return Russia to the European gas market, then the question becomes: through which corridor? If it is inevitable, what is our interest?

There would be four options. First, expand supplies through Turkey. Second, restore the Nord Stream pipelines — which currently appears to be the priority. Third, the route through Poland, where there is an existing pipeline. Fourth, Ukraine.

If Russia’s return to the European gas market is inevitable, then our interest is that it should pass through Ukraine. We need to negotiate with the Americans and Europeans so that gas returns through our territory. If they instead say they do not want Russian gas to return to Europe at all, we will say: great, we support you 100%.

— The role of gas in Ukraine’s energy system is increasing for several reasons. One is declining domestic production. Another is the restructuring of the energy system, particularly the thermal power sector, including the introduction of gas piston and gas turbine networks. And there is also the forced reduction of coal generation.

— Can we switch to “you” informally?

— Of course. We have known each other for a long time.

— I would slightly correct you. Gas is playing an increasingly important role in Ukraine’s energy system for two main reasons you mentioned.

The first obvious factor is Russian strikes destroying power plants and other energy infrastructure. Even if the war ends, I hope the new model of Ukraine’s energy system will be built on the assumption that war could resume at any moment.

This means the model of large centralized generation facilities does not suit us. They are simply impossible to defend. We must always be ready for another war with Russia.

Incidentally, this idea of constant readiness for war with Russia is why Russians hate Bandera so much. He was the one who formulated this concept — not the myths the Russians invent about him.

The second reason gas is so important is the inheritance we received from the Soviet period. Ukraine built this infrastructure itself. It is the gas transmission system.

These two factors must be added to explain why gas is now becoming central to Ukraine’s energy balance. On this reliable and stable gas system we can build the restored energy system of the future, with gas acting as the backbone or skeleton on which everything else is built.

— How does everything we discussed — both external and internal factors — affect your decisions about the energy businesses you are currently involved in? And what are those businesses?

— Russian missiles are forcing a kind of decarbonization. Russia is destroying the old energy system of Ukraine. What will likely remain is the gas transmission system and regional gas networks. Ukrenergo will remain, along with the electricity transmission system and regional electricity distributors. These will be restored. Gas production will also be restored.

This opens enormous opportunities for business, combining two factors. First, rebuilding and supporting the energy sector. Second, creating a new business model based on smaller, distributed energy systems.

The three projects I am currently involved in operate in exactly this direction: energy storage systems, gas generation systems and renewable energy systems.

Projects in energy storage and gas generation are already operational. They are producing electricity and generating economic returns for investors. So far more than €50 million has been invested in facilities that are already built and running.

Due to certain restrictions, I cannot currently invest my own money. Instead, I act more as an adviser and organizer for other investors — for example in building energy storage systems.

— What is the entry point for such a business?

— At the moment Concord Capital is attracting investors with a minimum ticket of about €300,000, although that figure may soon be reduced.

It is important to understand that these businesses involve relatively high risk. It would be irresponsible to attract people who do not fully understand those risks. But for those who analyze and understand them, it is a very interesting and attractive idea.

— Final question. It came to mind about 15 seconds ago when you mentioned personal restrictions preventing you from investing your own money. When will this process finally end? It has been going on for years.

— The criminal cases against us related to the Stockholm arbitration were opened in three different directions back in 2017. At first there were legal expenses. Then, if you remember, I was personally fined 8 billion hryvnias for allegedly incorrect customs clearance of gas supplied by Gazprom to temporarily occupied territories.

It was a unique case. I won it in court, thank God. There is also the case concerning bonuses and payments to the team.

I am heavily restricted by the legal code and by my lawyers regarding what I can say publicly. But we have come a long way, and the court is currently hearing witnesses.

I cannot comment on what they say — I am prohibited from doing so. But I very much hope that when my case is finished and it becomes legally possible, all witness statements and all materials will become publicly available.

That is in my strong interest, because I believe the real reasons behind this case and its consequences are an important lesson not only for me but for society as a whole.