Ukraine to focus on resources development in search for energy independence

July 1, 2013

Ukraine will keep its position as a key energy sector partner of the European Union, particularly in regard to gas transportation and storage, according to the EU Commissioner for Enlargement and European Neighbourhood Policy.

Photo credit: Tvish/iStockphoto/Thinkstock

Ukraine will keep its position as a key energy sector partner of the European Union, particularly in regard to gas transportation and storage, EU Commissioner for Enlargement and European Neighbourhood Policy Stefan Fule stated at a press conference in Luxembourg this week.

The Commissioner also stated that Ukraine will play an important role as a strategic partner to the EU for extraction of hydrocarbons and the development of non-conventional energy sources, such as shale gas. The country has already entered into partnership with several global energy giants, in an attempt to develop its own conventional and non-conventional energy resources. Ukraine is hoping that by collaborating with international companies that have a lot of experience in the field, it will be able to develop gas deposits across its territory and in its deep marine shelf in the Black Sea.

One of these companies is Shell, which was granted the right to explore for shale gas in the Yuzivske gas field in Eastern Ukraine in May last year. Just three months later, Shell, ExxonMobil, Romanian OMV Petrom and Ukrainian state company Nadra won joint rights to develop underwater deposits at the Ukrainian deep marine shelf field.

Early this year a number of European countries, including Germany, Italy, Hungary and Poland, declared an interest in getting involved in the Ukrainian gas storage and transportation system. The country has a system of huge underground storage facilities that could hold a combined amount of over 31 billion cubic meters of gas. These units allow the storage of significant amounts of gas over the summer months that could be utilized over the colder moths, when demand is substantially higher.

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The EU countries plan for Ukraine to become a major energy hub for Eastern and Central Europe member states, with the idea first introduced by the Special Envoy and Coordinator for International Energy Affairs of the U.S. Department of State, Carlos Pascual, during his February 2013 meeting with the prime minister of Ukraine, Mykola Azarov, who later presented the project at a cabinet meeting in Kiev.

Azarov referred to previous agreements that Ukraine entered into with Shell and Chevron, stating that these partnerships could help the country get an extra 25 billion cubic meters of shale gas annually in seven or eight years.

The development of both conventional and non-conventional energy resources would help the Eastern European republic in its efforts to reduce its energy dependence on Russia, following lengthy disagreements between the two countries over the price of gas delivery.

In less than a decade Ukraine's energy sector could be back to a time prior to the early 1970s when the national demand for energy was fully satisfied by domestic production. The rapid development in shale gas production technology, combined with expansion of domestic gas with the help of global companies, could revolutionize the industry, commented policy expert Taras Kuzio, chair of the Ukraine Policy Forum at the Center for Transatlantic Relations in the School of Advanced International Relations, Johns Hopkins University.

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