Embassy of Ukraine in the United States of America

Kyiv 09:36

Cooperation between Ukraine and the EU in energy

Cooperation between Ukraine and the EU in energy

The strategy of cooperation between Ukraine and the EU in energy is outlined in the Memorandum of Understanding on Co-operation in the Field of Energy between Ukraine and the EU (MoU), concluded on December 1, 2005.

The MoU envisages implementation of 5 road maps:

• nuclear safety;
• integration of electricity and gas markets;
• enhancing security of energy supplies and transit of hydrocarbons;

• enhancing safety and environmental standards in the coal sector;

• energy efficiency.

Nuclear safety

Following the developments at the ‘Fukushima-1’ nuclear power plant in Japan in June, 2011, Ukraine joined the Joint Declaration of the European Commission and EU neighboring countries

for the implementation of the comprehensive risk and safety assessment ("stress tests") plan of the nuclear power plants on their territories. The stress tests results were released in October, 2012 in the relevant communication of the European Commission.

Additional measures to improve safety at nuclear power plants in Ukraine have been developed, taking into account the stress tests, and incorporated into the on-going "Comprehensive (Integrated) Safety Improvement Programme" (for operating plants), which was launched by NNEGC "Energoatom”. Activity related to the upgrading of the safety systems is scheduled for completion by the end of 2017. Calculated cost of such measures is approximately 1.2 bln Euro.

Loans of EUR 600 mln (split 50/50) from the EBRD and “Euratom” each for safety upgrades were signed in March, 2013 and August, 2013 respectively.

The EU contribution to implementation of the projects financed by the Chernobyl "Shelter" fund and the Nuclear Safety Account is more than 400 mln Euro (about 20% of total costs, the amount of which is estimated at 2 bln Euros).

In 2014 the EBRD approved the allocation of loan in the amount of 350 mln. Euro to finance the "Shelter" project at the Chernobyl nuclear power plant.

Integration of electricity and gas markets

Ukraine became a full-fledged member of the Energy Community as of February 1, 2011 and held the presidency in this international organization during 2014.  A large-scale work to bring the national rules and regulations in line with the requirements of the EU legislation is being done within Ukraine’s membership in the Energy Community.

In March, 2015 the Government of Ukraine approved the Gas Sector Reform Plan which provides "Naftogaz of Ukraine" unbundling. The Plan was approved with the World Bank and the Energy Community Secretariat.

Ukraine requires technical and financial assistance to implement EU legislation in energy which is given namely within the Budget Support Programme initiated by the EU in March, 2010.

In October, 2013, the Government of Ukraine and Governments of Moldova and Romania signed a contract for the feasibility study on the synchronous interconnection of Ukrainian and Moldovan power systems to ENTSO-E Continental European Power System under the framework of the «Joint Operational Programme Romania-Ukraine-Republic of Moldova 2007-2013». It is expected that the contract should result in a comprehensive analysis of the existing technical, organizational and legal obstacles for interconnection of Ukraine and Moldova with the European electricity grid and provide a roadmap and a timeline for their solution.

Enhancing security of energy supplies and transit of hydrocarbons

As part of the implementation of the Joint Declaration of the investment conference on modernization of Ukraine's gas transit system on March 23, 2009 Ukraine has initiated the "Modernization and reconstruction of the main gas pipeline Urengoy-Pomary-Uzhgorod" project which provided support of the International Financial Institutions. The project involves the complete pipes replacement in 120 kilometers of the pipeline and modernization of two compressor stations.

The EBRD and the EIB intentions for further funding of the pipeline are fixed in a memorandum on the preparation of the project between "Naftogaz" and the EBRD and in the Letter of Intent between "Naftogaz" and the EIB.

In December, 2014 European Investment Bank and the EBRD allocated loan funds in the amount of 150 mln euros and 200 mln dollars respectively after considering Ukraine’ progress in fulfillment of the relevant criteria (including restructuring of "Naftogaz of Ukraine" and aligning of the Ukrainian legislation with the Energy Community Treaty obligations). In addition, «Deutsche Bank AG» agreed in principle to participate in financing the modernization of Ukraine's GTS with the entire estimated cost of between 3.5 and 5 bln Euro.

Enhancing safety and environmental standards in the coal sector

Financed by the EU "Support Program for the coal industry of Ukraine" project is completed. The adoption of the General Plan of the Ukrainian coal mining industry development in 2012-2017 was the final stage of the "Support Program for the coal sector" implementation in Ukraine.

Energy efficiency and renewable energy

Implementation of the Roadmap on Energy Efficiency and Renewable Energy Sources (signed in 2008) is ongoing. Together with experts from the EC training programs on investment support of energy efficient technologies and alternative energy sources in Ukraine are being held. The budget support programme under the European Neighbourhood and Partnership Facility is being implemented.

During the Ministerial Council of the Energy Community in October, 2012 in Budva (Montenegro) the share of energy from renewable sources was defined at 11% in the energy balance of Ukraine in 2020. In October, 2014 the Government of Ukraine approved the National Action Plan for renewable energy by 2020 as well as the Action Plan for its implementation.