Friday, June 5, 2009

Ukraine and Azerbaijan interested to boost maximum efforts to implementation of promising energy projects - President of Ukraine Victor Yushchenko

Caspian Energy (CE): Mr President, how actively is Ukraine involved in the ongoing integration processes across the EU?

Victor Yushchenko, President of Ukraine: I would say that Ukraine is more actively involved in the ongoing integration processes in the EU if to compare with other EU partners. We successfully develop cooperation with the European Union in foreign policy and security policy, join the statements and actions on behalf of the EU on most regional and international issues and actively participate in EU's measures aimed at tackling the global crises. Striking an Agreement on Association between Ukraine and EU is the major issue in the European agenda for us. We are also interested in achieving results of the dialogue about the visa-free regime. For us it is very important to join the energy community as a full member. All these objectives are going to facilitate our practical integration into the European Union in the mid-term outlook and create favourable conditions for Ukraine to be able to be prepared for a full-fledge membership in the EU.

The Eastern Partnership initiative makes Ukraine feel confident enough as the key "innovations" of the concept which distinguish it from the European Neighbourhood Policy are already present in the EU-Ukraine relations.

In June we are going to submit our opinion as regards the concrete implementation of the initiative. They will cover liberalisation of the visa regime, deepening of cooperation in the field of energy security, realisation of regional projects, cooperation in creating of the integrated frontier management system according to the EU standards as well as introduction of the overall programme on institutional development.

CE: How urgent is liberalization of the European energy market now? What impact will the last reforms of the European Commission have on the energy security of Ukraine?

Victor Yushchenko: The European Union, as we see, is taking purposeful steps to create a healthy competition in the energy sector. So, the issues around transparency and openness of the European energy market are as vital now as never before. However, not all EU member states are downsizing monopolist companies "in a due way" to decentralize access to transmission systems and gas storages. This must promote creating of favourable conditions and enable to maximum load gas transmission networks within Europe.

It is natural that energy security and legal regulation are number one issues for both the EU and neighbouring states. Ukraine is willing to become a part of the European energy market and now applies all efforts to succeed. We are ready to start the integration process as proved in the Joint Declaration on Upgrading of the Gas Transmission Network of Ukraine signed on March 23.

Ukrainian gas pipelines now transit 80% of Russian gas towards the European Union.

Here the interests of Ukraine and the EU match in terms of ensuring maximum security of energy transportation. Once upgraded, the Ukrainian gas transmission network will become more reliable and budding in terms of enhancement of mobility and if necessary raising the throughput capacity of the existing and new Ukrainian transit routes. This is a very important aspect. Even if new gas routes are created, Ukrainian transit pipelines will still be optimal among the existing and perspective resource bases.

Through boosting the EU's intends to ensure transparency and competition in the European energy market, we welcome all concerned parties to take part in upgrading of the Ukrainian gas pipeline system on terms stated in the Joint Statement signed on March 23 in Brussels by Ukraine, the European Commission, EBRD, WB and the European Investment Bank.

CE: How does Ukraine see the future of the White Stream gas project?

Victor Yushchenko: Certainly, Ukraine is interested in realization of all projects which may increase energy security both of our country and the European continent in general. White Stream project fully corresponds with the goal.

Here comes the question: Is it really rational to invest considerable means into development of completely new infrastructure during the global financial and economic crisis? This question concerns all the new projects including North Stream, South stream and Nabucco.

I would like to note that nowadays the Ukrainian gas transportation system is capable to considerably increase volumes of pumped gas. Besides, volumes may be increased as much as Europe needs it.

Moreover, our system is considered to be one of the most reliable ones in the region, whereas figures of losses are not higher than the global ones.

Therefore, I believe that complex modernization of the existing Ukrainian gas transportation system is the priority direction today. This will happen quicker and cost cheaper than the construction of new gas pipelines. This is an economically valued fact confirmed by experts and is beneficial both for Europe and Russia if ignoring the issue of political rationality which unfortunately becomes more important than the economic interest for our northern neighbors.

On the other hand, Ukraine does not refuse participating in other projects. We will be glad if suppliers and gas consumers are convinced of its importance and priority.

Time will show to what degree our hopes are justified.

