But more transparency is needed on all sides – from the government to the private energy firms vying for the rights to explore what could be vast amounts of oil and natural gas.
The process for extracting the “unconventional” gas, hydraulic fracturing – or fracking – is stirring up opposition. Environmentalists fear earthquakes and potential groundwater contamination when a high-pressure combination of water, sand and chemicals is injected into the shale or sandstone rock to crack them open enough to allow trapped gas deep below the surface to escape.
However, based on the record in the United States and elsewhere, we think the environmental concerns are not serious enough to stop fracking. America’s ability to become self-sufficient in gas has had tremendous benefits, improving the nation’s strategic position and lowering the prices consumers pay.
Ukraine needs to move in all directions at once – more coal, more nuclear, more gas, more oil – and an even greater effort for more renewables, including solar and wind. These efforts have to be coupled with greater energy efficiency in apartments, factories and commercial buildings.
Only an all-out effort will bring Ukraine to the day, hopefully in the next decade, when its domestic energy production meets demand. Energy independence will do wonders to improve Ukraine’s leverage with Russia, as market realities eat away at the political grip of state-controlled Gazprom.
Three of the most promising developments are the arrival of Shell, Chevron and ExxonMobil, working respectively in the Yuzivska area of eastern Ukraine, the Olesska area of western Ukraine and the Skifska area of the Black Sea. And the Ukrainian government recently gave the go-ahead for Vanco International to explore in the Kerch area of the Black Sea.
It’s great see to that Ukraine’s government is looking ahead enough to sign 50-year deals. But Ukrainians don’t trust their government and many people in the world don’t trust energy giants. Protecting “commercial secrets” is not enough of a justification to keep production sharing agreements confidential. If the energy majors want in, they’re going to have to agree to a higher level of public disclosure. Ukrainians deserve to know the extent of tax breaks the companies are given, how they will benefit and how the environment will be safeguarded. These are issues in which neither the government nor the energy majors have an outstanding record. Ukraine also needs a website like frackfocus.org that offers a wealth of information to U.S. citizens about the shale gas process.
On balance, though, Ukraine has been facing an energy crisis for its entire existence as a nation and needs to move forward, even if it means accepting more risks.
