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Energy Independence: Assuring the Future of Ukraine - Erkin Sancarbaba

After 30 years of its independence, Ukraine has a crucial economic and geopolitical role in the region. It is the second-largest country in Europe with 603.549 km2 acreage. Located as the neighbor of the European Union and Russia, Ukraine has a strategic significance that puts the country forward. On the other hand, the country’s turbulent political history keeps the instability risks alive. Alongside the structural problems, which chronically exist in most of the post-Soviet countries, such as corruption and heavy going bureaucracy, the country as well struggles against separatist terrorist organizations for years in its Eastern part. In addition to all these, one of the most challenging issues that the country faces is assuring its energy independence. It is a much more knotted matter than war in the Donbas region or country’s campaign for enhancing its cultural representation.

Ukraine’s over-reliance on Russia for the energy transport revenues and also for the coal and uranium for its domestic energy demand endangers the country’s economic and political independence. Moreover, Russia’s efforts for differentiating energy transmission lines within the scope of the projects such as Nord Stream 2, TurkStream, Blue Stream, and Yamal-Europe Gas Pipeline are considered by some experts as the weaponization of energy against not only the European Union but also Ukraine. The uncertainty that the aforementioned state of affairs creates, already evolved into a threat to Ukraine’s energy future and extensive national interests.

Ukraine has a dependency on imports in energy provision that for around 33% of its natural gas, 50% of its coal, and 83% of its oil consumption. Thanks to nuclear energy production (83 Terawatt hours), the country has a high domestic production that provides approximately %65 of the country’s total energy demand. This makes Ukraine the world’s seventh-highest nuclear energy producer. These numbers are quite impressive when the condition of the country’s aging Soviet-era nuclear reactors is not taken into account. It is foreseeable that the earlier-mentioned self-sufficiency rate might go into a downtrend in the near future. Additively, armed clashes and the instability in the Donbas region bring the extraction and the transportation of the coal to a standstill as well as the electricity generation from co-generation plants. As a result, the country imports nearly 13.8 Mtoe of coal annually. The two aforesaid sources, which are the backbones of Ukraine’s energy provision, are highly reliant on Russia. Over 55% of the country’s enriched uranium and 64% of its coal provided from Russian sources.

Despite the tensions between the two countries, Ukraine, still has a vital role in transmitting Russian gas to European markets. Although Ukraine ceases importing natural gas from Russia, its dependence on Gazprom for transit fees of natural gas still exists. Ukraine receives 3 billion dollars per annum, which is nearly 2.5% of the country’s GDP, as a result of its position as Russia’s main natural gas transmission route to Europe.

However, it can be a delusion to assume that the Russian government’s approach to Ukraine as a long-term trade partner in the energy sector. Russia’s undergoing strategy to bypass Ukraine on energy transmission becomes definite with the construction of the projects like Nord Stream 2 and TurkStream. These two projects have the potential to almost deprive Ukraine of the transit fees of 90 billion cubic meters of gas per year. Furthermore, by eliminating Ukraine from its natural gas transportation route, Russia will no longer have to abstain from the use of force more intensely in the possible conflict scenarios because of the absence of economic reasons. This situation jeopardizes the economic and physical security of Ukraine besides the regional stability.

When it comes to petroleum, Ukraine’s deep dependence on external resources attracts attention. In 2020, Belarus and Russia supplied 65% of diesel, 40% of petroleum, and 49% of liquefied petroleum gas consumed in the country. Twenty years ago, with its six big oil refineries, Ukraine was a self-sufficient country in petroleum products. Today, only one of them is still active. Through modernizing the refineries that halt production, it is possible to reduce foreign-source dependency.

In addition to all these, there are up and coming developments, such as the decision of the Ukrainian government to synchronize the Ukrainian energy system with the ENTSO-E network, which allows electrical current to flow easily between European countries. The full integration will be established in 2023. It is significant cooperation between Ukraine and Europe which has the potential to diminish the energy security risk of Ukraine.

In conclusion, Ukraine is coming up against a colossal challenge that is about preserving the country’s economic and physical security. While celebrating the 30th year of political independence, the Kyiv government must ensure that the energy independence of the country is following it. By means of modernizing the energy infrastructure and reactivating production facilities, Ukraine may reduce its reliance on external sources and achieve energy self-sufficiency. Finally, with an effective foreign policy that focuses on maintaining the country’s position as a natural gas transmitter, Ukraine can overcome the sovereignty risk.


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