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Moving towards energy independence

Article - January 19, 2012
Energy diversification will give Ukraine the options it needs as it sets its sights on fully satisying its domestic energy requirements
Currently top on the list of Ukraine’s political agenda is reforming the energy sector, given rising global prices and the country’s dependence on imported energy supplies, primarily from Russia. By the end of 2011, Ukraine was relying on imports to meet about three-quarters of its annual oil and natural gas requirements and 100 per cent of its nuclear fuel needs.

The overriding objectives of the country’s current strategy are to ensure its energy security and status as a significant transit country. As the main route for transferring Russian gas into Europe, Ukraine is vital to both European and Russian energy interests.
In February 2011 Ukraine became a full member of the European Energy Community, a move seen as a significant step in its integration into the EU energy market and as an important opportunity for more complex energy reforms to take shape within the country. As part of its membership obligations, from 2012 to 2018 Ukraine will have to implement additional elements of EU energy policy that regulate the electricity market and other energy-related environmental issues.

“We understand that problems of corruption, bad management, low-quality legislation and regulatory policy are quite serious in our country. Fair evaluation is the basis for finding the solution to these problems,” assures Vladyslav Kaskiv, head of the State Agency for Investment and National Projects of Ukraine (SAINPU).

“This country has an excellent potential in oil and gas,” says Dr Jim Bown, president and head of representation at Vanco Energy Company, an independent oil and gas exploration company registered in the United States that carries out deepwater exploration and development of oil and gas deposits worldwide. “Ukraine needs to move forward very quickly towards energy independence because the economy will benefit tremendously.”

Among the projects currently considered of top national importance is the liquefied natural gas (LNG) terminal. Mr Kaskiv is confident its completion could transform Ukraine’s position in global politics and raise Ukrainian living standards. “It could ruin the monopoly of the Russian Federation. The given question is not of an economic, but rather of a geo-economic and geopolitical nature,” he says.

Works in the Black Sea are expected to begin once the feasibility study is concluded. The LNG terminal will handle an estimated capacity equal to 10 billion cubic metres by 2017.

“There are a great number of advantages for locating enterprises in our country: ideal geographical position, much lower prime cost, highly qualified labour force and among the most liberal legislative terms throughout the entire Europe,” details Mr Kaskiv.

The head of SAINPU denies reports in December 2011 suggesting delays in the development of the LNG project are due to a lack of investor interest, and announced possible alternatives on its final location. “One option is in the Odessa region near Yuzhnyi port; another is in the Mykolayiv region near Ochakiv port.”