Business news from Ukraine

GERMAN AMBASSADOR SAYS IN INTERVIEW THAT ENERGY MARKET SITUATION CAN NOT INFLUENCE NORD STREAM 2 CERTIFICATION

The situation on the European energy market is unable to influence the certification of the Nord Stream 2 operating company as an independent network operator, German Ambassador to Russia Geza Andreas von Geyr said in an interview with Interfax.”The conclusion of the certification process is required for the pipeline to begin commercial operations, irrespective of the situation on the European energy market. We expect Gazprom to continue to fulfil all contractual obligations towards Europe, particularly in relation to gas transit through Ukraine,” von Geyr said.As reported earlier, the German Federal Network Agency started to process the application from the Nord Stream 2 operating company as an independent operator on September 8. The processing has been suspended as Bundesnetzagentur decided that a subject of its regulation could be only a German subsidiary of the Swiss-based Nord Stream 2 AG, which should be the owner and operator of the German part of the pipeline. The Polish company PGNiG and the Ukrainian opponents of the Project, Naftogaz and Gas Transmission System Operator of Ukraine, have received access to the certification process. The application processing deadline has been moved to the middle of 2022, which means Europe cannot count on gas supply through the new pipeline in the winter season of 2021/22.”The certification process for Nord Stream 2 is being conducted by the independent German regulator, the Bundesnetzagentur, in strict accordance with the provisions of the European Gas Directive. Interested parties can raise their views within that legal framework and have their voices heard. Politically, we have made a commitment that this pipeline must not be used to exert pressure on Ukraine. That is why we are campaigning to see reliable, long-term, contractually agreed gas supplies and transit agreements for Ukraine,” von Geyr said.

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SWEDEN AND UKRAINE TO BOOST COOPERATION IN ENERGY, ECOLOGY, SECURITY

Prime Minister of Ukraine Denys Shmyhal met with Prime Minister of Sweden Stefan Leuven on October 13 as part of a working trip to the Kingdom of Sweden, where the parties discussed the development of bilateral relations between the countries.
The press service of the government said on Wednesday evening that Shmyhal expressed gratitude to the Swedish side for organizing the International Forum on Holocaust Remembrance and Combating Anti-Semitism, as well as for Sweden’s participation in the inaugural summit of the Crimea Platform in August this year.
He also noted the support provided by the Swedish government for the implementation of the decentralization reform and thanked for the assistance provided through the Swedish Radiation Safety Authority for Ukrainian nuclear power plants.
“Diversification of nuclear fuel sources is one of our priorities in the context of ensuring energy security. In addition, Ukraine has met all the technical conditions for joining its integrated power system to the European ENTSO-E network. For us, this will be an important step towards energy independence,” Shmyhal said.
The parties also discussed issues of cooperation in the field of waste disposal and recycling.
The head of government said that investments and an increase in investment activity can become a driver for the development of economic relations between the countries. He urged Swedish companies to continue implementing joint projects in Ukraine, in particular taking advantage of the law on the so-called “investment nannies”.
Shmyhal also said that Ukraine is ready to further develop cooperation in the field of information technology, in particular in terms of digitalization and strengthening cyber security.

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SLOVAK AND UKRAINIAN PMS DISCUSS ENERGY

On Wednesday, October 13, Prime Minister of Ukraine Denys Shmyhal and Prime Minister of Slovakia Eduard Heger met within a working visit to Malmö(Kingdom of Sweden), where they discussed relevant issues of bilateral relations.
According to the Cabinet of Ministers press service, during the meeting, Shmyhal said that Ukraine highly appreciates the support provided by Slovakia in matters of protecting sovereignty and territorial integrity.
“We count on the support of Slovakia in countering the Nord Stream 2 operator in an attempt to bypass the standard certification requirements of the European Union,” the head of the Ukrainian government said.
The sides also discussed issues of gas transportation, development of electricity and hydropower, renewable energy sources and others.
“Denys Shmyhal also said that Ukraine is looking forward to holding the fifth meeting of the Ukrainian-Slovak joint commission on economic, industrial and scientific-technical cooperation and other intergovernmental commissions by the end of the year, as this will give new incentives to strengthen partnership between the countries,” the Cabinet of Ministers said.
The sides also agreed to hold the next meeting in Uzhgorod soon.

