The United States and the European Union agreed on Friday to work more closely with Ukraine to speed up liberalisation of the ex-Soviet republic's energy market and open it to more investment.
Holding the second meeting of the EU-U.S. energy council on the sidelines of a NATO summit in Portugal, U.S. Secretary of State Hillary Clinton and EU foreign affairs chief Catherine Ashton agreed that Ukraine needed to do more to develop its energy infrastructure, particularly as a gas transit route.
Around 100 bln cubic metres of natural gas transits Ukraine from Russia to Europe each year via Ukraine's state energy company Naftogaz, making the country a critical link in Europe's energy framework.
Clinton and Ashton said in a statement that they were encouraged by the steps Kiev had made to reform its market in recent months, including passing a natural gas market law in July, but said much more needed to be done.
A working group of the EU-U.S. energy council would support Kiev in improving the investment climate to facilitate the development of indigenous oil and gas resources; modernizing the gas transit system; financially restructuring and increasing the transparency of the national oil and gas company, they said.
The push for greater liberalisation in Ukraine is part of a European Union drive to modernize and better secure its energy supply networks from east Europe. The EU and Ukraine hold a summit in Brussels on Monday when energy will be discussed.
The EU-U.S. council said its goal was to "foster a more stable, transparent and efficient energy market in Ukraine".
NAFTOGAZ VENTURE
In September, the European Commission, the EU's executive, told Ukraine it expected Naftogaz to separate its gas transit pipelines from other businesses when an EU-Ukraine energy cooperation agreement comes into effect next year.
Since September, Ukraine is part of the EU's European Energy Community, which is aimed at extending the 27-nation's internal energy market to southeastern Europe to boost security and supplies, particularly of natural gas.
Analysts are doubtful about Naftogaz's commitment to unbundling. The company, which buys 30-40 bln cubic metres of natural gas from Russia annually to supply to local consumers at a heavily subsidised price, is loss-making.
The demand to unbundle has also raised doubts about the prospects for a joint venture between Naftogaz and Russia's Gazprom, which is being discussed by Moscow and Kiev.
