Ukraine's economy plagues energy sector

BAKU, Azerbaijan, July 17 (UPI) -- Ukraine says its energy ties to Azerbaijan are better than in previous years, though several joint developments suffer from economic obstacles, officials say.

The State Oil Co. of the Republic of Azerbaijan and Ukraine had moved on a series of energy developments, notably on oil refineries and oil supplies for the Odessa-Brody pipeline.

Boris Klimchuk, the Ukrainian envoy to Azerbaijan, said SOCAR has not lost interest in developments with Ukraine, but "there is a question of money," the Azerbaijan Business Center reports.

Klimchuk said there is a question of profitability in terms of those developments as the economic recession drags on global energy prices.

"There's a big difference between negotiating with the price of $130 per barrel and $40-50 per barrel," he said.

His comments come as the World Bank predicts the Ukrainian economy will contract by 15 percent in 2009, the BBC reports.

The Ukrainian economy was hit hard by the global economic recession. The contraction has spilled over to the energy sector as Kiev struggles with its debt obligations to Moscow.

A January dispute between Moscow and Kiev over gas debts and arrears left Europe scrambling for alternatives as the regional energy sector is dependent on Russian gas.

The European Union, Kiev and Moscow on Friday met with international financiers to help prevent a European gas crisis linked to the Ukrainian economy.