Today's Contents
Reporter's Notepad:
- Considering opening a Ukraine office?
Just The Facts:
- Ukraine, US reach agreement on terms of minerals deal, sources say
- Kremlin appears to reject Trump's claim that Putin is open to European peacekeepers in Ukraine
- Ryanair plans for 5 million passengers annually in Ukraine after airspace opens, CEO says
- DTEK seeks to sign long-term US LNG import contracts next month, CEO says
- Ukrainian agricultural company Nibulon signs debt restructuring deal with IFC
- Canada announces CAD 170 million package for Ukraine's energy infrastructure, humanitarian needs
Here's What They Think:
- Washington Post: The White House’s Ukraine minerals plan sounds like a shakedown
- USA Today: Ukraine once fed 400 million people worldwide. Freezing aid worsens global crisis.
Sober Second Thought:
- Demand for Kyiv office space nears pre-war levels, but rents are still down 24%, CBRE report shows
Considering opening an office in Ukraine to participate in the reconstruction?
You can still rent office space in Kyiv at an average 24% below pre-war prices, and perhaps lock in that price for 3-5 years, the average duration of a lease these days.
The data is from URN Daily's Sober Second Thought section way down below, where we cover CBRE's latest analysis of the Kyiv office real estate market.
We'd like to take this opportunity to briefly review the sections of our newsletter.
1 - Reporter's Notepad (the section you're reading right now) is where we communicate directly to readers and feature some of our interviews.
2 - Just the Facts is where we present the hard news, all originally reported (unless we attribute it to a news agency).
3 - Here's What They Think recaps some of the opinion pieces by pundits or major media related to Ukraine.
4 - Sober Second Thought focuses on deeper studies, whether academic, scientific, or from think tanks, related to the reconstruction of Ukraine and adjacent topics.
5 - The Rebuilders' Social carries a selection of social media posts from the preceding 24 hours, chose for relevance, importance or thoughtfulness.
6 - In Case You Missed It simply recaps some of the more notable recent editions of URN Daily.
And now, on to Just the Facts ...
Ukraine, US reach agreement on terms of minerals deal, sources say
Ukraine and the US have agreed on the terms of a deal to jointly develop Ukraine's mineral resources, including oil and gas, the Financial Times, Bloomberg, and Reuters reported on Tuesday, citing unnamed sources familiar with the matter.
Unnamed Ukrainian officials told the FT, which first reported on the development, that Kyiv was now ready to sign the agreement after the US gave up on its initial demand for $500 billion in revenue from the exploitation of Ukraine's mineral resources.
The final version of the pact, dated Feb 24 and reviewed by the FT, still doesn't specify any security guarantees the US would provide to Ukraine, which was one of the main reasons Ukraine's President Volodymyr Zelensky rejected earlier versions of the agreement. The terms of the pact are much more favorable for Ukraine than the earlier drafts, according to the sources.
The latest version envisons the establishment of a fund into which Ukraine would contribute 50% of proceeds from the "future monetization" of state-owned mineral resources, including oil and gas, and associated logistics, the FT reported. The fund would then invest in Ukraine's economy, while the size of the US stake in the entity would be determined later.
The deal excludes mineral resources already generating revenue for the Ukrainian government, meaning it would not apply to the existing operations of Naftogaz or Ukrnafta, the country's largest gas and oil producers.
According to the unnamed Ukrainian officials who spoke to the FT, the deal had been approved by the country's justice, economy and foreign ministers.
Ukraine's government is set to recommend on Wednesday that the deal be approved for signing, unnamed sources told Bloomberg. They noted that Ukraine sees the agreement as a starting point to obtain US security guarantees in the future.
Reuters reported, also citing unnamed sources, that Zelensky will travel to Washington on Friday to sign the deal.
The deal, whose initial version was presented to Zelensky by US Treasury Secretary Scott Bessent on Feb 12, is largely considered to be tied to US President Donald Trump's efforts to end the war in Ukraine.
