The idea of establishing a natural gas transit international consortium, agreed upon in Saint Petersburg by Leonid Kuchma, Vladimir Putin, and Gerhard Schroeder, has for the first time received a positive political appraisal from the European Union. Addressing the conference, The Development of Ukraine’s Oil and Gas Sector and the Possibilities of Attracting Foreign Investment, organized by the EU Innogate program and the Naftohaz Ukrayiny Company, EU representative Dominique Ristori said on behalf of the Union this was “a very important historic step.” Leading EBRD banker Paul Schapiro even added that “this is just the beginning of Ukraine’s radiant future.” Yet, the banker refused to disclose if, during his flying visit to Ukraine, his portfolio will contain EBRD proposals on supporting this radiant future.
The consortium prospects were also actively discussed behind the scenes of the conference. According to Serhiy Tytenko, Deputy State Secretary at the Ministry for Fuel and Energy of Ukraine and leader of the Ukrainian delegation, Poland has also evinced interest in the project.
Conference participants often emphasized that if Ukraine overhauled its gas transport infrastructure, it could become one of the key players. A Shell representative noted optimistically this was the first instance when Ukraine, Russia, and Europe are sticking together, which would make it possible to meet the increasing Western needs in and ensure uninterrupted delivery of energy resources. However, “Ukraine’s mistake is that when a question arises about development of the oil and gas sector, you are too modest and keep too silent,” said Faouzi Bensarsa, a European Commission representative in charge of EU-Ukraine relations in the field of energy. “We are not so obtuse as to play a political game with Ukraine, when a third of gas supplies goes to the EU across its territory. Of course, we want this transportation to be secure.”
In his view, to modernize its gas infrastructure, Ukraine needs $15 billion. Still, while talking about the importance of an energy-related dialogue between Europe and Ukraine, Western companies are not exactly in a hurry to invest. Thus by all accounts the Brussels conference followed the usual pattern: Ukrainian oil and gas barons stressed the critical nature of the services Ukraine could offer in the energy sector, while EU representatives agreed, still hinting at lacunae in the Ukrainian legislation that hinder Western investment in such a promising country, “the energy gate to Europe,” to quote Mr. Tytenko.
“Ukraine is, of course, a promising country, but we think it better not to invest until the investment climate changes there,” the representative of a highly-respected Western company told The Day.
On the other hand, the no less respected German company, Ruhrgas intends to launch in the immediate future a small project to modernize gas transport in Ukraine. Oleksandr Todiychuk, chairman of the Ukrtransnafta board of directors, hopes that a more investment-friendly new Tax Code will be adopted before the end of this year. According to Mr. Todiychuk, development of the Odesa-Brody-Plock-Gdansk oil transport corridor must become “the positive precedent for an investment project.”
The current logic demanded that the Ukrainian delegation prepare their speeches on Ukrainian capabilities so well that they would take the audience’s breath away. But, as usual, tough luck!
