UKRAINIAN ENERGY FORUM IN KYIV ADDRESSES CRITICAL ISSUES
U.S.-Ukraine Business Council (USUBC)
Kyiv, Ukraine, Wed, Oct 8, 2008
KYIV - The Ukrainian Energy Forum began in Kyiv on Tuesday at the Premier Palace Hotel and will run for three days. Most of the critical energy issues faced by Ukraine are being addressed during the Forum which is one of a series of Adam Smith Conferences' on key Ukraine economic and business issues.
The panels on Tuesday featured such speakers as the deputy minister of Fuel & Energy, Volodymyr Makuhka; Viktor Chernomyrdin, Ambassador of the Russian Federation to Ukraine; Oleksandr Shlapak, first deputy head of the Secretariat of the President of Ukraine; the general director of Ukraine's largest private energy company DTEK, Maxim Timchenko; Yuri Boyko, shadow minister of Fuel and Energy of Ukraine, and Mykola Martynenko, Chairman, Committee on Fuel & Energy Complex, Parliament.
U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
The U.S.-Ukraine Business Council (USUBC) is represented at the Ukrainian Energy Forum by Morgan Williams, SigmaBleyzer, who serves as President of USUBC and Ludmyla Dudnyk, USUBC program director in Ukraine.
USUBC members AES, Cardinal, ContourGlobal; Ernst & Young, Holtec, Shell, Squire Sanders, TNK-BP Commerce, Westinghouse, Vanco, Vasil Kisil & Partners have presenters on one of the several panels (see list of USUBC presenters below). Other USUBC members in attendance at the Forum included IMTC-MEI and the RULG-Ukrainian Legal Group.
Companies and organizations on the program Tuesday included Mott MacDonald, White Stream Pipeline Company, Sphere Capital, Gazprombank; MIM-Kyiv; GAZEKS-Management, Razumkov Centre, Gazprom Sbyt Ukraine, Target Decisions of FEC, Ernst & Young and the New Energy of Ukraine Alliance.
DEPUTY FUEL AND ENERGY MINISTER MAKUKHA
Ukraine intends to obtain a loan of about USD 1.5 billion from the World Bank for investing in projects in the fuel and energy complex before the end of the year 2011. Deputy Fuel and Energy Minister Volodymyr Makukha announced this at the Ukrainian Energy Forum.
Makukha added that Ukraine also intended to obtain loans from other international financial organizations. Moreover, according to Makukha, revenues from privatization of the states shares in power generating companies and regional power distribution companies are one of the main sources of investment in the energy industry.
He expressed confidence that Ukraine will be able to obtain the funds necessary for developing its fuel and energy complex despite the global financial crisis (Ukrainian News-on-line, Ukrainian News Agency).
RUSSIAN AMBASSADOR TO UKRAINE CHERNOMYRDIN
The Russian Ambassador to Ukraine Viktor Chernomyrdin favors the idea of restoring the International Consortium for Managing the Ukrainian Gas Transportation System. He announced this at the Ukrainian Energy Forum. He noted that since 2003, when the consortium was created, it has not started to work properly for political and other reasons.
We created it in 2003 and what? Have we moved somewhere since 2003? No, we have not! So we have to act, enough talks! the ambassador said.
Chernomyrdin added that operation of the gas transportation consortium would allow to increase transit of Russian gas to Europe through Ukraine and will ensure stability of this transit.
We [Russia] don't need property: a system without product is just a heap of scrap metal. We need reliability so that we could know that we can supply gas normally under contracts, Chernomyrdin said. He did not specify in his statement what operation format was best for the consortium.
As Ukrainian News earlier reported, Ukraine's Naftohaz Ukrainy national joint-stock company and Russia's Gazprom gas monopoly registered the consortium in January 2003, with each of them owning a 50% stake in it.
Naftohaz Ukrainy, Gazprom, and Ruhrgas AG (Germany) agreed the terms for Germany's participation in the international gas consortium in May 2004.