Kremlin appears to reject Trump's claim that Putin is open to European peacekeepers in Ukraine
The Kremlin on Tuesday appeared to reject US President Donald Trump's claim that his Russian counterpart would allow European troops to be deployed to Ukraine as peacekeepers, Reuters reported.
Asked about Trump's comments, Kremlin spokesman Dmitry Peskov referred reporters to an earlier statement by Russia's Foreign Minister Sergei Lavrov that Moscow would view European troops on the ground in Ukraine as a "direct threat" to Russia's sovereignty.
"There is a position on this matter that was expressed by the Russian Foreign Minister, Lavrov. I have nothing to add to this and nothing to comment on. I leave this without comment," Peskov stated, as quoted by Reuters.
Speaking to reporters in the White House a day earlier, Trump said Putin would accept European peacekeepers in Ukraine.
"He will accept them, I've asked him that question," Trump said of Putin's stance, adding that Putin "has no problem with it."
Sending European troops to Ukraine has been floated by some leaders on the continent as part of potential security guarantees for Ukraine in the post-war period.
Ryanair plans for 5 million passengers annually in Ukraine after airspace opens, CEO says
Irish low-cost carrier Ryanair plans to have 5 million passengers annually in Ukraine in one to two years after the airspace opens, CEO Michael O'Leary told Reuters on Tuesday.
"Straight out-of-the-box ... we have two million seats in there within six weeks (of the sky reopening) and then I think we would want to open bases both in Kyiv and Lviv within 12 months and then I think we could go from two to five million passengers within a year or two," O'Leary said.
He noted that reopening certain airports in Ukraine could take longer due to extensive damage from the three-year-old war with Russia. The airline aims to establish 6-8 routes to Ukraine from Poland, according to O'Leary.
Earlier this month, O'Leary said Ryanair is preparing a plan that would allow it to resume flights to Ukraine four to six weeks after the war with Russia ends, noting that the airline plans to launch approximately 24 new routes connecting Kyiv and Lviv, flying aircraft redirected from airports like Stansted and Paris Orly to service these cities.
Ukraine's airspace has been closed since the start of the Russian full-scale invasion in February 2022. Ryanair was the second-largest airline in Ukraine before the invasion.
DTEK seeks to sign long-term US LNG import contracts next month, CEO says
Ukraine's largest private power producer DTEK seeks to sign long-term import contracts for liquefied natural gas (LNG) next month with US companies Venture Global or Cheniere Energy to supply Ukraine and neighboring Slovakia, Poland and Hungary, CEO Maxim Timchenko told Reuters in an interview.
"It's an active discussion of our trading arm - another round of discussions and meetings will be taking place at the CERAWeek in Houston, so they will be speaking not only to Venture Global but to other big LNG suppliers. Cheniere, for example," Timchenko told Reuters, referring to the annual energy conference scheduled for the week of March 10.
According to Timchenko, DTEK's trading arm aims to secure a 10- to 20-year LNG deal, with the gas initially imported into Ukrainian storage facilities before being transported westward.
DTEK is also in talks to offtake Qatari LNG, Timchenko added.
Timchenko also said that Ukraine is expected to import 1-2 billion cubic meters of gas from Europe this year and acknowledged that Russian attacks on Ukrainian gas storage infrastructure pose a risk to the viability of importing and reselling US LNG.
In a separate interview with Bloomberg, Timchenko said that DTEK aims to import one cargo per month, which he described as "a success" for a newcomer to the market.
Last year, DTEK signed a preliminary deal with Venture Global for shipments from a Louisiana facility. Venture Global delivered the first cargo in December, according to the reports.
Earlier this month, Ukraine's Foreign Minister Andrii Sybiha said that Ukraine sees "immense" potential in buying and storing LNG from the US after the transit of the Russian gas through the country's territory ended on Jan 1.
Ukrainian agricultural company Nibulon signs debt restructuring deal with IFC
Nibulon, one of Ukraine's largest grain and oilseeds originators and exporters, said on Tuesday it has signed a debt restructuring deal with the International Finance Corporation (IFC).
The agreement covers an outstanding loan balance of $18.2 million and extends the loan's maturity date to 2029.
