Sunday, June 24, 2007

'Rainbows' and energy security

The National Security and Defence Council of Ukraine website, [wittily entitled after 'Rada Narodnoyi Bezpeky i Oborony Ukrainy'] posts the following sobering 12 page document entitled:

Information notes [dovidka] for meeting of National Security and Defence Council meeting to be held on 15.06.2007: "On the state of progress of execution of NSDC resolutions on questions of energy security."

I've roughly translated just a few portions:

"2. Main threats in the energy security sphere.
2.1 Particular alarm is aroused by the negative tendencies in the internal gas market. From 2006, Ukraine has only one supplier-importer of natural gas -RosUkrEnerho, which has also become the monopolistic supplier of gas to Ukrainian enterprises (via UkrHazEnergo joint venture).

The main threat to Ukraine in the medium term in the context of energy security remains the lack of guarantee of supply of natural gas at acceptable price for 2008 and subsequent years.

...there is a real threat to the energy security of Ukraine caused by the high degree of monopolisation, and the corresponding unacceptably high risks of price diktat by the monopolist supplier; and also by the absence of guarantee of long-term supply of gas at acceptable prices.

As a result, because of potential debt dependence, a threat of loss of assets [to pay for these debts] has arisen. [These include] transit pipelines, gas distribution networks, and gas storage reservoirs, as well as consumers' assets - industrial enterprises and so on.

..UkrHazEnerho has monopolist levers of influence on the industry sector of the economy of Ukraine: according to the security service of Ukraine, the UkrHazEnerho could be used by one of the co-owners of its mother company RosUkrEnergo, D.Firtash, to increase his presence in the chemical engineering branch of Ukrainian industry....

The information laid out above provide grounds to declare that in the gas sector of the fuel-energy complex, systematic threats to the energy security of the state are growing."

There's a lot more worrying stuff too, e.g. about hindrances to the introduction of market principles in the coal industry, and lack of competition in the sphere of export of electric energy.

At that NSDC meeting itself, government representatives, Minister of fuel and energy Yuriy Boyko and vice-premier Andriy Klyuyev, claimed that the problems were exaggerated, and that there is nothing to worry about.

As I posted, previously, some of those present rushed through the NSDC meeting because they were attending Elton John's bash in Kyiv, later that day.

LEvko thinks there is a sense of unreality in all of this - of sleepwalking to disaster. Who is going to address these problems?

p.s. Good analysis on this in last last week's 'Dzerkalo Tyzhnya' in English here.

Here's their conclusion: " is evident that the problem will remain unsolved without the consolidated efforts of all political forces around a clear and well-calculated strategy of energy security. As long as the top positions in this country are occupied by people that are personally interested in companies like RUE, Ukraine will be getting bogged down deeper and deeper in the slough of someone else’s interests."

1 comment:

Etienne du Clé said...

I am not so sure there is a real threat. More likely, I think, this is all window-dressing as the Orange mobsters try to extract their pound of flesh (ksckback) from Firtash's outrageous IPO ploy, while they can.

NOw UKR is paying at or near market price, the Russians still want to sell to them just as much as UKR still needs to buy.

It's a dirty business, but a reliable one nonetheless...