Ukraine’s recent rapprochement with Russia under President Victor Yanukovich could fade as another potential showdown over natural gas looms. Moscow has also sought to take control over vital parts of Ukraine’s natural gas infrastructure, which could imperil the EU’s strategy of reducing dependence on Russian gas in the near term. In this GR Brief, Alexandros Petersen of the Atlantic Council discusses the recent developments in Ukraine and how they could affect energy security there and in Europe as a whole.

The election of the relatively pro-Russian Victor Yanukovich as President of Ukraine in February 2010 was supposed to herald a new era of energy stability in a country wracked by natural gas cutoffs, disputes among energy-rich oligarchs and perennial political turmoil, but recent events show that energy security in Central Asia and a stable supply of gas to Europe remains far from certain.  While Western investors and European integrationists lamented Ukraine's expected "turn to the north", there was little nostalgia for the pitched battles over gas prices and pipelines between Russia's Kremlin-controlled monopoly Gazprom and the government of the previous President, the pro-Western Victor Yushchenko.  Every winter after Yuschenko's ill-fated "Orange Revolution" in 2004, Ukraine, and by extension many EU consumers, were plunged into a natural gas dispute with Russia.  Most observers assumed this was a way of punishing the Ukrainian government for leaning toward the West.  In this GR Energy Brief, Alexandros Petersen of the Atlantic Council explores the rapidly evolving political dynamics between Ukraine and Russia and the impacts that they are likely to have on Central Asia and the EU’s energy future.

Hopes too High?

Despite the new administration’s relatively pro-Russia political stance, Ukraine seems to be heading towards another energy crisis, leading analysts to contemplate a scenario in which Kiev is deferent to Moscow, but remains at the mercy of Russia’s command of the regional natural gas market.  The problem is that Ukraine remains one of the most energy intensive countries in the world, primarily a result of almost complete dependence on, and inefficient use of, natural gas in industry, the military and the residential sector.  The country's political situation has so far been so chaotic that this energy inefficiency has been allowed to deteriorate, increasing the country’s vulnerability to natural gas price shocks.

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