Ukraine's president told visiting U.S. Vice President Joe Biden on Tuesday that he wants American investors to help modernize Ukraine's strategic gas transport system at a time of a severe economic crisis.
Europe is highly dependent on natural gas supplies from Russia, with most of the gas passing through Ukraine’s aging and inefficient pipeline system. Both Russia and the European Union have raised concerns about the safety of the gas supplies.
Ukrainian President Viktor Yushchenko told Biden that “as many investors as possible, including U.S. investors” could help ensure the continent’s energy security.
Biden said the U.S. was committed to helping Ukraine become “a vital part of Europe.”
“We discussed ways in which the U.S. can help Ukraine undertake tough reform needed to build this democracy and economy and strengthen its energy sector,” Biden said after his talks with the Ukrainian president.
Ukraine has previously turned to the EU and Russia to fund the pipeline upgrade.
The EU signed a deal with Ukraine in March to help Ukraine improve both the management and capacity of its 40-year-old grid of gas pipelines in exchange for reforms to address corruption and bureaucratic red tape in the country’s energy system. The EU did not say how much money it would commit to the project, estimated to cost billions of dollars (euros).
The deal angered the Kremlin, which said any agreement needed Russia’s approval. Russia has said it would finance the pipeline revamping only if the EU makes its contribution, too.
Ukraine has been badly hit by the global economic downturn, with its economy declining by 21 percent in the first quarter and its currency losing more than a third of its value against the dollar as exports dropped and investors fled emerging markets.
Apart from the pipeline upgrade, Ukraine is looking for about $4 billion in international loans to help pay its monthly gas bill from Russia and restock Ukraine’s gas storages for next winter _ crucial for stable supplies during the heating season.
A dispute between Kiev and Moscow over natural gas prices left millions in Europe without gas for two weeks in January after Russia cut off supplies through Ukraine.
EU officials said last month that the European Union would provide a loan package only in return for reform of Ukraine’s natural gas sector.
