Interview with Ukrainian Fuel and Energy Minister

by V. Sharifov

Here follows a report on an exclusive interview with Yuriy Boyko, Ukraine’s Fuel and Energy Minister.

Question: How could you evaluate the current level of cooperation between Azerbaijan and Ukraine in the energy sphere?

Answer: Economic ties between our countries are developing in the right direction, though not so rapidly as we would like to see it. For example, in 2005, the commodity turnover between our countries increased by 40 % versus previous 2004, and just by 4.6 % in the first half of the current year. Thus, we have enough reserves of the growth and due to the development of the bilateral relations in the energy as well.
I would like to remind you that Ukraine and Azerbaijan are real natural partners in carrying energy supply to Europe, but, unfortunately, at present, our potential of cooperation is not fully used.

Question: How much is Kiev interested in the development of Azerbaijani oil and gas fields, including obtaining service contracts, for example, on delivering equipment to carry out oil and gas operations?

Answer: Ukraine is unambiguously interested in the development of Azerbaijani fields, as well as delivering oil and gas equipment. By the way, Ukraine is not against delivering Azerbaijani oil and gas equipment as well.
However, Ukraine is aware about statements of SOCAR about its intensions to develop the on-shore oil production owing to its own resources. But Ukraine hopes that these intensions will not become barriers in the way of our bilateral cooperation in the energy sector.

Question: What are the perspectives of the development of the project Odessa-Brody in 2007, and how much is Ukraine ready today to put forward its proposals to Azerbaijan to our country joining the above-mentioned oil pipeline?

Answer: Ukraine has absolutely neatly determined with perspectives of the prolongation of pipeline Odessa-Brody till Plotsk. On November 15, a sitting of the Ukrainian–Polish Intergovernmental Commission for Economic Cooperation Issueswas held. Both our Polish partners and us confirmed our readiness to launch prolonging the above-mentioned project till Plotsk. In order to implement it, we are to sign a new intergovernmental agreement between Ukraine and Poland.
As for Azerbaijan, we attach a great importance to involving the oil countries-suppliers into the project. We advocate equal in rights involving Azerbaijani, Kazakhstan, Russian, and other oil companies into the project.

On September 7, this year, Naftogaz of Ukraine and the State oil Company of Azerbaijan (SOCAR) signed an agreement on principle of cooperation. According to the agreement signed, Naftogaz sent a letter with proposal to hold a sitting of a joint working group within project Odessa-Brody-Plotsk.
As far as I know, the date of this sitting has not been determined yet. I wish this process were accelerated, and for our part, we are ready to do al our best to do it.

Question: Ukraine has intended to establish a company which would participate in SOCAR’s tenders on selling its oil products. What will be your plans on buying Azerbaijani oil products today -- through your participation in these tenders or via direct contacts on a long-term basis?

Answer: Ukraine has the same problem Europe has. And the name of this problem is the so-called “eastern pipe” -- a pipeline Russia is constructing to export its oil to China. Today, the entire world is compositing for energy resources; therefore Ukraine is extremely interested in delivering either Azerbaijani or any other oil.
At the same time, as far as we know, the growth of export deliveries is manly provided at the expense of the Azerbaijan International Operating Company (AIOC), not SOCAR. It is also clear that the most part of the Azerbaijani oil export will be carried via pipeline BTC (Baku-Tbilisi-Ceyhan). That means that we will have to find resources and mechanisms to delivering it to Ukraine. We hope that we can be understood by the Azerbaijani authorities.

Question: The issue on establishing a gastransporting consortium seems to be more a theoretic platitude. When could we expect, in your opinion, more concrete actions on its establishment, and on the whole, whether the establishment of the consortium is a concrete decision or is still under consideration?

Answer: Regarding the “theoretic platitude”, I dare disagree with you. First, as far back as in 2004, a whole normative base were formed, including an agreement with Russia’s gas giant Gazprom needed to implement the project. At the same time, a route was determined and lands for constructing the pipeline were chosen.
It is true that nothing has been done since that time. But we have viewed this project as one of the priorities and are holding corresponding negotiations with Gazprom and our partners from Germany. The Ukrainian-German High Level Group for Economic Issues has recently met in Kiev. Ukraine’s Fuel and Energy Minister was the Co-Chairman of the Group from the Ukrainian party, and the German Economy Minister -- from the Germany one. We proposed to our German partners to return to viewing the format of the consortium approved in 2004 with the participation of Ukraine, Russia, and Germany. I think that idea was admitted with a great enthusiasm.

One cannot doubt in the perspectives of the project. And without fail, they will be as soon as talks on establishing the consortium turn into the real practical platitude.
Forthcoming investments will be forwarded only after solving principal issues connected with the participating of the three above-mentioned parties in the project.

Question: How much defensible, in your opinion, will be the construction of the storage for wastes of nuclear fuel not far from Kiev?

Answer: The nuclear energy is playing an important role in Ukraine’s energy balance -- up to 50 % of all electricity generated in the atomic power plants of the country. Moreover, the deficit of energy is the major global problem now. Therefore, the leading countries have admitted that there had not been any alternative to nuclear energy year.
Such countries as US, Russia, China have announced that they are about to construct tens of atomic plant blocks in the near twenty years. Even Germany, which is known by its opposition to atomic energy, is discussing about the expediency to reviewing this policy.

We are also about to develop our nuclear energy. At present, Ukraine is implementing a project on construction of the storage for spent fuel in the zone of estrangement -- Chernobyl. That is a very sensitive issue to our country, therefore, the project is widely being discussed in the society. The final decision will be made only after a thorough research and study of this issue by scientists and experts.
The construction of the storage is a requisite of the programme on the development of the nuclear energy. In contradistinction with radioactive wastes, spent fuel might be further used, and state-of-the-art technologies of full use of spent nuclear fuel are expected to be put into operation very soon -- in 10-30 years.