Russia energy sanctions on Ukraine take effect as Zelenskiy calls for new proposals

Russia’s widescale energy sanctions against Ukraine,
imposed on Apr. 18, took effect on June 1. Starting this date, Russia’s
Economic Development Ministry reduced by about 30%-50% the volume allocated by
permits for supplying Russian diesel fuel and liquefied gas to Ukraine, the
epravda.com.ua news site reported on June 1. The report cited figures from the
two suppliers, Rosneft and Lukoil, provided by the enkorr.com.ua news site. The
sanctions also change the frequency with which supply volumes are determined to
a monthly basis, instead of an annual basis previously, the report said.

Ukrainian President Volodymyr Zelenskiy led his first
meeting of the National Security and Defense Council on May 31, at which its
new members discussed the nation’s energy security in the short- to mid-term.
He called upon the council members to begin preparing for the winter heating
season, stressing that natural gas extraction is not growing, while coal
extraction at Ukrainian enterprises has fallen 47% since 2014. At the same time,
Ukraine remains dependent on imports and “very little has been done” to gain
energy resources from new sources, Zelenskyi said, as reported by the
Presidential Administration website. He also called for the demonopolization of
the country’s energy markets in line with EU demands and asked council members
to offer proposals to the nation’s energy challenges at the next meeting in two
weeks.

Ukraine’s main energy challenges were determined to be
the possible loss of Russian natural gas transit as of Jan. 1, 2020 and the
energy sanctions that took effect as of June 2, said afterwards Oleksandr
Danylyuk, the council’s secretary, as reported by the pravda.com.ua news site.
“This possibly will create serious challenges for Ukraine,” he said. “We have
to be ready for this. These are restrictions in supplies of diesel fuel,
petrol-based fuels, and crude oil.” 

The new membership of the National Security and
Defense Council, as approved by a May 31 presidential decree, consists of its
secretary Oleksandr Danyliuk, Security Service First Deputy Head Ivan Bakanov,
Finance Minister Oksana Markarova, Armed Forces Commander and General Staff
Chief Ruslan Khomchak, Presidential Administration Head Andriy Bohdan, Deputy
Head Vadym Prystayko and Deputy Head Ruslan Riaboshapka.

Prosecutor General Yuriy Lutsenko, a holdover from the
Poroshenko administration, took offense at not being invited to the first
meeting of the National Security and Defense Council, offering his own
proposals for Ukraine’s energy security. An additional 3 bln bcm needs to be
imported considering that “the country-aggressor is obviously planning for a
blockade of our pipeline,” he wrote on his Facebook page on June 1. To deal
with this, he proposed canceling the October 2018 Cabinet resolution
confiscating 90% of Naftogaz profit, imposing rent on the extraction of coal
and ore, eliminating corrupt natural gas distributors (estimating they could
steal 10 bln bcm this year), and transferring the nation’s petrol-based fuel
transit to state administration.

Zenon Zawada: It’s
positive to see Zelenskiy addressing Ukraine’s most critical problem at the
first meeting of the National Security and Defense Council. It will be
interesting to see the proposals that emerge, how radical they may be, and to
what extent they conform to Western recommendations. It will also be
interesting to see any of them will be pursued.