Kiev vows to avoid Russian gas pressures

KIEV, Ukraine, Past contractual pressures from Russia won’t resurface as Ukraine becomes energy independent in the next five years, the prime minister said.

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Ukrainian Prime Minister Volodymyr Groysman told local leaders the oil and natural gas industry in the nation was recovering to the point that domestic reserves could be used to satisfy demand.

“After five years, we should get complete energy independence,” he said.

Ukraine is one of the Eastern European countries rich in shale natural gas. Fledgling hydraulic fracturing campaigns have emerged over the past five years, though impediments to doing business like higher taxes in the country led some companies to pull the plug.

Ukraine has around 21 trillion cubic feet of proven natural gas reserves, though total production is on the decline. With a lackluster economy, meanwhile, consumption declines are far outpacing the corresponding rate for production.

Ukraine relies heavily on Russia for natural gas and hosts a significant amount of the pipelines carrying foreign gas west to the European market, putting the resource at the center of regional geopolitical conflicts. Regional gas lines in August were hit by artillery shells during fighting in eastern Ukraine.

European leaders, concerned for their own energy security, have included Ukraine in efforts to expand the networks for liquefied natural gas, which is less exposed to geopolitical shocks than piped natural gas.

In the past, the prime minister said so-called take-or-pay contracts with Russian energy company Gazprom, which left Kiev faced with mounting debts, meant the country was bound too tightly to its former Soviet boss. The “occupiers,” he said, won’t be able to regain economic leverage of Ukraine.

“It won’t happen again,” he said.
By Daniel J. Graeber