DiXi Group presented instruments for enhanced EU-Ukraine energy partnership in Germany

11 May 2016

On May 10, DiXi Group experts presented a policy brief "Ukraine’s Gas Sector Reform: A Future Win-Win for Ukraine and Europe" in Berlin.

The advocacy trip included both public debates and bilateral meeting with think tanks and policy-makers in Germany. It was organized by the Ukrainian Think Tanks Liaison Office in Brussels in cooperation with the German Institute for International and Security Affairs (SWP), the German Council on Foreign Relations (DGAP) and the Media Coach.

The visit was held under the Ukrainian Think Tank Development Initiative implemented by the International Renaissance Foundation (IRF) in partnership with the Think Tank Fund (TTF) and funded by the Embassy of Sweden in Ukraine (SIDA).

"In the two years since the 2014 Revolution of Dignity, Ukraine has made substantial reforms to its gas and electricity markets. Such has been the scale and depth of reform, that Ukraine’s gas market is now even more integrated with Europe’s and just as profitable. Part of this success has been due to the carrot-and-stick approach adopted by the international community, which shall be continued under positive conditionality rule for providing more support in exchange for further reforms", said Olena Pavlenko, DiXi Group’s President.

According to Roman Nitsovych, Program Manager of DiXi Group, more liquidity on Ukraine’s domestic gas and electricity markets would open up opportunities for domestic and foreign businesses to invest in various sectors, namely upstream/generation, transmission and distribution, storage, trading, supply and marketing. "Further liberalisation of the gas and electricity markets, as well as the establishment of an independent regulatory authority, should serve this goal", he reported. "Our focus is to make sure these issues will remain high on the priorities for the Ukrainian government and the Ukraine-Germany cooperation agenda".

According to findings of the policy brief, gas sector reform in Ukraine became a success story in the making that has the potential to improve energy security in Central and Eastern Europe. Following the adoption of a new Gas Market Law and the relevant secondary acts and by-laws, Ukraine is now closer to the European legislation and effectively uses opportunities of commercial gas imports from the EU. This re-positioned Ukraine on the European gas market from a transit country to a reliable trading partner, one that is integrated into the European market structure.

With this in mind, DiXi Group experts developed following recommendations:

  • German companies should consider ramping up their activity in Ukraine as liberalization of one of the biggest gas markets in Europe provides good business opportunities in gas supply, transportation and storage, production, and infrastructure development.
  • Germany would benefit from deeper integration of Ukraine into the EU energy market. Using the full available capacity of reverse gas flows is key. This requires Germany’s political support of Ukrtransgaz in negotiations with the Slovak operator Eustream and other neighboring TSOs.
  • The German government should use its leverage in the EU Council and Commission to provide assistance needed for cross-border infrastructure projects with Ukraine. If supported, interconnections would add to energy security and stability.
  • German policymakers and companies should review their position on the Nord Stream 2 project in light of recent developments in Ukraine. After upcoming technical upgrades, Ukraine’s pipelines will become the most sustainable and feasible route for Russian gas supply to Europe.
  • Ukraine and Germany would benefit from making the Energy Union a successful policy framework for cooperation. This can only be achieved if Ukraine becomes an essential component of Energy Union. Changing gas transfer points from the western to the eastern border of Ukraine would provide the EU and Ukraine with an advantage in reviewing supply contracts with Gazprom.

 

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