Caspian Report - Issue 06 - Winter 2014

The defining moment for the development of the
energy market and system in Ukraine in 2014 was
the new agreement signed between Presidents
Viktor Yanukovych and Vladimir Putin in
December 2013.
At the outset of 2013, Ukraine had
fairly positive prospects in terms
of diversification of energy sources
and the development of alternative
energy and energy efficiency
programs. But after a new gas deal
between Ukrainian president Viktor
Yanukovych and Russian president
Vladimir Putin in December 2013,
there are growing risks of a return
to deep dependency on Russia and
a decline in most of the programs
devoted to diversification, alternative
energy and energy efficiency. The
first half of 2014, in light of the
internal political crisis in Ukraine,
will demonstrate how the Ukrainian
government old or new one will
make use of the opportunities in the
energy sphere, and how the system of
relations between the EU, Russia and
transnational energy corporations
will develop.
The rapid changes in the modern
world thanks to new technologies for
resource production, communication
and manufacture is leading to
dynamic changes on the markets
and of political dynamics. At the
same time, energy remains the key
one. Taking into account the growing
THERE ARE
GROWING RISKS
OF A RETURN
TO DEEP
DEPENDENCY
ON RUSSIA AND
A DECLINE IN
MOST OF THE
PROGRAMS
DEVOTED TO
DIVERSIFICATION,
ALTERNATIVE
ENERGY AND
ENERGY
EFFICIENCY.
interdependency between countries
and regions in Europe, Ukraine is
transforming and modernizing its
energy sphere. It has the capacity to
become a European leader in shale
gas and deep sea shelf natural gas
production in the medium term. At
the same time the challenges around
relations between Ukraine and Russia
in the energy sphere have not yet been
overcome.
BREAKING POINT
The defining moment for the development
of the energy market and
system in Ukraine in 2014 was the
new agreement signed between
Presidents Viktor Yanukovych and
Vladimir Putin in December 2013,
after the Yanukovych’s unexpected
refusal to sign the EU Association
Agreement at the Vilnius Eastern
Partnership summit.
According to the new deal, Russia
has promised to reduce the price of
natural gas exported to Ukraine from
420 USD per thousand cubic meters
to 268.50 USD. The Russian president
announced this step as temporary
measure. Putin has also agreed
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CASPIAN REPORT, WINTER 2014