Q Club

Ukrainian and international experts: Ukraine has sufficient energy potential, but it requires understanding and effective implementation strategy

On December 11, 2012, the international conference «The U.S.A. — Ukraine: IV Energy Dialogue. Sustainable energy future of Ukraine till 2030», organized by the Centre for US – Ukrainian relations in partnership with Kyiv International Energy Club «Q-Club», took place at the American Chamber of Commerce in Ukraine in Kyiv. The conference was attended by Ukrainian and international experts, government, energy companies and NGO representatives, ambassadors and the representatives of Hungary, USA, Canada, Slovakia and the UK embassies.

Participants discussed challenging topics and global trends in the energy sector, the outlook for both traditional and alternative energy sources markets, estimated the energy potential of Ukraine, its role as energy producer and transiter.

Swiss expert J.Gratz (Technische Hochschule Zurich, Center for Security Studies) mentioned, that Ukraine has significant energy potential. However, the financial situation with “Naftogaz”, significant energy dependence on the Russian Federation and low energy efficiency of the economy show that Ukraine does not understand its advantages.

Oleksandr Todiichuk, the president of the Kyiv International Energy Club «Q-Club», Oleksandr Chalyi, former deputy minister of foreign affairs, the president of «Grant Thornton Ukraine», Pavlo Kachur, former minister for housing (the Alliance «New Energy of Ukraine»), Mykhailo Honchar, director for energy programs at «NOMOS» Center, Georgy Geletukha, the chairman of the Bioenergy Association of Ukraine and other recognized Ukrainian experts discussed challenges and energy prospects of Ukraine, in particular its optimal energy mix and energy security, commented the Updated Energy Strategy of Ukraine till 2030.

«In recent twenty years Ukraine has significantly weakened its position as energy transiter. The volumes of oil and gas transit decreased in 4.5 and 1.5 times respectively. We have almost lost the oil refining industry, reduced hydrocarbons production due to the lack of realistic development strategy, the absence of think-tank that could solve strategic issues, estimate and forecast, set state energy policy. Now the main challenges for Ukraine in the energy sector are the harmonization with the EU legislation, the Russian issue (start of the Southern and Northern streams, the gas prices for Ukraine), GTS modernization, solving the institutional failure of industry and corruption problems. Overcoming these challenges and creating new energy diplomacy should be the priorities for the country», commented Oleksandr Chalyi.

According to the Deputy Minister of Energy and Coal Industry of Ukraine Volodymyr Makukha, «energy system of Ukraine had been stable for a long time till negative events of 2006—2009 that shook this stability and highlighted the need for systemic changes. The government determines the following priorities: gas and electricity markets liberalization, harmonization with EU legislation, supply sources diversification, domestic energy production increase, energy mix optimizing, gas sector restructuring. The «Naftogaz of Ukraine» reforming process will provide the separation of gas transportation, production and sale functions. These reforms are aimed to improving the company efficiency, increasing its investment prospects etc.

Summarizing remarks of energy NGOs representatives to the Updated Energy Strategy till 2030, Oleksandr Todiichuk mentioned: «The current and «updated» Strategy is unlikely to be able to fulfill its role of optimal energy mix providing. According to the Strategy, the problem nuclear power, coal, gas and oil will remain the main elements of energy mix. At the same time the document eliminates the significant potential of alternative energy sources. Therefore, the strategy abandons the existing state of things. We all see the consequences of the strategic approach lack in the energy sector. The rate of Ukraine’s energy security decreased from 65% (out of 100%) in 2010 to 55% in 2011. Ukraine needs to involve independent experts, scientists, industry associations and NGOs to the reform process to solve these problems”.

Conference speakers lively debated such issues as prospects of shale gas in North America, Europe and Ukraine, so called «shale gas revolution», changing the balance of global gas market major players, Russian energetically oriented geopolitical strategy, Northern and Southern streams launch and its impact to the global gas market. In this regard, useful information has been provided by foreign experts J.Gratz, A.Cohen (U.S. «Heritage Foundation»), James Sherr (UK, Royal Institute of International Affairs), C.Filipowicz (Poland, «United Oilfield Services Sp. z.o.o»).