The IFC provided Nibulon the original loan of $120 million in 2017 for the development of the company's infrastructure projects, which were then affected by the Russian invasion in February 2022, it said in a press release.
"The agreed restructuring provides the company with additional flexibility to meet its financial commitments during the recovery period," the statement read.
Nibulon said it was working to reach similar agreements with other financial institutions, including the European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD), Deutsche Investitions- und Entwicklungsgesellschaft (DEG), and the Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO).
"By supporting our company, these institutions help sustain agricultural production in Ukraine and maintain its export capacity during challenging times. We remain committed to fulfilling our obligations and will continue to invest in Ukraine’s recovery and the strengthening of global food security," said Nibulon CEO Andriy Vadaturskyy.
Nibulon exports to 75 countries worldwide and has a total landbank of 76,600 hectares, of which 25,500 hectares are mined or occupied. It has an annual production capacity of 300,000 tons and 3,500 workers, according to its website.
In December, Nibulon said it had secured $5 million in funding from First Ukrainian International Bank.
Canada announces CAD 170 million package for Ukraine's energy infrastructure, humanitarian needs
The Canadian government said it will provide a total of nearly CAD 17o million ($120 million) to Ukraine to repair the country's infrastructure and address its humanitarian needs.
CAD 50 million will be allocated for the overhaul and replacement of damaged energy equipment and critical infrastructure in Ukraine. The funding will be allocated through the Energy Community Secretariat.
Canada will also provide CAD 92.3 million in development assistance to support local community building, among other initiatives, and CAD 14 million in humanitarian assistance, the government said in a press release on Monday.
A further CAD 8 million will be allocated to weapons threat reduction, CAD 4.25 million to support peace and stabilization operations, and CAD 82,000 for local initiatives that will support the physical and mental health of former Ukrainian prisoners of war.
The assistance was first announced by Canada's Prime Minister Justin Trudeau during his visit to Kyiv on Monday to mark three years since the start of the Russian invasion of Ukraine, as per the statement.
Trudeau also announced a total of CAD 55 million in military assistance to Ukraine and said his government will provide Ukraine with the first part of Canada's CAD 5 billion contribution to the $50 billion G7 loan for Ukraine, funded by revenues from frozen Russian assets, in the coming days.
Since Russia's full-scale invasion in February 2022, Canada has committed over CAD 19.7 billion in comprehensive assistance to Ukraine, the government said.
Washington Post: The White House’s Ukraine minerals plan sounds like a shakedown
Ukrainian President Volodymyr Zelensky is right to refuse US President Donald Trump's demand that he sign over half of Ukraine's revenue from oil, gas and other minerals, as well as earnings from its port, worth a total of $500 billion, the Washington Post editorial board wrote.
"Ukraine has held out bravely against Russia’s brutal aggression, at the cost of hundreds of thousands dead and wounded, entire towns and villages destroyed and depopulated, and basic infrastructure damaged by daily Russian missile and artillery strikes," the article states. "Now, Trump wants to reduce support for Ukraine’s sovereignty to a mercantilist deal over its mineral wealth."
USA Today: Ukraine once fed 400 million people worldwide. Freezing aid worsens global crisis
The freeze on aid by the US government under President Donald Trump will have "dire consequences" for the fertile lands in Ukraine, particularly in the south and east of the country, where US funding could help restore damaged soils, according to an op-ed piece in USA Today.
"Sustaining U.S. financial investment for demining efforts in Ukraine is crucial in building global capacity for research, mapping and monitoring environmental risks on agricultural lands," the article says. "These efforts are essential for product safety, sustainable agriculture and consumer health."
Demand for Kyiv office space nears pre-war levels, but rents are still down 24%, CBRE report shows
Demand for office space in Kyiv increased in 2024, with take-up approaching pre-war levels, although companies seeking to lease offices were particularly attracted to properties equipped with air raid shelters, according to CBRE Ukraine.
Full-year take-up of office real estate rose 42% in 2024 from 2023 to 129,000 sqm, in line with take-up in 2020 and just 4% below the level reached in 2021, the year before the full-scale Russian invasion, according to an analysis by the commercial real estate services company.