Yet, Germany has not joined the project after all.
The gas transportation consortium was created in a format that provided for construction of the Bohorodchany-Uzhhorod gas pipeline and inclusion of the idling Torzhok-Dolyna and Ivatsevychy-Dolyna mini-pipelines.
The design capacity of the Bohorodchany-Uzhhorod gas pipeline is 19 billion cubic meters per year; the cost of the project is about USD 560 million.
Naftohaz Ukrainy and Gazprom agreed in April 2007 to step up cooperation in implementation of the project for the gas transport consortium (Ukrainian News-on-line, Ukrainian News Agency).
GAZPROM NOT RULING OUT SUPPLY OF SUPPLY OF RUSSIAN GAS TO UKRAINE
Gazprom, the Russian gas monopoly, is not ruling out the possibility of delivering natural gas of Russian origin to Ukraine instead of natural gas of Central Asian origin. Anatolii Podmyshalskyi, the general director of Gazprom Sbyt Ukraina, which is a Kyiv-based subsidiary of Gazprom, announced this at the Ukrainian Energy Forum.
In order to implement the memorandum [that the prime ministers of Ukraine and Russia signed on October 2], a transition period will most likely be needed for Ukraine to [reach] the level of European prices. The possibility of delivering Russian gas to Ukraine and sending Central Asian gas to Europe will most likely be considered, Podmyshalskyi said.
Podmyshalskyi stressed that this is one of the options that are presently being considered and that no decision has been made on the issue. Agreements will be signed at the corporate level, he said. It may be unprofitable for Gazprom to deliver Central Asian gas to Ukraine because of its high price.
As Ukrainian News earlier reported, Gazprom is planning to conclude talks with Turkmenistan, Kazakhstan, and Uzbekistan in November on the terms of delivery of natural gas in 2009. The average selling price of natural gas for European countries could fall to USD 360-400 per 1,000 cubic meters by April 2009 because of the fall in the world price of crude oil.
Ukraine annually imports about 50 billion cubic meters of natural gas, including 42 billion cubic meters of natural gas originating from Turkmenistan and the remainder originating from Uzbekistan and Kazakhstan. Natural gas of Russian origin was also imported to Ukraine in early 2008 because of a shortage of natural gas of Central Asian origin.
After her visit to Russia on October 2, Prime Minister Yulia Tymoshenko said that the price at which natural gas would be sold to Ukraine in 2009 would become known after Gazprom reached agreement with central Asian countries. Ukraine is importing natural gas at the price of USD 179.5 per 1,000 cubic meters in 2008 (Ukrainian News-on-line, Ukrainian News Agency).
UKRAINE'S COAL DEFICIT COULD REACH 19 MLN TONNES IN 2015 - DTEK
Ukraine's deficit in domestic coal production could reach 19 million tonnes by 2015 if investment in the sector is not increased, forecast Donbas Fuel-Energy Company (DTEK). The company's general director, Maksym Tymchenko, said that the country's coal deficit could come to 2 million-4 million tonnes for 2008 during the Ukrainian Energy Forum, organized by the Adam Smith Institute, in Kyiv on Tuesday (Interfax Ukraine).
HUNGARY-BASES UKRENERGY TRADE PLANNING TO CREATE SUBSIDIARIES
UkrEnergy Trade ZRt. (Hungary), in which Ukraine's Ukrinterenerho state foreign-trade company owns a 52% stake, plans to create subsidiary companies in Russia, Germany, Croatia, Italy, Poland, and Romania. Parliamentary Deputy Mykola Martynenko, the chairman of the Parliamentary Committee on the Fuel and Energy Complex, announced this at the Ukrainian Energy Forum.
UkrEnergy Trade is expected to deliver electricity to Eastern, Central, and Southeastern Europe... The relevant subsidiaries are expected to be created in Russia, Germany, Croatia, Italy, Poland, and Romania, Martynenko said.
