Last winter, for the first time in its history, Ukraine got more natural gas from Europe than from Russia.
Until Ukraine’s Revolution of Dignity in 2013–2014, Russia supplied at least half the natural gas consumed by Ukrainians. High subsidies, artificially low prices and murky contracts with Gazprom (Russia’s state-owned energy company) distorted the market, hindered domestic production and allowed corruption to run rampant, according to Olga Bielkova, a deputy head of the Ukrainian parliament’s energy committee.
She and her colleagues have worked to eliminate political influence over gas producers and traders. At the same time, they are working to increase domestic gas production and diversify the country’s energy sources.
A more competitive Ukraine
Importing natural gas has put pressure on the country’s trade accounts. Not only does Ukraine need to produce more gas domestically, Bielkova said, “we also have to be very efficient in the way we consume it.”
The country is making progress. In April 2015, the Rada (Ukraine’s parliament) passed a law to put Ukraine on track toward a market foundation for its energy market.
Last year, Ukraine worked to boost investment in the production of natural gas. The government also raised tariffs to cover the cost of producing energy, and introduced market pricing for households, she added.
Continued reforms
The Ukrainian Parliament’s energy committee is now focusing on eliminating or reducing remaining monopolies in the energy market and privatizing some of Ukraine’s energy companies. “The people of Ukraine will benefit greatly,” Bielkova said, as the need for private capital will force newly independent companies to be more efficient to attract investment.
Ukraine continues to look for innovative ways to reform its energy market and join its European counterparts in finding ways to meet the energy needs of the 21st century. “Europe will benefit greatly from Ukraine being a part of the community because we have many things to offer,” Bielkova said.
Follow the conversation on Ukraine @UnitedforUkr and sign up for weekly updates on United for Ukraine.