Sunday, January 25, 2009

From an article on Ukraine's gas sector - Where East Meets West: European Gas and Ukrainian Reality, by Edward Chow and Jonathan Elkind, The Washington Quarterly, Jan. 2009 (.pdf is here; link via Wu Wei):

[...] The current form of the country’s energy sector, however, needs to be seen for what it is, a major threat to itself and to its neighbors. If Ukraine fails to modernize its energy sector practices, the sector will continue to undermine Ukrainian politics, economy, and energy security. Most importantly, it will threaten Europe’s own energy security.

Ukraine has the potential to change this story line. Friendly governments and international institutions can help with capacity building for effective policy execution, but only after the political will for energy reform is in place. Serious energy sector reform would not only help Ukraine but would also stabilize the economic undergirding of all European gas importing countries. In this sense, serious energy reform would arguably be Ukraine’s single most important contribution to improve the security of the trans-Atlantic community. On the other hand, continuing failure to engage in energy reform, when the high stakes are so obvious to all, would be a clear signal that Ukraine is not ready to pursue its stated desire of becoming a more integral part of the Euro-Atlantic community.

And this:

[...] Naftogaz’s chronic and massive indebtedness - it is currently in technical default of its international bond obligations - makes Gazprom the only potential purchaser of its remaining valuable assets, namely the trunk gas pipeline and storage facilities. Gazprom’s dominant position gives Russia the possibility of taking over Ukraine’s decaying infrastructure and strengthening its control over gas exports to Europe, including those from Central Asia, even without having to construct all the bypass pipelines it is planning. [...]

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