Ukraine Energy

The recent collapse of the Soviet Union brought independence to Ukraine. In making the transition to a market economy, however, Ukraine has been plagued by energy shortages due to declining oil, gas, and coal production in the region. At the same time, several of Ukraine's nuclear reactors were built using the Chernobyl model and may have to be shut down. This report provides information on (1) trends and problems related to Ukraine's energy imports and production, (2) Ukraine's energy needs and steps being taken or planned to address them, (3) factors that discourage U.S. trade with and investment in Ukraine's energy sector, and (4) U.S. government efforts to assist in developing Ukraine's energy sector.

GAO found that: (1) Ukraine's fossil fuels production has declined due to inappropriate use of production equipment and technologies, improper maintenance, lack of modern equipment and capital investment; (2) Ukraine may lose nuclear power plants; (3) Ukraine's energy imports have not offset production declines due to recent political and economic conditions; (4) Ukraine is seeking substantial foreign investment and technology to increase its fossil fuel production; (5) Ukraine will lease the right to produce mineral resources to enterprises, including foreign ones; (6) the United States and Ukraine do not have a bilateral investment treaty or an adequate bilateral tax treaty; (7) both countries are interested in establishing bilateral tax and investment treaties; (8) the U.S. government is assisting Ukraine's energy sector in such areas as environmental monitoring and enhancing the safety of nuclear power plants; and (9) the Department of Commerce cosponsored a conference on the political, legal and business climate in Ukraine.