According to Martynenko, Ukrinterenerhos entry into the market for electricity supplies to European consumers through the purchase of 52% of the shares in UkrEnergy Trade ZRt. (which has been renamed as UkrEnergy Trade) is one of the ways of raising the efficiency of electricity exports in general.
At the same time, Martynenko expressed concern that private energy companies would possibly monopolize electricity exports. Such a question also arises here: will electricity exports not be monopolized by a single company? Martynenko said. He stated the need to resume auction of electricity intended for export.
As Ukrainian News earlier reported, Ukrinterenerho acquired 52% of the shares in Energy Capital Trade ZRt (Hungary), which is a subsidiary of Korlea Invest Holding AG (Switzerland), in September, thus entering the market for supply of electricity directly to European consumers. Previously, Ukrinterenerhos contractors for export of electricity to Hungary were System Consulting ZRt (Hungary) and Energy Capital Trade ZRt, in which Korlea Invest Holding owned 100% of the shares.
In late September, Parliamentary Deputy Yurii Boiko of the Party of the Regions, who is a former Fuel and Energy Minister, called on the Antimonopoly Committee of Ukraine to investigate the monopolization of Ukrainian electricity exports by foreign commercial entities with the help of government officials (Ukrainian News-on-line, Ukrainian News Agency).
GAZPROM ZBYT UKRAINE TO START REALIZING INVESTMENT PROJECTS IN UKRAINE IN 2009
Gazprom Zbyt Ukraine is planning in 2009 to start realizing investment projects in Ukraine, Gazprom Zbyt Ukraine Director Anatoliy Podmyshalsky told journalists in Kyiv on Tuesday after the Ukrainian Energy Forum, which was organized by the Adam Smith Institute.
"If not this year, then next year we will develop the directions. The statute of the company allows us to perform, in particular, hydrocarbon extraction," he said. Currently Gazprom Zbyt Ukraine is collecting information on projects that could be interesting to the company. One of the possible directions of work could be the development of offshore oil and gas fields located on the territories of both Ukraine and Russia.
He stressed investment projects would be realized after they are agreed with the Ukrainian side. Gazprom Zbyt Ukraine for the realization of such projects can use both the funds of parent company OJSC Gazprom, and bank credits (Interfax Ukraine).
USUBC MEMBER/AFFILIATED COMPANY PRESENTERS AT THE FORUM INCLUDE:
1. AES Ukraine, Steve Walsh, President
2. Cardinal Resources, Robert Bensh, Chairman & CEO
3. Contour Global, George Nizharadze, CEO, Ukraine and SVP, Operations
4. Ernst & Young, Volodymyr Kotenko, Partner
5. Holtec Ukraine, Kevin Cuthill, General Director
6. Shell Retail Ukraine, Christo Ivanchev, General Director
7. Shell Ukraine E&P, Patrick Van Daele, General Manager
8. Squire, Sanders & Dempsey, Steven Sprague, Partner
9. TNK-BP Commerce, Sergey Lizunov, President
10. Westinghouse Electric, Anders Jackson, Vice President, European Fuel
11. Vasil Kisil & Partners, Oleg Alyoshin, Partner
12. Vanco Prikershenska, Dr. James Bown, President
Issues to be addressed during the rest of the Forum in the various panels include: Opportunities for Exploration & Production in Ukraine; Investment Opportunities in Ukraine's Downstream Sector: Refining, Petrochemicals & the Petroleum Products Market; Developing a Transparent and Level Playing Field for all Participants in the Ukrainian Energy Sector; Ongoing Reform of the Ukrainian Power Market - The Role of and Opportunities for the Private Sector; Ukrainian Utilities and the Appeal of the Sector to Investors; the Ukrainian Power Sector and the Optimal Energy Mix; Demystifying the Ukrainian Gas Sector; and Creating a Win-Win Environment For Investors, the Regulator and Consumers.
