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NATIONAL SECURITY & DEFENCE π 6 (117) CONTENTS 2010 UKRAINE-RUSSIA RELATIONS IN THE ENERGY SECTOR: STATUS, RECENT DEVELOPMENT TRENDS, AND PROSPECTS (Analytical Report by Razumkov Centre) Founded and published by: Section 1. UKRAINE AND RUSSIA: INTERIM RESULTS AND PROBLEMS OF BILATERAL COOPERATION. 2 Annex 1. ENERGY STRATEGIES OF UKRAINE AND RUSSIA: GENERAL PRINCIPLES AND APPROACHES (EXTRACTS) . .10 UKRAINIAN CENTRE FOR ECONOMIC & POLITICAL STUDIES DEVELOPMENT AND EXTRACTION OF DOMESTIC OIL AND NAMED AFTER OLEXANDER RAZUMKOV GAS RESERVES IS A KEY TO UKRAINE’S ENERGY INDEPENDENCE Jim BOWN (Opinion). 12 Director General Anatoliy Rachok Section 2. UKRAINE-RUSSIA BILATERAL COOPERATION Editor-in-Chief Yevhen Shulha IN THE OIL AND GAS SECTOR. .13 Layout and design Oleksandr Shaptala Annex 2. INTERNATIONAL LEGAL RELATIONS BETWEEN Technical & computer UKRAINE AND RUSSIA IN OIL AND GAS SECTOR . 32 support Volodymyr Kekukh Section 3. UKRAINE-RUSSIA COOPERATION IN THE NUCLEAR This journal is registered with the State Committee of POWER ENGINEERING SECTOR. 35 Ukraine for Information Policy, Annex 3. INTERNATIONAL LEGAL RELATIONS BETWEEN UKRAINE AND RUSSIA registration certificate KB №4122 IN THE FIELD OF NUCLEAR POWER ENGINEERING AND ATOMIC INDUSTRY . 47 Printed in Ukrainian and English Section 4. CONCLUSIONS AND PROPOSALS. 49 Circulation: 3,800 UKRAINE-RUSSIA RELATIONS IN THE ENERGY SECTOR: TODAY AND TOMORROW Editorial address: (Opinions and Assessments) 16 Lavrska str., 2nd floor, Mykhaylo VOLYNETS. 52 Kyiv, 01015 Dmytro BOBRO. 53 tel.: (380 44) 201-11-98 Oleksandr TRETYAKOV. 54 fax: (380 44) 201-11-99 Anatoliy CHEREDNICHENKO. 54 e-mail: [email protected] Oleksandr NARBUT. 55 website: www.razumkov.org.ua Oleksandr SVETELIK. 56 Olha KRAVETS . 56 Reprinted or used materials must refer to Aleksei URIN. 57 “National Security & Defence” Valerij BOROVYK. .. 59 Hennadiy RIABTSEV. 60 www.gazprom.ru – cover UKRAINE’S ENERGY DEPENDENCE ON RUSSIA: REALITY OR A MYTH? Hennadiy RIABTSEV (Article). 61 UKRAINE, RUSSIA, THE EU – PROSPECTS OF COOPERATION IN THE FIELD OF ENERGY SECURITY (Interviews) Mykhaylo HONCHAR. 64 Andrey KONOPLIANIK. 66 Serhiy SAPEHIN. 69 Konstantin SIMONOV. 70 © Razumkov Centre, 2010 Oleksandr TODIYCHUK. 72 Leonid UNIHOVSKYI. 72 UKRAINE-RUSSIA RELATIONS IN THE ENERGY SECTOR IN THE EYES OF UKRAINIAN CITIZENS The project was implemented through support provided by (Public opinion) . 73 the National Endowment for Democracy (USA) ЗАОЧНИЙ КРУГЛИЙ СТІЛ 1. UKRAINE AND RUSSIA: INTERIM RESULTS AND PROBLEMS OF BILATERAL COOPERATION eparation of Ukraine-Russia bilateral relations in the energy sector is rather conventional, since they S objectively fit into the relations of both countries with a third party – first of all, countries of Europe (in particular, the EU) as consumers of energy resources transported across the territory of Ukraine. Therefore, both from the viewpoint of the process chain (producer – transit state – consumer) and from the economy viewpoint (seller – provider of transportation services – buyer) those relations should be viewed in a trilateral format.1 More than that, it may be argued that problems stockpiled in that sector of relations between Ukraine and Russia and in Europe in general may be solved solely in such trilateral format.2 On the other hand, since early 2000s Russia has been insistently pursuing a policy translating relations with partners in the energy sector into a bilateral format where it is usually stronger and uses that advantage to defend and promote its interests and/or the interests of its state monopolies and separate financial-industrial groups. That is why there are grounds to view the Ukraine-Russia relations in the energy sector as bilateral, but with account of presence of a third party there, first of all, the EU, as Ukraine declares its integration in it and is now engaged in formulation of common norms and rules of the European energy markets. This section briefly outlines interim results and problems of the Ukraine-Russia relations in the oil, gas and nuclear sectors – more interrelated and interdependent than other domains of the energy sector. 