Ukraine’s energy relations with the EU:
implications for competition
Oleksii Leshchenko, Gorshenin Institute
Brussels, Bel...
Ukraine-EU: Energy
• 25% of annually consumed in the EU gas
passes through Ukrainian territory (120
bcm/a)
• 75% of all ex...
Major Russian Gas Pipelines
Source:PetroleumEconomist
• The 10-th largest gas consumer in the world
and the 30-th gas producer in the world
• Ukraine gas consumption equals to ...
Energy capacity of GDP of
Ukraine & other countries
Source: IEA, 2008 (PPP USD 2000)
Assets and Vulnerabilities
GTS capacity 180 bcm/a/
“Metal scrap” if not utilized by
Gazprom
Naftogaz - Oil&Gas Monopoly
Production &
Refinery
Transportation Sales &
Distribution
SC Ukrgas
production
SJSC Chornomor
...
Ukraine and the European
Energy Community
• Became a member on Feb. 1, 2010
• More competition in the domestic market
• Hi...
• Ukraine expected blocking of the “South Stream”
and investments in the GTS modernization
• EU expected reforms of the in...
Implementation
• Gas produced in Ukraine should be used to
meet the needs of the population and housing
and communal compl...
• Regulations on the access to the GTS of the
third parties are postponed until mid-2012
• Law on Naftogas restructuring s...
Third Energy Packet
• National Electricity Regulatory Commission is
directly subordinated to the President, and
this fact ...
www.gorshenin.eu
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Ukraine’s energy relations with the eu

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Report on the European Energy Symposium on European Energy policy.

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Ukraine’s energy relations with the eu

  1. 1. Ukraine’s energy relations with the EU: implications for competition Oleksii Leshchenko, Gorshenin Institute Brussels, Belgium 15 March 2012
  2. 2. Ukraine-EU: Energy • 25% of annually consumed in the EU gas passes through Ukrainian territory (120 bcm/a) • 75% of all exported gas from Russia to Europe goes through Ukrainian territory • The lowest transit rates in Europe (2.84 $) • Underground gas storage capacity – 1/3 of EU gas storage capacity (32 bcm) • Largest consumer of Russian gas in the world (25% of Gazprom European exports)
  3. 3. Major Russian Gas Pipelines Source:PetroleumEconomist
  4. 4. • The 10-th largest gas consumer in the world and the 30-th gas producer in the world • Ukraine gas consumption equals to the Czech Republic, Hungary, Poland, and Slovakia combined • Energy capacity of Ukrainian GDP – 40% (World - 19%, Europe – 17%) Energy efficiency in Ukraine
  5. 5. Energy capacity of GDP of Ukraine & other countries Source: IEA, 2008 (PPP USD 2000)
  6. 6. Assets and Vulnerabilities GTS capacity 180 bcm/a/ “Metal scrap” if not utilized by Gazprom
  7. 7. Naftogaz - Oil&Gas Monopoly Production & Refinery Transportation Sales & Distribution SC Ukrgas production SJSC Chornomor naftogas OJSC Ukrnafta (50%+1 share) SC Ukrtransgaz OJSC Ukrtransnafta SJSC Ukrspetstransgaz SC Gas of Ukraine SE Ukravtogaz Heat power generating companies 97% of oil & gas production 100% of oil & gas transportation 100% of gas distribution
  8. 8. Ukraine and the European Energy Community • Became a member on Feb. 1, 2010 • More competition in the domestic market • Higher technical standards and regulations • Better investment climate • Further integration of Ukrainian energy sector with the EU • Enhance energy security • Access to international loans and technical assistance
  9. 9. • Ukraine expected blocking of the “South Stream” and investments in the GTS modernization • EU expected reforms of the internal market • Ukrainian government uses membership in the EEC to promote reforms that do not enhance competition but strengthen manual control: law on oil and gas sector reforming entitles the Cabinet of Ministers to unilaterally reorganize the energy sector • This state of affairs is at hand to third parties Ukraine and the European Energy Community - reality
  10. 10. Implementation • Gas produced in Ukraine should be used to meet the needs of the population and housing and communal complex • Gas produced in Ukraine may not be exported • Gas produced in Ukraine is sold by regulated tariffs • Profitability of the state gas production companies is limited to 15%
  11. 11. • Regulations on the access to the GTS of the third parties are postponed until mid-2012 • Law on Naftogas restructuring submitted to the Parliament Implementation
  12. 12. Third Energy Packet • National Electricity Regulatory Commission is directly subordinated to the President, and this fact can influence independence of the regulator • Property unbundling: restructuring of Naftogaz is not transparent
  13. 13. www.gorshenin.eu
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