October 27, 2014

Sokolovskyi: Gas Problems Are Not the Most Important Ones

Bohdan Sokolovskyi

At the recent briefing the leadership of the Antimonopoly Committee rightly stated that the prices of petroleum products in our country do not decrease in accordance with the decrease in oil prices. It turns out that the current prices for petroleum products at petrol stations are at least 2 hryvnyas higher than they should be. And it's easy to find out even with the help of the Internet. Indeed, against the background of the fall in crude oil prices, reduction of the prices of petrol or diesel fuel at European fuel stations has not been observed. It is quite logical that this situation causes dissatisfaction among our citizens who use the services of petrol stations and petroleum tank farms. And there are a lot of such disgruntled people. Their number will grow each year. De facto, these people to some extent depend on importers of petroleum products. And importers, in their turn, depend, usually on Russia. Already now, for example, almost 20 million of our population depend on refueller's prices. And if we take into account the transportation costs for the delivery of products — such dependence concerns actually everyone! Is this not dream of any empire — to have influence on the population, regardless of the will of its authorities?!

Is it not clear that the current problems with petroleum products are an attempt (intentional or unintentional) of individual anti-Ukrainian forces to influence Ukraine, adding to this other factors?

It is no exaggeration to say that the potential problem of petroleum products is not a smaller but even a greater threat to our nation and government than the current gas problems. Actually the briefing gives reason to remind of the troubles that can befall us, if proper measures are not taken.

Can we make the importers reduce prices of petroleum products almost simultaneously with the decrease in oil prices? The answer is short: no! Because there are no appropriate mechanisms for this. In particular, the market ones. Take into consideration that we have six technically obsolete, privatized large refineries of Soviet developments. Last year we imported nearly 7 million tons of quality petroleum products of the 9 million tons, which were used. All our refineries were not sufficiently upgraded over the last 23 years, because, in particular, their owners have not had adequate motivation. And now it is not desirable to even mention their modernization! It is worth thinking about building a new refinery, which would meet needs of the independent Ukraine, not of oligarchs.

To influence petrol prices is possible only under one condition — when the state of Ukraine as the most serious players enters the market with its own, beneficial by the price, high quality products. That's when all importers will adjust. And if they do not, they will disappear from the market.

Therefore, analyzing what has been said above, and many other things, one can draw an unambiguous conclusion: Ukraine needs to urgently build a petrochemical complex beyond the Kremlin's control. At some point of time, this question had been carefully and for a long time studied. It seems that in 2008 there was even ready a project of the tripartite Complex: Ukraine, with its market of petroleum products and raw materials for the chemical industry; country with oil; and the EU member state. Had been worked out the issue of financing (non-Russian assets) under favorable lending. Is there no relevance in the resumption of the project? In its implementation? This method, in particular, can help avoid many potential problems that, by the way, are the real component of national security. Moreover, we should start immediately. After one and a half to two years, it will be too late.