Lies And Deception In Ukraine’s Energy Sector | Zero Hedge

The Ukrainian government has repeatedly claimed it is doing its best to improve the oil and gas investment climate, but official statements are the opposite of the reality, as Prime Minister Arseniy Yatsenyuk is leading the great deception.

According to Prime Minister Yatseniuk, Ukraine has taken a number of important steps to reform the energy sector, and has even achieved success in the formidable fight against rampant corruption, as well as signed open and transparent contracts for purchase of the natural gas from EU member states. Now he claims Ukraine is looking forward to Western companies' investment in Ukraine's gas transportation system.

"I would like to point out where we have succeeded: we have succeeded in overcoming corruption in the energy sector. Billions of dollars, which previously used to flow into the pockets of Ukrainian oligarchs, are now being brought out of the shadows. At present, Ukraine purchases gas under transparent and open contracts with European companies," Yatseniuk recently told a joint press conference with German Chancellor Angela Merkel in Berlin.

Even the President has made misguided and naïve statements this past week in Davos, declaring that “…Ukraine will build new ways for receiving Norwegian gas and gas from Europe, and Ukraine will also produce shale gas."

The stark reality is that these official statements are in no way reflected by government action, and the gas market players in Ukraine recognize the deception as does the energy industry as a whole.

The real story is that while gas has been received from Norway in reverse flows, Ukraine’s current energy strategy, taxation and fiscal regime has forced Ukraine’s current producers of oil and gas to stop drilling new wells and curtail production.

The development of Ukraine’s potential shale gas is even further afield with Chevron announcing its departure from Ukraine and only Cub Energy remaining in the country as an operator with both technical and local expertise in developing the shale. Even if shale can be developed in Ukraine it will be extremely challenging given the highly service-oriented logistical train, which does not presently exist in Ukraine.

In the course of the last year the Ukraine’s private gas producers were doing their best to overcome, if not merely survive, the consequences of the government’s move to significantly increase fiscal and administrative pressure on the industry without any consultations with the latter. The government failed to deliver on its promises, and the only thing it managed to achieve was an undermining of any trust the industry may have had in it.

Ukraine’s current regulatory and fiscal systems governing the energy sector are overly complicated and non-transparent, even without the major political and military conflict with Russia and annexation of the Crimea. The implications have been significant. Since last year, all major oil and gas projects in Ukraine have significantly slowed down at best, and been suspended entirely at worst.

Issue by issue, the lies continue to mount.

Complete story at - Lies And Deception In Ukraine’s Energy Sector | Zero Hedge

​Winter is coming: Ukrainians educated in energy saving, alternative heating — RT News

With natural gas shortages central heating may not be in place in Ukrainian flats for the cold winter. While people are rushing to buy electric heaters, authorities have issued brochures with advice on how to cope with freezing temperatures.

Recognizing that it is extremely hard to keep a city flat warm with no central heating, Kiev authorities, for example, launched a campaign aimed at informing citizens on tricks and methods they could use to save energy and heat – at temperatures of -10 degrees Celsius and lower.

Firstly, the heat insulation of windows and doors is strongly advised, as well as the purchase of a personal boiler or energy-saving heating installation. In fact, people are already starting to buy the boilers: shop owners in Kiev told TCH TV channel that demand for such devices has increased at least threefold since the beginning of the crisis.

Also, it is suggested in the brochures that city residents should buy warm clothes made of natural fabric, valenki, and headwear to protect themselves from freezing temperatures.

Where there is heating in flats, the authorities advise to paint the radiators red or brown instead of traditional white, in order to increase their heat output – or wrap them in foil.

With so many heating devices power consumption will increase and may overload the grid, authorities are also giving advice on electricity savings: from switching to lower wattage light bulbs, to giving up on devices’ stand-by functions and instead unplugging them completely.

Complete story at - ​Winter is coming: Ukrainians educated in energy saving, alternative heating — RT News

NoBC4U Note:  There is just soooo much wrong with the advice the "authorities" are handing out. The economy is borderline Depression, if not there already, but go out and buy personal boilers (for hot water) and energy-saving heat installations. Buy more warm clothing. Or insulate your flat. How? Buy asking for it? By begging for it? How many people have that kind of money in a depressed economy? But even for those who do have it, a whole lot of buildings in Kiev still have Soviet era electric circuitry. Plug in too many things, and you'll pop the breaker for the whole building. Or possibly the whole block.  But hey, use lower wattage light bulbs.  

