Ukraine has historically relied on its energy resources and transit infrastructure developed during the Soviet era. It now faces challenges of outdated infrastructure, overreliance on natural gas imports from Russia, and high energy inefficiency. Ukraine aims to diversify its energy sources through European cooperation and new pipelines like White Stream, but its dependence on Russian gas and transit fees remains a geopolitical vulnerability.

1. Energy Security of Ukraine
Elmir Badalov

2. Content
 During the soviet era energy sector in Ukraine
 Current situation in energy sector
 Challenges
 Crises
 Solutions
 Conclusions

4. Soviet era
 The republic pioneered hydroelectric plants in the
USSR in the 1920s, accounting for about 17 percent
of the total electric energy production in the Soviet
Union by 1990
 Coal mining was priority and specialization of
Ukraine within the Soviet industrial complex: Ukraine
mined about
 30 percent of all coal produced in the Soviet Union
 the government built five water reservoirs along the
Dnieper River
 Ukraine's biggest gas field was producing 30 percent
of the USSR's total gas production

5. Overview
 Ukraine was the seventh-largest energy consumer in
Europe and Eurasia in 2010. More than half of the
country's primary energy supply comes from its
uranium and coal resources, although natural gas
also plays an important role in its energy mix.
 Ukraine consumed approximately 2.3 trillion cubic
feet (Tcf) of natural gas in 2011, with domestic
production accounting for approximately 30 percent
of the total at 700 billion cubic feet (Bcf). The
remainder of supply is made up by Russian natural
gas, imported through the Bratstvo (Brotherhood)
and Soyuz pipelines.

6. Overview data
Ukraine (2010) Rank (2010) 2011
Total Oil
Production
(thousands
barrels per day)
78.90 52 80.40
Natural Gas (bcf) 684 29 699
Coal(million short
tons)
61.054 14 68.129
Electricity(Billion
Kilowatthours)
164.59 21 176.31
Total Primary
energy((Quadrillio
n Btu)
3.074 32 3.089

7. Current situation
 Ukraine is one of the most energy inefficient
countries in the region and restructuring and
upgrading its energy sector continues to be one of
the key development challenges for the Government.
The sector faces problems maintaining security,
reliability and quality of supply due to delays in
energy sector reform, poor financial condition of
energy sector enterprises, lack of investments, and
deferred maintenance in aging infrastructure. These
factors threaten the sustainability of economic
growth, degrade the environment and increase the
cost of social services. (World Bank)

8. Main challenges
 Outdated equipment and energy facilities, whose
modernization requires substantial investment. Any
slowdown in the modernization process dramatically
reduces effectiveness of Ukraine’s energy production
industry.
 High level of energy consumption by the Ukrainian
industrial complex, due to lack of technological
improvements. This makes Ukrainian industry
increasingly less competitive.
 Increasing dependence on external energy sources,
most notably natural gas. By heavily relying on gas
supplies from Russia, Ukraine limits its foreign policy
options

9. Gas Wars
 The series of “Gas Wars” that started in 2005,
 the Kharkiv Accords with Russia in 2010,
 the trial of Ukraine’s former Prime Minister Yulia
Tymoshenko in 2011

10. Kharkiv Accord
 signed on April 21, 2010, by the presidents of Russia
and Ukraine
 Ukraine received a 30 percent discount for Russian
natural gas purchased between 2010-2019 in
exchange for a 25-year extension of accommodation
of the Russian Black Sea Fleet in Sevastopol

11. Strengths in Ukraine’s Energy System
 Ukraine’s primary capacity in the energy field is
transit.
 Ukraine possesses the largest system of oil and gas
pipelines in Europe, capable of delivering around 56
million tons of oil as well as 180 billion cubic meters
(BCM) of natural gas per year
 Thirteen underground as storage facilities make
Ukraine Europe’s largest reservoir of natural gas
 Its own reserves of coal and uranium
 Ukraine is also a net exporter of electricity.

12. Weaknesses in Ukraine’s Energy System
 Ukraine’s economy consumes too much energy. It
requires about two times more energy per GDP unit
than the world average, and about four times than
the European average.
World Ukraine EU US
Natural gas 21% 41% 22% 24%
Oil 35% 19% 41% 38%
Coal 23% 19% 16% 23%
Uranium 7% 17% 15% 8%
Renewable
sources
14% 4% 6% 7%
Total 100% 100% 100% 100%

13. Weaknesses in Ukraine’s Energy System
 Ukraine is dependent on foreign sources of energy,in
particular Russia.
 Ukraine’s general dependence on imports of energy has
recently leveled off at about 60 percent, higher than
European average at 50 percent,
 A lack of diversity in supplies of gas and oil creates
additional risks and weakens Ukraine’s economic and
political standing.
 Ukraine suffers from the high cost of oil and gas
production, outdated equipment, and high levels of
pollution.
 Ukraine relies more on natural gas (about 40 percent of
all energy resources consumed) than on oil (only 20
percent).

14. Ukrainian-EU cooperation in the energy
field
 Ukraine remains the principal transit partner for
Europe. Most gas and oil imported from Russia
arrives in Europe through Ukrainian territory.
 Ukraine needs European technologies and
investment to modernize its gas transportation
system and decrease the level of internal energy
consumption.
 2009 EU-Ukraine Joint Declaration on the
modernization of Ukraine’s gas transportation
system and Ukraine’s consequent membership in the
Energy Community in 2011

15. Gas Pipelines as an Energy Security
Barometer
 Ukraine is looking for alternative sources of natural
gas, while trying to reduce its dependence on it.
 As a matter of economic survival, it is also trying to
keep the importance of its gas transportation system
as long as possible
 Transportation of natural gas is binding Russia, EU,
and Ukraine into a real system of interconnected
interests
 the White Stream

16. The presidents of Azerbaijan, Ilham Aliyev (left), and of Ukraine, Viktor
Yanukovich (right), in Davos. In the final moment Azerbaijan reportedly
withdrew from signing an agreement to supply LNG to Ukraine. Source:
president.az

17. Prices
 Kiev pays $390 per 1,000 cubic meters of Russian
gas purchased in Europe, while Russia sells Ukraine
its gas at $406 per 1,000 cubic meters, as of the first
quarter of 2013. (http://rt.com/business/russia-
ukraine-gas-reverse-163/)
 Russia paid a transit fee of $2.84 for sending 1,000
cubic meters of gas for 100 kilometers through
Ukrainian territory in the first quarter of this year, up
from $2.70 last year.
 (http://en.rian.ru/russia/20110606/164467844.html)

19. Conclusions
 Dependent on Russia
 Internal Policy
 Personal Interests
 EU-Ukraine cooperation