"Despite ongoing challenges, Kyiv’s office market showed visible signs of improvement in 2024, with demand maintaining positive momentum," CBRE Ukraine said in the report. "Favorable lease terms encouraged small- and medium-size occupiers to upgrade to A- and B-class properties."
It added that "the growing preference for high-quality, secure properties fueled leasing activity, driving demand for offices with equipped shelters."
The IT, high-tech and telecommunications sector accounted for 25% of the office take-up in 2024, followed by the public sector, which accounted for 15%, the manufacturing, industrial & energy sector, at 8%, and banking & finance, also at 8%.
The prime effective rent level was $19 per sqm per month in 2024, about the same as in 2023 but still down 24% from pre-war 2021, when it was $25 per sqm per month. Asking rents in A-class properties ranged from a monthly $16 to $22 per sqm while the asking rent in B-class properties ranged from $8 per sqm to $15 per sqm per month.
CBRE added that office space landlords appear to be adopting "a more realistic pricing approach, as the gap between declared and effective rents rates in A-class suggests properties was narrowing.
The market has primarily returned to standard 3–5 year lease agreements with more flexible terms, including early termination options," CBRE added. "However, in some cases, securing favorable rent conditions until the end of martial law or for a mutually agreed-upon duration still occurs."
Relocations remained the single biggest factor in new office take up, accounting for 38% of the deals last year, but that was down from 58% in 2023. The share of new entries to the market rose to 25% from 10%.
Last year also saw the first significant increase in occupancy of office space since the full-scale invasion, with the average vacancy rate falling to 22.7% from 24.9% in 2023, CBRE found.
Most of the vacant offices are in new properties and in poorer-quality offices outside of Kyiv's central business district. The vacancy of A class office space changed little last year, at 22.7%, while the B-class vacancy rate fell to 22.1% from 27.1%, primarily as tenant companies relocated from residential and other non-professional buildings.
CBRE predicted that a "cautiously projected" economic recovery in 2025 will continue to fuel leasing activity and further lower vacancy rates even as 56,000 sqm in new space is forecast to enter the market.
"Tenants will continue to be attracted to properties with high level security arrangements in desirable locations, while properties that do not meet these requirements will continue to face challenges," CBRE said. "The push for cost efficiency and office space optimization will continue to encourage selective relocations."
Guidebook for BioEnergy Investments
UkraineInvest, the state investment promotion agency, announced that is has developed a guidebook designed to inform entrepreneurs about carrying out investment projects in the bioenergy sector in the country.
Under the slightly awkward name Invest to the Bioenergy in Ukraine: Rebuild Incentives, the guidebook offers an overview of export prospects for biomethane, investment incentives for biogas and biomethane production and customs and tax exemptions.
Small Business Deteriorates
The European Business Association, which represents European companies operating in Ukraine, presented the results of the 2024 Small Business Sentiment Index survey along with partners OLX Ukraine and Raiffeisen Bank Ukraine.
The index shows the overall score fell to 2.3 out of 5, from 2.5 the previous year, driven by a low assessment of the economic situation, which rated 1.9 out of 5. 52% of small businesses surveyed rated their condition as "poor."
Fighting Corrupt Judges
Oleksandr Abakumov, head of the detective department at the National Anti-Corruption Bureau of Ukraine (NABU), posted about the bureau's progress in fighting corruption in the judiciary, with 85 judges brought to trial and 25 convicted since 2015.
"In contrast, before NABU’s establishment, such cases were rare. This progress proves that the era of impunity is ending, and judicial corruption is no longer untouchable," he wrote.
Energy Imports Fell
Ukrainian think tank DiXi Group promoted an article breaking down Ukraine's expenditures last year on energy, noting that imports fell by 14.2% to $8.9 billion, by value, while the share of oil and oil products in the imports rose to 76.6%, an increase from 75.6% in 2023 and 37.6% in 2021, before the full-scale invasion.
"The second place in the structure of last year's imports was shared by petroleum gases and electricity, which accounted for 7.5% each. Coal was in third place with 4.5%," the think tank said.
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