The Cream of Energy Industry

The Cream of Energy Industry

For the scandal to become loud, it must be prepared quietly.

(Unknown Author)

In conflict situations, a showdown is sometimes necessary. In the atmosphere of a big scandal, which guarantees close attention of mass media and the public, many events go faster, while the prize is substantial and undeniable. A little showdown helps to resolve a small issue, while big and loud one – an issue much bigger. It is true though that most of the «events that disgrace participants and put them in an awkward position,» and «incidents that violate the established order by cursing and fighting» (this is how «scandal» is interpreted in dictionaries) are quickly forgotten, concerning only losers in the aftermath. And since there were few real winners in 2016, it is useful to recall the most high profile events of 2016, which will continue to affect Ukrainian and global energy markets in the future.

pexels-Kaique RochaIn order not to be deemed subjective, the editorial staff of Terminal offered that the industry experts from among STC Psychea’s personnel and attracted specialists grade 69 events that could affect the country’s fuel and energy complex and its future development. The evaluation was conducted on a ten-point scale using the system of expert evaluation PsycheaExpertus.

As it turned out, three events were given the highest scores by experts representing different industry sectors:

  • blocking LPG imports by Ukraine’s law enforcement agencies (sector: liquefied gas, degree of influence: 8 of 10, more details in the column «Falling through»);
  • establishing a premium to the «green tariff» for the use of Ukraine-produced equipment (sector: wind power, degree of influence: 7 of 10);
  • signing of the Paris Climate Agreement (sector: solar energy, degree of influence: 7 of 10, variance of sectoral experts’ estimates: 0).

Such a choice evidences a trend of recent years – the shift in the interest of energy market participants toward non-traditional and renewable fuel and energy sources.

Nevertheless, while the opinions of analysts from different industry sectors were almost the same for the first two events 00C8221D-3D2B-4E52-9422-A729890B4C38_w1023_r1_s(the variance of scores was 4.0 and 1.0, respectively), they differed significantly with regard to the Paris Climate Agreement (the variance of estimates by experts from different sectors was 21.8). This comes as no surprise, given the ambiguous attitude of a number of countries and experts to this document (more details in the column «Is it about the climate»).

As a consequence, in the general ranking, the climate agreement was pushed down by last year’s start of exports of American natural gas. Although the United States is still very far from achieving full energy self-sufficiency, the emergence of American hydrocarbons on the world market means the beginning of the expansionist phase of the «shale revolution,» which until now has not been recognized by individual experts, as evidenced by the considerable (12.3) variance of estimates (more in the column «Unburst bubble»).

36efb44Even more misunderstandings were caused by the assessment of Ukraine’s accession to the International Renewable Energy Agency (IRENA, variance: 37.6). The suspicions of the survey participants were not groundless. It turned out that our country has submitted a membership application and will only be able to join the organization after the approval of 144 member states and the adoption of the relevant law, the draft of which has not even been submitted to the Verkhovna Rada (more in the column «Saying does not mean doing»).

Pretty much the same story happened with the «adoption» of the law on incentive gas production rent (sector: extraction, degree of influence: 6 of 10, variance of the sectoral experts’ estimates: 0). Contrary to any logic, this bill was rejected by the Verkhovna Rada, jeopardizing the achievement of the goal, so phantom anyway, of increasing from 15 bcm to 20 bcm by 2020 the gas output by enterprises with a state share of ownership (more details in the column «No carrots this time»).

The facts mentioned above have confirmed the truth not too pleasant for Ukraine: over the past three years, governmenthttp://photo.unian.net officials have become accustomed to wishful thinking, confusing the products of politics with its results and shamelessly presenting as their achievements the work they must perform anyway, in accordance with their official duties (more in the column «Back at the bottom of the ladder»).

Still, sectoral experts continue to believe that at least one of the 120 policy documents adopted over the past twenty years will be implemented. Moreover, the draft of the Energy Strategy of Ukraine until 2035 submitted to the Managing Committee was completed using this very PsycheaFuel 2.2 system. However, doubts remain (more detail in the column «Lament for the Strategy»).

Read full article — The Cream of Energy Industry.

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