Can a Ceasefire and Economic Compromise End the War?
THE RUSSO-UKRAINIAN war is essentially a struggle for supremacy over Ukraine’s vast mineral wealth between Russia and NATO. In 2014, Russia forcibly annexed the Crimean Peninsula, home to an estimated 4-13 trillion cubic meters of natural gas. Prior to 2014, the Yanukovych government had managed to reduce Ukraine’s gas imports from Russia from 45 bcm in 2011 to just 28 bcm in 2013. The original plan was to eliminate all Russian gas imports by 2020 as a stepping stone toward achieving self-sufficiency by 2035 through increased domestic conventional and unconventional gas extraction.
The annexation of Crimea was primarily intended to disrupt gas supplies to NATO members in Europe and integrate Ukraine’s energy market with that of the West. A peculiar situation arose in which Russia was the dominant producer of gas, but its primary delivery route passed through Ukraine.
This created a major incentive for military conflict, as subsequent events up to 2024 proved. To reduce dependence on Russian gas, Europe sought to create an alternative source and delivery mechanism in Ukraine.
Russia’s strategy to diminish Kyiv’s role in gas transmission was based on the construction of two key pipelines to the EU: Nord Stream 2 and Turkish Stream.
Sergei Donskoi, a former Russian Minister of Natural Resources and Ecology, announced that Crimea contained 44 hydrocarbon fields, including seven gas condensate reservoirs and ten oil and 27 gas fields. The region’s natural gas reserves amounted to 165.3 billion cubic meters, alongside 47 million tons of oil and 18.2 million tons of gas condensate.
In effect, the Crimean annexation was aimed at enhancing gas supplies to the West via three major pipelines, which generated immense revenues for the Russian exchequer (until 2022) while providing Europe with gas that was significantly cheaper than the US/Qatari alternatives.
Russia then shifted its focus to the Donbas region. Ukraine’s growing proximity to the West was merely the official excuse for invading Russian-speaking eastern Ukraine; the real motive lay elsewhere. By 1998, an estimated 63.5 Tcf of natural gas and 1.2 billion barrels of oil were deemed technically recoverable from the Dnieper-Donets Basin, then valued at more than $450 billion at $70 per barrel.
More recently, Ukraine became the world’s third-largest producer of shale oil, with exploration and extraction largely carried out by the Ukrainian state gas company in collaboration with ExxonMobil and Royal Dutch Shell.
Russia’s strategic focus on resource-rich provinces such as Donetsk, Kherson, Luhansk, and Zaporizhzhia—alongside Crimea and the Black Sea—underscores the economic and geopolitical dimensions of the war.
These marine areas and border territories, rich in hydrocarbons and critical minerals such as graphite, lithium, and uranium, are not only vital to Ukraine’s sovereignty but also to Europe’s energy independence and the broader competition between the United States and China for technological dominance.
Before the 2022 Russian invasion, Ukraine had registered 20,000 mineral deposits (8,700 of them proven), including 117 of the 120 most widely used metals and minerals globally. Ukrainian and international reports indicated that the country was home to some of the world’s largest recoverable reserves of coal, gas, iron, manganese, nickel, titanium, and uranium.
Prior to the war, Ukraine was also a key supplier of noble gases such as neon (critical for microchip manufacturing) and held Europe’s most significant known lithium and rare earth deposits. Most of these minerals are found in the so-called “Ukrainian Shield,” spanning Luhansk, Donetsk, Zaporizhzhia, and Dnipropetrovsk to Kirovohrad, Poltava, and Kharkiv.
The Dnieper-Donetsk region alone accounts for 80% of Ukraine’s known conventional oil, gas, and coal production and reserves. Most identified critical minerals, including Ukraine’s 22 rare-metal formations, are concentrated in Donetsk, Dobra, and Kruta Balka. While Ukraine’s major cash crops—wheat and sugar beets—are cultivated primarily in central and southern regions, critical agricultural exports such as barley, corn, and sunflower oil are harvested in eastern and southeastern Ukraine.
Control over Ukraine’s vast resources, from hydrocarbons to rare earth elements, is crucial not only for Ukraine’s economic recovery but also for Europe’s green transition and Russia’s continued energy dominance. In the evolving geopolitical landscape, whoever controls Ukraine’s resources will wield significant influence.
Within months of its 2022 invasion, Russia seized control of over $12.5 trillion worth of Ukrainian mineral and gas reserves. The most lucrative assets included more than 56% of Ukraine’s hard coal reserves—among the largest in the world and valued at approximately $12 trillion. Russia also took over 20% of Ukraine’s gas fields and 11% of its oil fields, the second-largest in Europe, with an estimated worth of $85 billion.