1.1. INTERIM RESULTS OF BILATERAL of Soviet nuclear technologies and research projects, COOPERATION IN OIL, GAS AND in particular, of new generation reactors’ development. NUCLEAR SECTORS (1991-2009) At the same time, the Russian Federation lost direct The energy sectors of Ukraine and the Russian access to the main consumers of Russian hydrocarbons – Federation are closely interrelated and to a large extent European countries, and to large deposits of uranium interdependent being a natural result of their long- that remained in Kazakhstan, Ukraine and Uzbekistan. standing development within the framework of the Ukraine got main transit gas and oil pipelines, common business and economic system of the former large underground storages of natural gas, NPPs, large USSR. After the breakup of that system both states deposits of uranium (the sixth largest in the world, the inherited some (first of all, spatially determined) parts of third in Europe) and zirconium (the third largest in the the once integral system. world, the first in Europe), uranium and zirconium ore The Russian Federation mainly got large reserves processing facilities, research facilities and technologies of hydrocarbons (the world largest proven reserves of of production of nuclear-pure zirconium and hafnium, natural gas, seventh largest reserves of oil) and powerful enterprises of nuclear power engineering and instrument- industrial complexes for their extraction, the bulk of the making industry, vast scientific-technological potential of transcontinental pipeline infrastructure, and all facilities development of the nuclear fuel cycle elements. of the complete nuclear fuel cycle, production of reactors At the same time, Ukraine inherited big industrial and other NPP equipment, the overwhelming majority complexes consuming large quantities of hydrocarbons 1 As this was done, in particular, under one of the previous projects of Razumkov Centre. See: The EU-Ukraine-Russia gas triangle. Razumkov Centre analytical report. – National Security & Defence, 2002, No.3, p.2-43. 2 These words primarily refer to the oil and gas sector and relations of Ukraine, Russia and European countries in it. 2 • RAZUMKOV CENTRE • NATIONAL SECURITY & DEFENCE • No.6, 2010 UKRAINE AND RUSSIA: INTERIM RESULTS AND PROBLEMS OF BILATERAL COOPERATION as raw materials and fuel (petrochemical, oil refining, issues, which purchase and sale of energy resources metallurgical industries, etc.) – while developed actually are, for achievement of political and geopolitical Ukrainian fields of hydrocarbons had actually been goals. On the contrary, that practice was extended to exhausted by that time. European countries dependent on deliveries of Russian hydrocarbons (so-called “Schroederisation” of Europe). That situation naturally led to interdependence of the two countries’ energy sectors (first of all – oil, gas In relations with the EU and European countries and nuclear sectors) and could facilitate development Russia preferred bilateral formats of cooperation in of mutually advantageous, equal cooperative ties the energy sector, having refused from participation in between them.3 multilateral documents (the European Energy Charter Instead, the energy sector became one of the most Treaty) and negotiations with Europeans about extension secret, non-transparent and corrupt in the economies of market principles and European norms and rules to of both countries. There (and in allied sectors) the East-West relations (talks about the Transit Protocol wealth of many presently known financial-industrial attached to the European Energy Charter). groups and separate persons was made, they still see a In 2000s Russia adopted a number of fundamental spread practice of various preferences, benefits, selective documents that set out the Russian Federation course access of some economic actors to profitable contracts towards restoration and strengthening of its role on and/or commercially attractive energy facilities, deposits the world scene, leadership in the CIS (CIS as an area of raw materials, infrastructure, etc. of “privileged interests”) and influence in the Eurasian 4 Bilateral Ukraine-Russia relations in the energy space. What strikes the eye is the evolution of the sector became similarly non-transparent and corrupt, Russian foreign policy stand formulated in annual as witnessed by the absence of an effective accounting addresses of the Russian President to the Federal and control system, and the practice of involvement Assembly of the Russian Federation. Namely, the post- of various mediators in contracts of energy resources Soviet space (CIS) is always viewed there as one of the supply, secret arrangements, exchange of preferences main priorities of the national foreign policy: the 2001 (for instance, cheap gas in exchange for preferences to Address stressed that “the Russian Federation is the Russian capital at privatisation of Ukrainian enterprises), core of integration processes in the Community”, the etc. Interests of national FIGs and separate persons on 2005 Address went farther to speak of the “civilising both sides got a “political cover” in interstate negotiations, mission” of the Russian nation on the Eurasian continent, arrangements and agreements, leading to strong the 2007 Address stressed that “Russia plans to further politicisation of business and economic issues proper. play a proactive role in the processes