STATEMENT of The Ukrainian National Platform of Eastern Partnership Civil Society Forum On the development of Energy Infrastructure within the framework of the Eastern Partnership and in the context of Platform 3 “Energy Security” meeting

The UNP CSF experts taking part in Working Group 3 “Environment, climate change and energy security” are delighted to welcome the participants of the seventh meeting of Platform 3 “Energy Security”, wish them an interesting and productive discussion and would like to ask them to take into account the following points in their discussions on Ukraine:

1. The Ukrainian Government announced significant measures to develop the national energy infrastructure. However, any real implementation is unlikely to happen in the near future, and it is too early to consider its efficiency in terms of energy security.

The actions of the Ukrainian Government received positive response in the report on the implementation of the European Neighbourhood Policy in Ukraine in 2011, published in May 2012 by the European Commission. The paper listed the following achievements by Ukraine in the development of energy infrastructure:

The establishment of a new Regulator – the National Commission on Energy Control has been replaced by the National Commission for State Regulation in the Energy Sector;
Order of the President to the government to draft a plan of development and restructuring of “Naftogas of Ukraine”, which should facilitate speedy support of the modernisation of Ukrainian Gas Transportation Systems by international institutions;
Feasibility study of the modernisation of Ukrainian Gas Transportation Systems;
Ukraine’s efforts in the construction of LNG(liquefied natural gas) terminal – Feasibility Study of the Project, negotiations with various countries - potential gas suppliers;
Ukrainian and Moldovan request to the EU to finance a feasibility study for the simultaneous interconnection of these countries’ power plants to the European network of transmission system operators (ENTSO);
Modernisation of power grids in Ukraine.

It is worth noting, that most of these initiatives need to be finalised in order to be implemented in accordance with the European standards.

Thus, the new Regulator has to be more secure and independent in its decision making – its current status leaves space for authorities to influence its decisions; specific steps to restructure “Naftogas” must start to take place (the bill on the restructuring of oil and gas industry passed in its first reading only allows for the government to make independent decisions regarding the restructuring of the company), the government must speed up the launch of the construction of the terminal of LNG, initially announced in January 2012.

In addition, it is worth noting the government’s efforts to develop cooperation with other European energy companies to ensure gas supply from European spot markets in reverse mode, as well as successful tender to develop unconventional gas.

At the same time, delays in the restructuring process of “Naftogas of Ukraine” and in negotiations on the distribution of output among the winners of the tender on unconventional gas could trigger another round of frustration and disappointment in Ukraine as a reliable and predictable partner.

2. In accordance with the recommendations of the European Union and obligations, undertaken by Ukraine when joining the European Energy Community, the Ukrainian Government has been adopting laws on Energy Sector Reform. However, frequently such laws are not offered for public debate, and consequently require immediate adjustments.

Working towards the integration of the Ukrainian energy market into the EU market, the government must improve transparency - a very important constituent of the European Energy Policy. Disregard for transparency is one of the main threats to quality reform of energy infrastructure, including ability to attract investment.

Despite the appeal of civil society organisations to the authorised Ministries, they were given no access to the assessment of the draft law “On the Functioning Principles of Energy Market in Ukraine” – the key bill regulating electricity/energy market and infrastructure.

The recently adopted Parliamentary Act, repealing the use of public tender procedures in gas, oil and electricity industries, created opportunities for protectionism and non-transparent procurement.

A meeting of Multilateral Stakeholder Group of Extractive Industries Transparency Initiative (EITI) should be held in Ukraine to approve an Action Plan in order to start the implementation process of the Extractive Industries Transparency Initiative.

3. The Ukrainian Government has stepped up its efforts to diversify energy sources, in line with one of the EU policy priorities. However, these projects require support from the EU to enable their implementation in shorter timeframe.

Ukraine remains a strategic natural gas transit country for the EU. Hence all existing and potential transit routes through its territory are deemed important for the European policy of diversification.

In this regard, the support of the European Commission is crucial, in conjunction with the modernisation of Ukrainian GTS and other projects providing not only Ukraine, but the rest of the Eastern European countries, with alternative supplies.

Strategic support from the European Commission is necessary to allow Ukraine to purchase gas in the European markets, in particular, for the transportation of gas through the territory of Slovakia, as well as for its strategic projects to supply liquefied gas from the Caspian region or Persian Gulf through the Black Sea to Ukraine.

back to Forum News