Ukraine may face energy crisis by year end

Ukraine may face an energy crisis by the end of the year because Naftogaz Ukrayiny, the national oil and gas company, has failed to accumulate sufficient reserves of natural gas, a top official said Thursday.

Viktor Baloha, President Viktor Yushchenko’s chief of staff, accused Energy and Fuel Minister Yuriy Boyko of poor management of the sector. He said Boyko will soon be summoned up to address energy sector problems at a special meeting between the president and Prime Minister Viktor Yanukovych.
“It appears that our own reserves of natural gas have not been created in the country,” Baloha said in a statement. “Whatever has been stored in underground gas tanks does not belong” to Ukraine.

The development poses significant threat to Ukrainian national interests and may again lead to disruptions of natural gas supplies to the European Union in the case of a clash between Ukraine and Russia over natural gas prices.

The clash may be even worse than in January 2006, when Naftogaz owned up to 15 billion cubic meters of natural gas that it had used it in place of disrupted deliveries of Russian gas.

Baloha warned the situation is especially worrying as Ukraine an Russia failed to reach an agreement on prices for natural gas to be supplied in 2008.

“The government failed to establish constructive negotiations with Russia over gas prices in 2008,” Baloha said. “It’s the month of August already, but the country still doesn’t know the price of gas it will have to pay next year.”

Ukrainian Journal