By the end of 2022, Russia controlled between 50% and 100% of Ukraine’s reserves of lithium, tantalum, cesium, and strontium—metals critical for green energy technologies and defense industries. Before the invasion, Ukraine was a major supplier of iron ore, lithium, manganese, and steel to Europe, but the war disrupted these supply chains.
Ukraine holds Europe’s largest uranium deposits, with an estimated 2% of global reserves. Uranium is critical for the expansion of nuclear power to meet the growing energy demands of data centers and AI-driven industries. As of 2022, Ukraine also possessed some of the largest suspected recoverable rare-earth resources in Europe.
Unconfirmed lithium reserves, believed to exceed 500,000 tons in Kruta Balka, Dobra, and Shevchenkivske, could be among the largest in Europe. Ukraine is also the world’s fifth-largest gallium producer and a major supplier of neon, providing 90% of the highly purified semiconductor-grade neon used in the U.S. chip industry.
Ukraine’s proximity to EU markets ensures lower transportation costs, making its resources potentially more attractive to investors and governments than alternatives from Africa or Asia, particularly China. The country’s 37,000 km of gas pipelines, which deliver Russian gas to Europe, remain a valuable asset for Moscow. By some estimates, Ukraine’s Black Sea reserves contain up to 2 trillion cubic meters of natural gas, of which Russia now controls approximately 80%.
Beyond its mineral wealth, the Donbas region plays a crucial role in agriculture, supplying water to southern Ukraine and Crimea, which suffers from chronic water scarcity.
In 2021, Ukraine’s agricultural sector accounted for over 46% of global sunflower and safflower oil supplies. It also contributed 18% of the world’s barley production, 16% of corn, and 12% of wheat. The total export value in 2021 was approximately $27 billion, including $7.6 billion in sales to the EU, $4.2 billion to China, $2 billion to India, and $1.5 billion to Egypt and Turkey.
It is evident that any peace agreement on Ukraine will centre around its natural resources. Currently, over three-quarters of these resources lie in Russian-occupied territories.
The Black Sea remains a strategic priority for Russia, serving as a crucial route for oil and gas exports. Russia’s Black Sea grain terminals handle about 70% of the country’s grain exports, while the ports of Novorossiysk and Taman in the Azov Sea manage the remaining 30%.
The Black Sea also holds immense strategic value for Russia, offering a crucial exit route to the Mediterranean via the Bosphorus Strait. Under the Montreux Convention (1936), warships from non-Black Sea states may not remain in the Black Sea for more than 21 days, with an aggregate tonnage limit of 45,000 tons.
Up to 2024, Ukraine still controlled the port of Odessa, its primary export hub for grains and other commodities, although it has been repeatedly targeted by Russian attacks.
Given the high stakes of the conflict, which has drawn NATO involvement and brought over $200 billion in foreign aid to Ukraine, a sudden cessation of hostilities is unlikely. Former U.S. President Donald Trump’s proposed peace plan may ultimately lead to a partition of Ukraine. However, with many Ukrainians of Polish descent potentially favoring reunification with Poland, Ukraine faces an existential crisis.
At best, a long-term ceasefire, modelled after the Korean Armistice (38th Parallel) with a United Nations Peacekeeping Force (UNPKF), may be acceptable to Russia. This could include provisions for free and fair elections in Ukraine, supervised by Russian, NATO, and third-party monitors. Additionally, there would likely be guarantees that Ukraine will not be granted NATO membership and will not host any offensive weaponry on its territory.
Russia may also insist on limiting Ukraine’s defence forces, similar to the restrictions imposed on Germany by the Treaty of Versailles. As long as Zelensky remains in office, Russia is unlikely to engage in peace negotiations. Therefore, any peace initiatives led by Mr. Trump may gain traction only after a new, impartial government is elected in Kyiv.
A peaceful settlement would also necessitate the restoration of banking services, the lifting of all Western sanctions against Russia, and the reinstatement and potential expansion of previous energy supply routes. The West stands to gain as much as Russia and other stakeholders from such an arrangement.
However, the question remains whether Ukraine can sustain itself as an independent nation. Furthermore, U.S. ambitions to dominate European energy markets by selling its natural gas and oil may emerge as the biggest obstacle to a settlement. Additionally, any demands to share 50% of Ukraine’s natural resources could serve as a major point of contention, potentially derailing the negotiations altogether. 
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Shantanu Basu
Writer is a retired senior civil servant, public policy analyst, author and commentator.
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