Policy: Environment & Energy

Fracking is a beacon of hope in Ukraine, Eastern Europe

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Russia has been turning up the pressure on Ukraine, its former Soviet vassal, in recent months, culminating in a spat that froze all trade between the two countries in August.

Russian President Vladimir Putin’s top trade adviser Sergei Glazyev was blunt about the move to block Ukrainian exports: “We are preparing to tighten customs procedures if Ukraine makes this suicidal step of signing the EU Association Agreement.”

In November, Ukraine is expected to sign a trade agreement with the European Union that will mark a symbolic milestone in its attempts to escape the shadow cast on the region by Russia.

This is viewed in Moscow as a sort of existential threat to Russia, a country that views Ukraine as an intrinsic part of its own identity. Since the country gained its independence, Russia has continually exploited Ukraine’s energy dependence and meddled in its internal affairs in an attempt to keep the country on a short leash.

Attracting less attention, but perhaps much more decisive in determining Ukraine’s future, is the development of the country’s shale gas resources. Ukraine has massive potential in this regard, according to the U.S. Energy Information Agency.

Ukrainian President Viktor Yanukovych hopes shale will afford the country the opportunity and resources it needs to escape political domination by Russia.

It is hoped that shale will reduce the excessively high price Ukraine must now pay for Russian gas and, more importantly, Putin’s capacity to strong-arm Ukraine with its belligerent energy diplomacy.

Ukraine is one of the few countries in the region that has thus far managed to avoid giving into Putin’s incessant attempts to corral it into his Eurasian Customs Union.

Former U.S. Secretary of State Hillary Clinton has denounced the Eurasian Customs Union as a land grab by the Kremlin, calling it a “move to re-Sovietize the region.”

With stakes high, Ukraine has moved quickly to capitalize on its resources. A major deal was signed in January with Royal Dutch Shell for the exploration of the Yuzivske gas field in the eastern Donetsk Oblast.

A second deal was announced with Chevron in May to explore the Oleske field in Ivano-Frankivisk Oblast in western Ukraine. Together, these contracts represent almost $18 billion for Ukraine.

Putin has certainly understood the implications for Moscow of a Ukraine freed of dependence on costly Russian energy. He has repeatedly voiced concerns about the environmental impacts of shale gas, reportedly bitter about both the Ukraine’s potential and the shale fracking-driven energy boom in America, with its impact on global markets.

In Ukraine, Russia has helped to prop up a largely “AstroTurf” anti-fracking movement in an attempt to sink plans for shale development in the country. Ukrainian Prime Minister Mykola Azarov called opponents of shale gas exploitation “agents of the Russian Federation.”

Independence has found a powerful vehicle in shale gas both stateside and abroad. The American experience provides much-appreciated political and technical guidance for implementing profitable and responsible exploitation policies.

It is also a highly symbolic feat for countries like Ukraine, which hopes to harness this resource to render impotent one of the most powerful weapons in Putin’s diplomatic arsenal.

Christopher Stakhovsky is a Kiev-based Ukrainian energy consultant.
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