Fuel and Energy complex

The fuel and energy industry is very important for the economy of Ukraine and is one of the most influential factors for maintaining the stability, economic growth, and social development of the country, as well as for activation of cooperation with Europe. The fuel and energy industry is represented by a range of enterprises specialized in the extraction, enrichment, processing and usage of solid, liquid and gaseous fuel, as well as the manufacture, transfer and consumption of electric power and heat. The fuel and energy industry provides facilities for the development of manufacturers with high fuel consumption and is the basis for the formation of industrial complexes specialized not only in electric power, oil and gas, coal fuel chemistry, and the gas industry, but also in metallurgy, chemistry, forest chemistry, etc.

The problem of the provision of the Ukrainian economy with energy sources is one of the most important. Gas, oil, coal and even electric power are imported. Annually, huge money resources are spent for these purposes, which is more than 2/3 of total commodity exports. The shortage of energy sources is having drastic consequences: a shortfall in output yield, the systematic disconnection of supply in settlements, etc. That’s why this problem requires a comprehensive solution and Ukraine should decrease its energy dependence on other countries.

One should also take into account that Ukraine owns large volumes of gas reserves and huge, but unexplored, hydrocarbon reserves, especially in the shelf areas of the Black Sea and the Sea of Azov. The forecasted gas reserves are estimated by the State Geological Survey at 4.5 trillion cubic meters. Their presence was proven by geophysical techniques, but their prospecting and preparation for operation and maintenance require the attraction of foreign capital.

 Figure 1. Extraction of fuel and energy mineral deposits in 2005 – 1st half of 2009

According to the Energy Strategy of Ukraine up to 2030, the growth of oil extraction to 5.8 mln tons and the depth of its processing – to 85% – are envisaged.

The main factors that slow down the development of the domestic fuel and energy industry are:

•    a constant shortage of investments as a result of the inefficient privatization of the  Ukrainian oil refineries;
•    absence of an actual national program for the formation of modern complexes for deep oil processing at oil refineries, which should be subject to strict control by the government;
•    absence of investments in geological surveys for Greenfield development.

However, apart from being under the influence of negative factors, the fuel and energy industry has a promising outlook in Ukraine based on the following:

•    qualified specialists in the industry, more than a century of experience in the extraction, transportation and processing of oil and gas;
•    favourable geographical location of the country with access to seas and an extensive transport infrastructure, one of the largest in Europe, built in different years (oil and oil products pipelines, oil terminals and tanker basins in Odesa, Kherson and Feodosiia) and six oil refineries;
•    the transit capacities of Ukraine for oil transportation are rather large, which allows the country to obtain profit from transit, provides instruments for interaction with petroleum exporting countries, and plays an important part in the distribution and supply of energy sources to European countries.
•    the oil products market is rather attractive, as it shows high rates of development and has a very good background. In particular, the growth of a vehicle fleet used to stimulate constantly growing demand for oil products before the crisis.