Heart-warming optimism, if justified

In an interview with the European Voice, Kozhara said: “What is clear is that Gazprom dominance in Ukraine is broken,” that his country is increasing its own gas extraction, just as it is increasingly relying on nuclear power engineering, planning a liquefied gas terminal. All this, according to Kozhara, has caused a reduction in Ukraine’s rate of consumption of Russia’s gas, lowering it from 55 billion cubic meters to 33 billion.

Is one to question a foreign minister’s knowledge in this sphere? Perhaps the man should be reminded that Ukraine intends to tangibly increase gas supplies from Europe using the reverse routes, just as it intends to boost extraction of unconventional and eventually shale gas. The foreign minister chose not to mention these diversified sources and means of increasing gas deliveries, for reasons best known to himself.

Foreign Minister Kozhara’s statement about an end to Gazprom dominance on the Ukrainian energy market was echoed by Minister of Energy and Coal Industry Eduard Stavytsky: He told media people on Thursday: “We have proposals concerning deliveries to Ukraine from Europe” and specified that such deliveries would start being made in the first quarter of this year — and not only by Germany’s RWE: “There are technical matters we’re coordinating with Slovakia, while all such matters have been practically settled with Hungary.”

“The good thing is that our [foreign] minister is dreaming of ending Gazprom dominance and is acting in that direction. For all I know, however, the man is indulging in wishful thinking,” says Mykhailo Honchar, director, energy programs, Nomos Center, adding: “What is there one can agree with in his project and define it as an asset?” He answers his own question: “A degree of reduction of the amount of Russian gas imported by Ukraine, as a result of lower consumption nationwide. Regrettably, the domestic extraction rate is on a downward curve, following the disastrous drop by one billion cubic meters two years ago (from 21.5 billion in 2010 to 20.5 billion in 2011). Last year Ukraine extracted some 20 billion cubic meters. There is an easily identifiable and disheartening trend. While there was a bit of extraction growth rate on the Black Sea shelf, this can by means make up for the losses on solid ground.

Honchar says the situation with LNG is almost as disheartening. Prime Minister Mykola Azarov said Ukraine could try to implement this project in Turkey, yet the whole situation remain ambiguous: “The outcome of this project is anyone’s guess unless it can be made a reality in Ukraine.” The man is not optimistic about reverse supplies from Europe. He believes that, against the backdrop of Gazprom bill for seven billion dollars Ukraine must allegedly pay for unpurchased gas (which sum he vehemently rejects), the European partners will act in an unnecessarily overcautious manner.

Valentyn Zemliansky, an independent energy expert who seldom supports any optimistic forecast, does not wholly share Leonid Kozhara’s optimism, saying the most realistic project for Ukraine would be keeping up reverse gas supplies from Europe: “This year Ukraine could make spot sales of gas and pump it into its storage facilities… because the rest of the projects will take a lot of time… It will take Ukraine between three and five years to overcome dependence on Gazprom supplies.”