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Energy Security Challenges in Ukraine:
A snapshot
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Energy security in Ukraine
Who is responsible for energy security in Ukraine?
What challenges to energy security are in legislation?
What challenges to energy security are in management?
What challenges to energy security are resource-based?
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The purpose of this report
To point out the need to develop an effective energy development strategy
To provide an in-depth analysis of the contemporary state of the energy sector in Ukraine
To determine the main symptoms and problems in the energy sector in order to find a way to cure them
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Who “controls” the energy sector?
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Central executive
bodies
Business
International partners
Consumers
Central executive bodies
More than 15 government agencies are involved informing energy policy.
On 7 July 2010, an Interagency Energy Development Commission was set up.
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The Commission’s purpose is to: •optimize the energy balance structure•establish a positive investment climate •research alternative energy sources
International partners
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Russia Ukraine depends on Russian resources
The EUUkraine is involved in many EU energy
initiatives
The USThe US works on its own strategic
priorities in Ukraine
Legislative gaps lead to:
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Lack of structural reform in the sector
Absence of a system of control over strategic state decisions
Corruption in the energy sector
Lack of control over natural monopolies and independent regulation of their activities
Ineffective rates for residential and industrial users
Strategy
Ukraine’s Energy Strategy to 2030 is an unused basis for forming energy policy:
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Adopting the Energy Strategy in 2006 failed to guarantee its enactment.The Strategy fails to rank its priorities.SInce its adoption, not a single effort has been made to improve it …
Two options for strategic energy planning
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Update the current Strategy1
Offer a new Strategy 2
Problems managing energy
Planning and decision-making system centered in Moscow
Closed, opaque actions of those in power
Lack of a proper tracking system for energy
Undiversified energy supply systems
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Energy resources
Ukraine covers less than 50% of its own energy needs.
Extraction
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Oil: 10–12%
Natural gas: 20–25%
Coal: 90-92%.
Gas, oil & coal: Common problems, missed opportunities
Outdated extraction infastructure
Resource depletion
Inconsistent State policy
Not the conditions for strategic investors
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Atomic energy
Ukraine’s total AES capacity is 7th in the world and 4th in Europe.
Ukraine continues to build new energy blocks
Ukraine is planning its own manufacture of domestic nuclear fuel for AESs
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Ukraine’s electricity—not competitive
Unified transmission system includes: – 8 regional power grids – 1 million km of power lines – 24 oblenergos (oblast power companies) and companies in
Sevastopol, Kyiv and Crimea
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No program to modernize the power grid Debts of over US $16bn on the wholesale electricity market
Renewable energy: Alternative sources
Alternative energy supplies only 1-2% of domestic demandUkraine’s priorities include bioenergy, windpower, mini-hydrolectric power, solar power, geothermal energy, and alternative gases
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Renewable energy: Alternative sources
Windpower potential is 330 million MWt.
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Powerful hydroelectric resources are available in Ukraine’s small rivers, which could provide electricity to hard-to-reach rural areas but need government backing.
Renewable energy: Alternative sources
Ukraine has huge deposits of “revolutionary” shale gas but extraction costs are high and serious investment is needed.
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Biomass is used to produce biogas, biodiesel and bioethanol.
Ukraine grows canola (rapeseed) for export to Europe.
Energy transit
Exit throughput of GTS is 142bn cu m/year. Potential throughput is 175bn cu m.If GTS is modernized, theoretical throughput across Ukraine could be increased to over 230bn cu m/year.Poor technical state of GTS threatens Ukraine’s geostrategic position as the key transit link in the East-West pipeline system.
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Nabucco pipeline
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Whitestream pipeline
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Transiting oil
Until 2000, 65mn t/year of oil passed through Ukraine’s pipeline network, 50mn t of it in transit for export.
By 2009, of only 38.5mn t/year, 29.1 was transiting for export.
In 2002, construction of the 674-km Odesa-Brody pipeline as part of the Eurasian Oil Transport Corridor (EAOTC) was completed.
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Ukrainian-style energy efficiency
Ukraine’s GDP energy consumption is 2.6 times the average around the world. Corruption is the main reason.
Energy efficiency is covered by more than 200 pieces of legislation: – 10 laws– 15 Presidential Decrees – 120 Cabinet resolutions and other legal acts
Yet there’s no understandable mechanism for encouraging energy efficiency.
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Project
Strategic priorities for increasing Ukraine’s energy security to 2030
Goal: To establish the strategic priorities for increasing Ukraine’s energy security.Funding: UK Strategic Programme Fund, “Low Carbon, High Growth” programme
23Foreign & Commonwealth Office
Products and events
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Products
Database
National documents
and international commitments
Analytical Report
“Energy Security Challenges in
Ukraine: A snapshot”
Analytical Brief
“Best international practice in
energy security”
Green Paper
“Problems in Ukraine’s
energy security to 2030”
White Paper
“Strategic priorities for increasing
Ukraine’s energy security to 2030”
Events
Expert Roundtable
To discuss key problems in the energy
sector
28 May 2010
Seminar
To discuss analytical report
22 July 2010
Study Tour
Tour to London and Brussels to learn about best
practice
Roundtable
To discuss Green Paper
Roundtable
To discuss White Paper
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