Archive 2010

  • Ukraines accession to the Energy community: new opportunities and new responsibility


    On September 24, 2010 the two-year long negotiation process of Ukraine’s accession to the Energy community came to its logic end. Yuriy Boyko, Ukraine’s energy minister, signed the relevant protocol in Skopje, Macedonia, which legally formalized Ukraine’s accession to the Treaty. In order to enter finally into force this protocol must be ratified by the Verkhovna Rada.

     The accession was made possible after Ukraine had fulfilled a number of conditions put by the Energy community members. Principal conditions consisted in carrying out a set of measures on strengthening safety of Ukrainian nuclear power plants in accordance with the IAEA requirements as well as harmonizing Ukraine’s gas legislation with the relevant EU Directives.

     The first condition had been fulfilled in February 2010 when the Ukrainian authorities finalized the implementation of the common EU-IAEA-Ukraine project on safety evaluation of Ukrainian nuclear power plants. The evaluation certified the conformity of Ukrainian reactors to international nuclear safety standards. The second condition had been accomplished in July 2010 when the Verkhovna Rada passed the law on fundamentals of natural gas market functioning. This law defines the legal framework for creating a model of competitive gas market in Ukraine. In particular, the legislation establishes principles of a new model of Ukraine’s gas market which correspond to the relevant provisions of the EU gas Directives (Directive 2003/55/EC, Regulation EC 1775/2005), namely: opening of the gas market, separation among functions of transportation, supply, distribution and storage of natural gas, providing third parties with an equal access to gas transportation system and underground gas storage facilities, creating an independent regulator of the gas market.

     Ukraine’s accession to the Energy community brings both new opportunities and serious responsibility as regards reforming national energy sector and ensuring reliable energy supplies to EU countries.

     As a party to the treaty on Energy community, Ukraine gets access and becomes a full member of the EU internal electricity and gas markets. Ukrainian gas transportation system and electricity networks become part of European ones, which will require from Ukraine a systemic work on raising their profitability and meeting environmental security standards. Ukraine’s energy sector will operate in the EU general regulatory framework which should ensure transparent mechanisms of price formation and observance of competition rules. It is expected to facilitate foreign investments in the Ukrainian energy sector. Ukraine’s accession to the Energy community clears the way to the implementation of EU-Ukraine arrangements on modernization of Ukraine’s gas transportation system. Still, it will require further efforts on deeper adaptation of Ukraine’s legislation to the EU norms.

     Moreover, forming a common energy market between Ukraine and the EU will objectively strengthen Ukraine’s stand in the situation of a possible pressure on its energy sector on the part of energy resources suppliers. Henceforth, European Commission experts will carry out independent monitoring of gas supplies through the Ukrainian transportation system, which will allow Kyiv to avoid groundless accusations from Gazprom of illegal appropriation of transiting gas. The Treaty also provides for mutual assistance among countries in the event of supplies interruption.

     Thus, Ukraine’s accession to the Energy community is expected to urge the Ukrainian government to a comprehensive reforming the energy sector, which makes possible to create a modern energy market model in Ukraine and to modernize existing pipelines and electric lines networks as well as to use more effectively the export and transit potential of Ukraine. Besides, Ukraine’s entering the EU internal energy market constitutes a virtual beginning of sectoral integration concept implementation, which is put into the future agreement of association. At the same time, if the pace of reforms remains as low as it had been in the past, Ukraine will not be able to take advantage of most opportunities provided by its accession  to the Energy community.

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