CE: What perspectives will the establishment of the single Odessa-Brodi-Plotsk-Gdansk oil-transportation corridor provide?

Victor Yushchenko: Stable supply of energy resources to Europe is still of great importance even during the global economic crisis. For this purpose, Ukraine's proposals on establishment of the single Baltic-Black Sea-Caspian energy space, especially on implementation of the Eurasian oil transportation corridor project on basis of Odessa-Brodi oil pipeline remain without a rival.

According to experts, oil production in the Caspian region shall have increased by 100 million tons per year till 2015. This figure shall have increased by 150 million tons per year by 2025. In the meantime, starting from 2013, the deficiency of free oil-transportation capacities which could provide transportation of additional oil volumes to the external markets will be felt.

Hence, in order to solve this problem, new capacities for transportation of over 80 million tons of oil in addition to the existing ones will have to be built in the Caspian region in 2025. It means that project of the Eurasian gas transportation corridor fully correspond with the development plans of the Caspian region and will be supplied with oil. This project will also promote the solution of the problem on the relief of the Bosporus channel which is the only way out for oil transportation from the Black sea. Thus, we need alternative routes. The fact that by 2020 oil transportation volumes via the Bosporus channel will have grown twice as much compared to the current figures, will raise the delay in work of tankers and increase prices for tanker transportation.

Experts also confirm the available demand for light Caspian oil in Europe. This is the result of considerable decline of light oil production in the North Sea as a result of exhaust of domestic fields. According to forecasts, its deficiency will be partially covered by hydrocarbons supplied from the Caspian region.

On whole, cooperation between the countries of the Caspian, Black and Baltic Seas shall provide safe and transparent energy supply to Europe since it is based on principles of balance of interests of all participants of the energy flow.

I am sure that we will manage implementation of this project.

CE: During the meetings held with Azerbaijan's President I.Aliyev, You invited Azerbaijan to participate in the development of the oil-industrial sphere of Ukraine. What projects you belive will promote the expansion of cooperation between two countries?

Victor Yushchenko: I would like to note that it was Ukraine which stood for the establishment of the single Caspian-Black Sea-Baltic energy space a year and a half ago.

Azerbaijan in her turn supported this initiative. This is natural since a geostrategic location of Azerbaijan and transit state status provides an opportunity to diversify oil and gas transportation routes via her own territory. It is noteworthy that Azerbaijan aspires to enter the new markets for sale of her raw stock and products of oil processing.

Owing to considerable oil and gas reserves, Azerbaijan gained a broad experience in oil refining. Therefore, Ukraine offered Azerbaijan's companies to take part in implementation of projects for oil delivery to the European consumers within the framework of the Eurasian oil transportation corridor which also includes Odessa-Brodi oil pipeline. We also offer projects on processing of Azerbaijani oil (at the scope of 5 million tons a year) at Drogobich and Nadvirnansk oil refineries with further sale of refined products in the Ukrainian and European markets.

Construction of new oil refineries in Ukraine is another perspective direction for cooperation.

We are also grateful to the Azerbaijan Republic for supporting our proposal on the establishment of the alternative gas transportation route. For Ukraine, Poland and other countries of Europe which are dependent on an exclusive supplier, this is a real chance for diversification. These projects are beneficial for Azerbaijan since she gains an alternative access to the Baltic region.

I assume that both Ukraine and Azerbaijan are interested in sooner implementation of such perspective projects.

CE: What Caspian projects are interesting for Ukraine to participate in?

Victor Yushchenko: As an energy dependent country, Ukraine is mainly interested to be involved in projects on production of liquid and gaseous hydrocarbons.

Specialists of the Ukrainian oil-gas sphere are well known and popular in the world since they have a broad experience in the most various geological and climatic conditions. It is noteworthy that they have got a developed infrastructure for cooperation with the Azerbaijani companies. Our oil and gas cooperation now includes exchange of experience and geological data. However, we are about to go ahead. Both the Ukrainian and Azerbaijani governments undertake joint efforts to activate a joint action plan. Ukraine would be also interested to fulfill orders within the framework of creation of the tanker fleet for oil transportation within the water area of the Caspian Sea.

Thank you for the interview