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Interview on Ukraine energy market

Enerdata has just released the Ukraine energy report with 2006 data.

Karine Pollier, economist at Enerdata in charge of energy market intelligence, unveils the latest energy market evolutions.

How does the Ukraine energy market evolve these last months ?

Ukraine is an important country for gas transit from Russia to Europe. In 2006, 114 Gm3 Russian gas transited by Ukraine to Europe, representing 30% of the EU countries imports (the country owns 37 500km pipelines).

Beginning 2006, strong tensions appeared between Ukraine and Russia regarding prices and invoice settlements at the same time. That led to disturbances of exports towards Europe, which struck people and showed the vulnerability towards gas imports from Russia. Since, the problems have been solved but the gas price for Ukraine has considerably increased.

What are the current priorities of the Ukrainian government in terms of energy policy ?

Among the priorities announced by the current government, the most important ones are the improvement on energy efficiency, the reform of prices and the reimbursement of various debts, especially gas, and the reorganisation of the energy sector (privatization, suppression of monopoly).

The privatizations in the energy sector were extremely important in 2003 due to the political stability, but officially, they should nevertheless complete until 2008.

What are the main energy resources of Ukraine ?

Ukraine disposes of important coal resources (32 bnt recoverable, representing 500 years of consumption). The natural gas resources are lower (1 110 Gm3, 14 year consumption) and badly developed, the country depends at 75% on foreign gas. The oil resources are more modest.

What are the challenges of Ukraine for the coming years ?

The country wants to diversify its suppliers (Iran, Turkmenistan) and look for payment modalities which are adapted to its capacity (debt reimbursement to Russia with barters). To increase infrastructures and develop its national resources, Ukraine would call upon foreign capital, which does not facilitate the political stability.

The governement has adopted a development plan for the gas and oil sectors at 2010 which plans a doubling of oil and gas production and an increase of transported gas volume.

Ukraine is keen also to develop its nuclear capacity : the country plans the construction of 11 new reactors by 2030 (15 currently).

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