The Russia-Iran energy deal may be a losing proposition | Russia Direct

The forthcoming signing of a set of “breakthrough” trade and economic agreements between Russia and Iran may not be the blockbuster economic deal everyone thinks it will be. The unraveling of relations with the West and the forced policy of diversification leaves Russia short of prospective partners, China notwithstanding. Essentially, Russia may have been forced into a deal with Iran that it did not really want.

Economics is still predominantly governed by the law of “opposites attract,” in which regard, Iran and Russia are simply too alike (as strange as it may sound to the patriotic ear) for the new trade partnership to make sense.

First, the two countries possess some of the largest reserves of hydrocarbons anywhere in the world. Second, both Russia and Iran are critically dependent on oil and gas exports. Third and most importantly, they are friends in need, both hit hard by Western sanctions (Iran significantly more so than Russia).

Thus, in world trade (and world politics) Russia and Iran are more like natural competitors than partners. More specifically, Iran is theoretically capable of replacing Russia as the main supplier of gas to European markets, whereupon it is no coincidence that Tehran recently stated its readiness to feed the Nabucco pipeline, a once dead-in-the-water alternative to Russia’s South Stream. Unfortunately, by threatening its neighbors with retaliatory sanctions, Russia continues to push the European Union into the arms of other suitors.

Complete story at - The Russia-Iran energy deal may be a losing proposition | Russia Direct

Ukraine’s Next Crisis? Economic Disaster

Ukraine’s next crisis will be a devastatingly economic one, as violent conflict destroys critical infrastructure in the east and brings key industry to a halt, furthering weakening the energy sector by crippling coal-based electricity production.

The Ukrainian military’s showdown with separatists in the industrial east has forced coal mines to severely cut production or close down entirely. This has led to an electricity crisis that can only be staunched by cutting domestic production along with exports to Europe, Crimea, and Belarus -- or worse, getting more imports from Russia.

In the coal centers of Ukraine’s industrial east—Luhansk and Donetsk—fighting has forced the full closure of an estimated 50 percent of coal mines, while overall coal production has fallen 22 percent over the same period last year.

Key industry sources say they will potentially run out of coal in less than three weeks.

For Ukraine, the second largest producer of coal in Europe, this will have a devastating impact on the energy sector, which is in a state of emergency, unable to get coal to thermal power plants that provide some 40 percent of the entire country’s electricity.

In the wider energy picture, the halt of coal production sets Ukraine back a decade. The plan was to rely more on coal in order to reduce dependence on Russian natural gas.

Complete story at - Ukraine’s Next Crisis? Economic Disaster

Energy security remains a key issues for Ukraine following Crimea crisis

The Ukrainian revolution, the annexation of Crimea with its fuel resources and undeclared war between pro-Russian separatists and Ukrainian army forces in the eastern part of the country have revealed a set of strategic problems for the Ukrainian economy. Energy safety and dependence on Russian gas remain the key issues for Ukraine’s politics and economics.

The new government, elected after ex-President Viktor Yanukovych was ousted and fled to Russia, is clearly leaning toward Europe. In response to Ukraine’s new policy, Russia, after the annexation of Crimea, canceled its special tariff for gas exports, which had been set partially in exchange for the presence of the Russian fleet in the Crimean city of Sevastopol. Now Ukraine is among the European countries paying the highest price for Russian gas.

Gas Supply Problems

Ukraine is the second largest country in Europe. Because of its strategic location between Russia and Europe, it’s a key transit country for energy resources, Russian natural gas in particular. According to the International Energy Agency, in 2011 Ukraine was dependent on imported energy products by at least 40 percent. This number has remained more or less the same for the past couple of decades. The country has to import around 30 billion cubic meters (about 1,000 billion cubic feet) of natural gas yearly to keep its heavy industries up and running. At the same time, Ukraine transports up to 50 percent of the Russian gas imported by the European Union.

The problem of Europe’s energy dependence on Russian supplies is not new. During the 2006 and 2009 gas disputes, Russia briefly cut off its gas supplies to Ukraine, which largely affected Eastern European countries dependent on the importation of the fuel. And the Russian government has been accused numerous times of using the country’s energy resources as a political tool.

Complete story at - Energy security remains a key issues for Ukraine following Crimea crisis

‘EU is completely politically and economically irrational dealing with Russia’ — RT Op-Edge

Energy policy in Europe is a complete and utter ludicrous mess, while its politicians are ultimately incontinent and incompetent when it comes to economic and energy policies, global financial markets expert Patrick Young told RT.

RT:Austria's unequivocally backedSouth Stream. Why would they do that when other European countries are calling for the project to be frozen?