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UKRAINE TO START IMPLEMENTING ENERGY SAVING PROGRAM NEXT YEAR

Ukraine will begin to implement an energy saving program next year, about UAH 300 billion is currently needed for implementation, Ukrainian President Volodymyr Zelensky has said.
“This program [on energy saving] has been developed in absolute detail […] We see that this program can be implemented, and we will definitely implement it with the support of specialists and financial assistance from the European Union. In any case, we will start doing this next year. We cannot wait when our neighbor [Russia] threatens us with a shutdown or reduction in gas volumes,” Zelensky said during a briefing following the 23rd Ukraine-EU summit with President of the European Council Charles Michel and President of the European Commission Ursula von der Leyen.
He said that Ukraine should be truly energetically independent.
According to Zelensky, Ukraine currently needs about UAH 300 billion to implement this program.

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MIKHAIL FRIDMAN PREDICTS STABILITY OR GROWTH IN GAS DEMAND IN FUTURE

The downward trend in non-renewable energy sources is very strong and it will progress, but the demand for natural gas will remain or even grow in the next decade, Mikhail Fridman, founder of LetterOne, shareholder of Alfa Group Consortium, has said.
“Gas is likely to rise rather than fall in the next decade,” he said at the Kyiv International Economic Forum on Thursday.
Fridman added that the share of alternative energy will also grow, helped by government incentives and worsening conditions for carbon sources.
At the same time, according to his forecasts, despite the strong trend against non-renewable energy sources, the change in the structure of energy generation will not be very rapid.
“It is frivolous to say that everything will happen very quickly – it is irresponsible,” the businessman said.
In such an environment, Fridman believes, oil and gas companies will not be popular, but they will exist for a long time and actively invest in carbon neutrality.
“They will be arranged like a tobacco industry,” the shareholder of Alfa Group said.

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“THE ROLE OF GAS REMAINS ESSENTIAL IN THE NEXT 10-15 YEARS”, ROMAN ABRAMOVSKY, MINISTER OF ENVIRONMENTAL PROTECTION AND NATURAL RESOURCES

Similar to other European countries, Ukraine has declared its strive to complete shift to clean energy use. But on the way of the so-called “energy transition” natural gas will continue playing an important role for more than one decade – as a “transitional fuel”. In order not to be dependent on gas supplies, Ukraine has to increase its production, especially considering that the country has one of the largest gas reserves in Europe.

This and other important topics will be discussed at the Ukraine Gas Investment Congress, which starts on October, 20 in Kiev, involving business leaders from all around the world. On the eve of the Congress, Roman Abramovsky, Minister of Environmental Protection and Natural Resources of Ukraine, is telling about the situation in the industry and prospects in a blitz interview.

“The State is ready not only to support, but also to act as a guarantor of complex risky projects. And I would like our international partners and investors to hear this message,” emphasizes Mr.Abramovsky.

Roman Abramovsky, the Minister of Environmental Protection and Natural Resources of Ukraine

  1. The Government of Ukraine has set an ambitious strategic goal – to achieve climate neutrality by 2060. How is the Ministry of Environmental Protection and Natural Resources of Ukraine contributing to achieving this goal?

Our intention to reduce the environmental impact is in line with the European Green Deal. We consider Ukraine as a member of the European community. Therefore, we share its aspirations, values and standards.

Our ministry acts as an engine and mouthpiece of changes in the ecosystem. This year, we have prepared proposals to reduce national greenhouse gas emissions by 65% compared with 1990 by 2030. The green course will have an impact on all economy sectors, including energy, manufacturing, transport, utilities, agriculture, forestry and waste management.

In particular, for the energy sector, there is a goal to increase power generation from renewable sources (solar and wind). Their share in power generation should grow to 17% in 2030 and up to 25% in 2035, which is provided for in the energy strategy of Ukraine. Ukraine is already one of the European leaders in the development of green energy generation and potential for further growth is far from exhausted.

