This document summarizes issues facing Ukraine's energy security and proposes solutions. It notes that after 2013, figures guaranteeing state stability received outsized resources, interfering with business and dissatisfying western regions. This led euro integration to symbolize better living, and suspension of integration escalated protests. The defeated figures had to retreat east while the replacement opposition relied on new oligarchs. As a result, state authority was lost, markets became unpredictable, competition unfair, and threats like military aggression and supplier domination emerged. Solutions proposed include restoring trust in authorities, developing secure institutions, and building a decentralized, diversified energy system with regional reserves for stability.

1. Ukrainian Energy Safety Problems
and Ways of Their Solution
Gennadiy Ryabtsev
NATIONAL ACADEMY
FOR PUBLIC ADMINISTRATION
under THE PRESIDENT OF UKRAINE
STC «Psychea»
IV International Conference «Oil and Gas Power Engineering 2015»
(April 21-24, 2015, Ivano-Frankivsk, Ukraine)

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Backgrounds of the “new market order”
At the end of 2013 it has become evident that:
1. FIGs that used to guarantee state authorities stability
started to be afforded too significant financial resources
2. To get the latter, state authorities began to interfere even in
small business activities, thus creating protest opinions
3. Western regions were the most dissatisfied, the elite in
these regions felt themselves discriminated
4. The deficiency of the resources being withdrawn in favor of
FIG resulted in acute disappointment of the population in
the state authorities
5. Most citizens started to form an association between euro
integration and hope for the change of working rules of the
game

3. Backgrounds of the “new market order”
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As a result:
1. Euro integration has been perceived as symbol of
transition to the better life
2. Even its formal temporary suspension has led to
escalation of protest, supported by counter elite and
suffered middle class
3. «Registered opposition» revealed itself to be unprepared
to lead protest but due to its experience managed to seize
key governmental positions
4. Defeated in its struggle for power, FIGs had to step back
to the East with its paternalistic thinking

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As a result:
5. Due to the fact that state authorities stability was
guaranteed by successfulness of oligarchs, its destruction
led to economical disturbances and partial loss of
sovereignty
6. Understanding its incapability to establish country in
accordance with “European standards”, “register
opposition” had to rely on oligarchs, competing with their
predecessors
7. As a result several FIGs once again have become
sponsors of politics
8. To conceal that, state authorities freeze conflict in the East
and replace reforms by revolutionary rhetoric.
Backgrounds of the “new market order”

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1. State authority bodies has lost understanding of markets,
branches of industry, economics as integral objects of
management
2. Transition to the neoliberal regulation model
As matter of fact it is disregard of market processes,
deserting from the spheres of social responsibility
3. Predominance of operation activity upon strategic planning
4. Essential deficiency of taxes
Reasons: depreciation of oil quotations; privileged position of
FIGs, supporting stability of state authorities; military
activities in the East of Ukraine
The main features of “new market order”

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5. Significant changeability of markets at high risks
Result – low profitability
Outcomes – reduction of production and processing, high
fuel and electricity prices
6. Shadow markets
Reason – credit crisis. Result – GDP reduction
7. Escalation of competition, first of all unfair competition
8. Increase of asymmetry of market information
9. Activation of civil society institutions
Striving to compensate lack of state in the spheres of social
responsibility
The main features of “new market order”

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Internal:
1. Overdependence upon import
2. Insufficient diversification of sources and supply routes
3. Limited use of own potential
4. Low energy effectiveness
5. High corruption level
6. Opacity of energy markets
7. Disintegration of market participants’ interests
The main threats to energy security under
such conditions

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External:
1. Military aggression
2. Domination of offers of a limited group of suppliers
3. Insufficient investing into the market development
4. Energy separatism
5. The absence of an agreed position of consumers in
negotiations with the suppliers of resources
6. Manipulation of mass consciousness
Main Threats of Energy Security
under the Following Conditions

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1. To renew the trust in the actions of authority
• Credible appointments
• Transparency of budget expenditures
• Decentralization of decision-making
• Independent executors
2. To develop institutions that provide the citizens with security,
justice and employment
• Counteraction of plundering the budget
• Prevention of making huge profits
• Elimination of shadow schemes
• Systematic evaluation of the quality of justice
• Simplification of the regulatory system
What must be done?

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3. To make a system of energy security based on the following
theses
• Every consumer must be able to use different fuel and
energy sources at different time
• Energy production must be decentralized and energy flows -
disaggregated
• Every region must have fuel and energy reserves
preserving the state functions especially in particular periods
• The structure of reserves must conform to the structure of
energy consumption and ensure sustainable functioning of the
economy based on different periods of loading
What must be done?

11. Thank You For Attention
Ryabtsev Gennadii Leonidovych
+380 (50) 357-20-40
rgl2006@ukr.net
www.oilreview.kiev.ua