Patrick Young: The situation we have at the moment is an argument between frankly the economically irrational and those who are energy rational. Austria is one of the leading countries in that group. The Austrian government knows that ultimately one third of their gas comes from Russia. In some areas of Austria almost 100 percent of their gas comes from Russia. The similar situation is that large parts of Western Europe exist in a very old nirvana kind of state, where they don’t appreciate how much energy they need or indeed where it comes from. Many of them think that it comes from renewables, yet spending tens of billions only gives them roughly one percent renewable energy. The truth of the matter is that ultimately about a third of Europe's energy need comes from Russia at the moment. In the situation where the world has become more unstable in the last fortnight, thanks to ISIS and so on in the Middle East, we have a situation where ultimately Europe needs Russian gas, and the sooner we have European pragmatism, the better it is going to be. That is what Austria understands.

RT: Is Europe mixing up its politics and economics with regards to South Stream?

PY: I think you can say that actually Europe mixes up its politics and its economics. After all, why would we have a Lalaland project like the euro that was actually economic rationalism? The whole position within the European Union is one of trying to create the great power empire without understanding the necessary economics that come behind it. Therefore, energy policy in Europe is a complete and utter ludicrous mess. Even in countries such as Germany they are proclaiming some sort of weird eco-mantra on one side, and actually burning more coal. Ultimately Europe needs this gas; European Union is being completely politically and economically irrational in terms of how they are dealing with the whole Russian incident at the moment.

RT: On the other hand, Gazprom holds a huge share in the European gas market... isn't that cause to worry?

PY: Europe has got an opportunity if it wants to diversify and they can do it very easily, I mean it can frack its way to freedom. But again, you have got an incredibly spineless energy policy going on in many countries. Look at the way Chancellor Merkel as a knee-jerk reaction closed all of her nuclear power plants simply because she was worried about the risk of a tsunami, which are not particularly common hitting the Baltic Sea. Therefore you have a problem, Europe can solve it itself if Europe wants to diversify away from Russian energy, it can find sources within its own shores by using the fracking power. But a thing that I find particularly worrying is that the offer at the moment is a pivot to endless numbers of ships coming from the US to supply Europe with gas from where they have fracked it in the US. That makes no sense whatsoever. It’s not a particularly effective way to transit the gas itself, it is going to be incredibly costly to bring together, and Europe is going to be jumping out of bed with one partner, Russia, into the bed with the another partner, the US, who ultimately has proven to be very fickle as recent spying scandals have shown.

It’s absolutely fascinating, isn’t it? We have an arguable alcoholic, who couldn’t manage to control a tram load of secret agents in Luxembourg, could well be the European Commission President by the end of this week. We have got a situation where Mrs. Merkel, a research scientist, ignores all of the science in order to go populist. It’s really very worrying all together. At this moment Europe is being run by a group of politicians who are ultimately incontinent and incompetent when it comes to both economic and energy policies, and given the fact that that is going to be the security and the future of the EU, it’s a tragedy. Europe needs a better political deal, Europe needs both energy and security and economic growth. At the moment the political pigmies are delivering neither.

Complete story at - ‘EU is completely politically and economically irrational dealing with Russia’ — RT Op-Edge

Ukraine: The Real Energy Crisis Starts in June | naked capitalism

By Robert Bensh, an energy and energy security expert with over 13 years of experience leading oil and gas companies in Ukraine. He has been involved in various roles in finance, capital markets, mergers and acquisitions and government for the past 25 years and is currently the Managing Director and partner with Pelicourt LLC, a private equity firm focused on energy and natural resources in Ukraine. Cross posted from OilPrice

Kiev is feeling emboldened by the successful election of a new Ukrainian president and a bloody surge against separatists in the east, but in just a few days, Russia says it will twist the gas spigot, and there’s very little Kiev can do to stop that.

On June 3, Russia plans to reduce the gas supply to Ukraine — and hence, to Europe — if Kiev has failed to pay in advance for next month’s gas deliveries, the price for which has been doubled as a result of the political crisis.

Interim Ukrainian Prime Minister Arseniy Yatsenyuk is trying to play hardball with Moscow, suggesting that gas talks cannot move forward until Russia addresses the issue of $1 billion in gas it stole when it annexed Crimea.

Yatsenyuk may be riding high on the sense of stability the recent presidential election has brought, not to mention the unleashing of the Ukrainian military on pro-Russian separatists in Donetsk, but the “stolen gas” gambit is a losing one—a bunch of bluster that certainly won’t make Moscow go away.

Complete story at - Ukraine: The Real Energy Crisis Starts in June | naked capitalism