29.07.2010
ICPS: Ukrainian Energy Strategy to 2030 is just a wish list by sector lobbyists

International Centre for Policy Studies (ICPS) recently published a snapshot on energy security challenges in Ukraine. Policy brief reviews the general situation in the energy sector of Ukraine and the results that have been achieved since Ukraine adopted “The Energy Strategy to 2030” back in March 2006.

The main conclusion of the brief is that Ukraine’s current Energy Strategy:

• Does not provide a clear, strict path to ensuring energy efficiency and transitioning to alternative energy sources.
• Does not propose ways for Ukraineto achieve energy independence and security.

The adopted “Energy Strategy to 2030” does not discuss any plans to attract investment into Ukrainian energy sector but proposes to invest in developing deposits outside Ukraine. According to the ICPS study “without investment in Ukraine’s own energy system, which can only be gained by ensuring a free energy market, the Strategy remains little more than paper wishes.”

The Strategy did not respond to political or economic changed and did not bring any tangible results to date.

According to the sector analysts, if Ukraine were to carry out its 2006 Energy Strategy, the country could entirely cover its energy needs and export surplus to Europe at competitive prices. Shale gas is considered an unexploited opportunity which could potentially supply Ukraine with gas for 30 years. Ukraine has coal reserves to last for another 100 years but the efficiency of coal extraction is very low while production costs are very high.

Currently Ukrainecontinues to depend on Russiafor supplying of 75-80% of natural gas and 85-90% of oil. Without investment in the energy sector, these numbers are likely to grow even more.

According to ICPS report over the last six months of 2010, domestic extraction of gas declined 6.8% compared to the same period of 2009. Existing oil deposits are 85-90% depleted and investment is required to develop new deposits.

ICPS outlines main problems in Ukraine’s energy sector to be “corruption, a disconnect between states policy priorities and real action, political games with utility rates during election campaigns, a flawed rate policy, the lack of foreign investment and energy sector statistics that don’t reflect the real situation.

ICPS report can be downloaded at: http://www.icps.com.ua/files/articles/58/24/Energy_Strat_Eng.pdf

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