Now we are also actively discussing the huge prospects of Ukraine in the area of hydrogen production and transmission. Namely, Naftogaz of Ukraine is already planning the first pilot projects in cooperation with Germany’s RWE.

Along with the development of green capabilities, we will decommission heat generating units with expired service life and provide for the gradual abandonment of coal mines. Of course, this will be accompanied by coal regions transformation programmes.

  1. How do you see the future of the Ukrainian gas industry in this context? Since your appointment in 2020, what changes have you initiated in the oil and gas industry?

The energy transition cannot take place in an instant, especially in such a large, industrialised country with a high level of energy consumption. We will not be able to stop using fossil fuel completely, so like the rest of the world, we consider gas as a transitional energy carrier. In the next 10-15 years, its role will remain essential. First, as a replacement for coal that is significantly more harmful to the environment, and secondly, to provide room for manoeuvre.

Ukraine is lucky to have some of the largest gas fields in Europe, however at the same time, their potential was not fully utilised, and the country was losing both hydrocarbons and money. Since my appointment in 2020, I have initiated the development of large oil and gas bearing areas, where no exploration was previously carried out. In particular, I managed to restart the large Black Sea exploration project. At the end of 2020, Naftogaz of Ukraine obtained licenses for exploration of several dozen blocks. They have great potential and can open a new chapter for Ukraine’s oil and gas industry. This is evidenced by the success of our neighbours – Romania and Turkey, which have explored significant reserves in the Black Sea.

We have also started developing large onshore oil and gas fields that were previously inaccessible to investors, including the Yuzivske field, which is unique in size and potential.

  1. The UN climate change conference, also known as COP26, will be held in November this year. Recently Ukraine announced its commitment to move towards a zero CO2 emissions future, can you tell us more about what you are doing to encourage and to stimulate investment in Ukraine as part of its transition to clean energy?

The climate goals that we set for ourselves are ambitious and require huge resources. Therefore, over the next 10 years, Ukraine will need Euro102 billion of capital investment to finance decarbonisation projects.

Some of them will be provided by businesses. Companies should adjust their development plans to adapt to the Green Deal and decarbonisation. They need to understand that this is no longer a nice to have, but a mandatory requirement for their further sustainable development.

Part of the costs will be covered by the State. For example, by direct loans to businesses at acceptable interest rates so that businesses can introduce decarbonisation measures.

At the same time, we are very limited with our in-house resources, and I constantly emphasise this during meetings with foreign stakeholders, in particular, with the ambassadors of the G7 countries. Therefore, we count on external investment and are actively working to inform investors about the opportunities that await them in Ukraine. Compared to other European countries, the Ukrainian economy requires almost the largest investment. To attract attention of investors, we must offer almost turnkey projects with a guarantee of mutual benefit.

Today, Ukraine is improving the investment climate not with words, but with concrete actions. The State is ready not only to support, but also to act as a guarantor of complex risky projects. And I would like our international partners and investors to hear this message.

 

  1. With the support of the Ministry of Environmental Protection and Natural Resources of Ukraine, the Ukraine Gas Investment Congress will be held in Kyiv for the first time from 20-22 October. How important do you think the Congress will be in terms of demonstrating to the world Ukraine’s commitment to the energy transition in the context of the climate change?

Without a doubt, it will be an outstanding event. Perhaps for the first time in many years, important issues of the energy industry and the energy transition will be considered with the involvement of the country’s leaders, international stakeholders and business representatives from more than 15 countries. This will be an opportunity to look at and assess risks and opportunities from different angles and from different perspectives.

I hope that that Ukraine Gas Investment Congress will become a platform for making important decisions, launching new projects and areas of cooperation.

Moreover, I hope that the Congress will help numerous investors and partners learn about the business opportunities that exist today in Ukraine, as well as what is being done to implement these opportunities as easily and quickly as possible.

Ukraine Gas Investment Congress received support from our Ministry and other government representatives. We will be happy to meet with all interested parties and will be open to discussions on topical issues.

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