The document discusses Ukraine's energy crisis, highlighting its dependence on Russian gas and the implications of various energy strategies proposed for 2030. It outlines Ukraine's attempt to increase domestic production and reduce reliance on Russia, while also addressing the challenges of gas transit and the potential risks associated with pipeline control. The author reflects on the political dynamics influencing energy policy amidst growing nationalist sentiments and external pressures.

1. National Energy Security Fund
‘Alleviating the EU’s rocky
road: a firmer Kiev-Moscow
partnership ahead?’
Konstantin Simonov
BREC
Brussels
February 5
2014

2. Three whales of
Ukrainian Crisis
• European phobia concerning
Russia
• Russian imperial syndrome
• Ukrainian slyness
National Energy Security Fund

3. No gratitude
Discount for Ukraine
500
400
300
200
100
0
Average price for Russian gas in 2013
National Energy Security Fund
New gas price

4. No gratitude
Nafrogaz Debt (bilion USD)
4
3,5
3
0,65
2,5
2
1,5
2,7
1
0,5
0
Naftogaz debt for
1
January, 2014
Naftogaz debt for 2013
National Energy Security Fund

5. Ukrainian Stubbornness
New Version of Energy Strategy – 2030
(January, 2014)
• Increasing of domestic production (6095% of local gas in Energy balance in
2030)
• Decline of dependence from Russia
• Import from Azerbaijan, Qatar and Egypt
• Reverse from Europe
National Energy Security Fund

6. Stupid Policy
• Ukraine has strong need to save
transit business and induce
Russia to revise the capacity of
South Stream
• Instead of it Ukraine is try to
scare Russia with paper tigers
National Energy Security Fund

7. Ukrainian Transit in Gazprom’s
Export to Europe & Turkey, %
100
95
90
82
80
70
70
69
67
66
60
56
52
50
40
1998
2002
2008
2009
2010
2011
2012
2013
Source: NESF (based on figures of Gazprom
and Naftogaz of Ukraine)
National Energy Security Fund

8. Gas Transit across Ukraine in 19982013, bcm
140
120
114,9
110,7 109,3
105,3 106,1
112,4
120,3 121,5
Russia and Moldova
113,8 112,1 116,9
100
92,2
95,4
Europe
101,1
81,2
83,9
80
60
40
20
26,2
14,6
19,1
11,3
15,5
16,8
16,8
14,9
14,7
3,1
2,7
3
3,2
3,1
3,1
2,2
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Naftogaz of Ukraine
National Energy Security Fund

9. Transit of Russian Gas to
Europe and Turkey, 2013
23%
51%
Belarus
Blue Stream
Nord Stream
9%
2%
National Energy Security Fund
Finland
Ukraine
15%
Source: Gazprom

10. Gas in UGS of Ukraine
Source: NESF Calculation
National Energy Security Fund

11. Gas Balance of Ukraine
140
118,1
120
100
Production
Consumption
80
51
60
40
24,4
20,9
20
0
1991y 1995y 2000y 2005y 2006y 2007y 2008y 2009y 2010y 2011y 2012y 2013y
National Energy Security Fund

12. National Idea
• The thesis about “gas independence from
Russia” is typical of the current Ukrainian
elite and is not disputed. The protests only
increase the “gas pride” sentiment with the
idea like “we do not need Russian gas at all”
• This is becoming almost part of a “national
liberation struggle” for “independence from
Moscow”
National Energy Security Fund

13. Bye-Bye, Transit!
• Even if we will see presidential election in 2015
it is impossible for Viktor Yanukovych to let
Gazprom have the pipeline, as even without
that the opposition almost calls the current
Ukrainian leader “a Moscow puppet,” which is
absolutely wrong in essence, yet resonates
strongly with the Ukrainian masses
• The surrender of the pipeline in this situation
may lead Yanukovych to lose not only power,
but also personal freedom (if he is sent down
the way Yuliya Tymoshenko was, charged with
abuse of power or even high treason)
National Energy Security Fund

14. In Third Package We Trust!
• Another form of playing up the subject of Europe is
discourse of the Ukrainian gas establishment and expert
community on Ukraine’s presidency of the European
Energy Community and on Ukraine implementing
provisions of the Third Legislative Package
• The idea is that the Third Legislative Package will enable
Ukraine to remove legal risks when organising virtual
reverse supply from Europe. Also, it will at least provide a
new plausible ground for accusing Russia of
unwillingness to go the way of “civilised nations” and
adopt liberal standards for regulating the gas business
and gas pipelines in particular (for instance, to allow
transit of some gas from Central Asia to Ukraine)
National Energy Security Fund

15. Destruction of good buisness
Naftogaz Transit Tariffs
2009
Revenue from transit,
billion USD
Volume, bcm
Transit Tariffs
($ for 100 km)
Source: Naftogaz, NESF
National Energy Security Fund
2010
2011
2012
2013
1,5
3,1
3,6
3,2
3,6
92,2
95,4
104,2
84,3
86,2
1,7*
2,65
2,8
3,1
3,4

16. Pipelines in Museum
National Energy Security Fund

17. Nord Strem, Opal and Gazelle
Source: Net4gas
National Energy Security Fund

18. The role of South Stream
National Energy Security Fund
Source: Gazprom

19. Austria, Slovakia and Poland
National Energy Security Fund

20. National Energy Security Fund
Source: Gazprom

21. Ukrainian Gas Import
50
45
44,8
40
35
32,9
27,7
30
25
20
15
10
5
0
2011
2012
2013*
Source: Ukrainian National Office for National Statistics
National Energy Security Fund

22. Reverse is not the solution
Reverse in 2013, million cubic meters
250
200
150
Poland
100
Hungary
50
be
r
ec
em
D
m
be
r
r
ov
e
N
O
ct
ob
e
r
be
pt
em
Se
gu
st
Au
ly
Ju
ne
Ju
ay
M
ril
Ap
ch
ar
M
ru
ar
y
Fe
b
Ja
nu
a
ry
0
Source: Ukrainian National Office for National Statistics, Gaz System, FGSZ
Statistics,
System,
• Average price – 397$
National Energy Security Fund

23. Naftogaz on the way
to bankruptcy
Share of low-profitable consumers in Naftogaz Sales
80%
70%
60%
50%
75%
57%
40%
30%
20%
10%
0%
2011y
National Energy Security Fund
2013y

24. Ukraine is Already Divided
National Energy Security Fund

25. Thank you!
simonov@energystate.ru
National Energy Security Fund