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Policy Brief

Ukrainian Energy Security: Between Mortgage and Profit

October 18, 2012

Mykola Kapitonenko

Since the 1990s, battles over the control of Ukrainian energy facilities and transportation routes have shaped the political landscape of the country. The major energy challenges the country faces include outdated equipment and energy facilities, a high level of energy consumption by the Ukrainian industrial complex, and increasing dependence on external energy sources, most notably natural gas. Compromises, agreements, and mistakes in dealing with natural gas suppliers are at the heart of Ukrainian foreign policy. Two common interests form the basis of Ukrainian-EU cooperation in the energy field. Ukraine remains the principal transit partner for Europe and Ukraine needs European technologies and investments to modernize its gas transportation system and decrease the level of internal energy consumption. But so far, Ukraine has been unable to convert its comparative advantages into long-time arrangements with both Russia and the EU. Minimizing risk is still possible, should Ukraine choose to fully implement provisions of the Energy Community and the Brussels Declaration and contribute fully to the creation of a transparent European energy market.

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