U.S. envoy: Reform would solve Ukraine's gas troubles
Nov 19, 2009 at 13:00 | Reuters"It's not too late, but they need to take the steps," Richard Morningstar, U.S. special envoy for Eurasian energy, told an EU policy briefing in Brussels.
"I've spoken to companies that say they have projects lined up to develop gas production in Ukraine, but they're not going to go there because it's such a difficult investment climate."
Russian gas supplies to Europe via Ukraine -- a route that supplies a fifth of Europe's gas -- were halted for more than two weeks in January due to a quarrel between Moscow and Kiev.
Concerns are growing that the dispute could be repeated this January, when Ukraine holds presidential elections. Ukrainian Prime Minister Yulia Tymoshenko said the country had struggled to pay its latest monthly gas bill to Russia.
"The tragedy of Ukraine is that in the last 15 years they had the opportunity to be totally energy independent," said Morningstar.
"If they had taken steps to be more efficient with energy and if they had a better investment climate so domestic production could be developed, it could be a totally energy independent country," he said. "They must once and for all reform their energy sector.
Production and exports in vital sectors such as steel and chemicals have been hard hit by the global crisis and Ukraine has one of Europe's worst performing economies.
Squabbling among the president, prime minister and parliament have paralysed decision-making and reform, and the economy is expected to show a 15 percent contraction this year.
Rivalry in the power elite has derailed Kiev's cooperation with the International Monetary Fund which has said it will suspend cooperation over its $16.4 billion bail-out programme until after a presidential election in Jan. 17.
Analysts and officials, however, expect the economy to show some recovery in the second half of this year on the back of a global economic turnaround.