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On Monday, Russia and Ukraine both signed an agreement with the European Union which allows for the resumption of natural gas supplies to Europe. The agreement allows international monitors to be stationed at key pipeline checkpoints in Russia and Ukraine to verify that all gas intended for Europe gets through Ukraine.

This agreement only allows for the transit of Russian gas to European consumers. It does not resolve the existing price dispute between Ukraine and Russia.

An article in yesterday’s Huffington Post poses an interesting theory about the problem between the two countries. The argument goes back to Ukraine getting gas allocations from Soviet planners and expected the same after independence. When independent Ukraine failed to pay Russia for its gas, the supply was shut down, but Kyiv simply diverted gas intended for the rest of Europe.

The article continues by noting that the dispute is more an issue of economics for both countries than Russia wielding a heavy fist. Further, Russia is facing a budget deficit due to falling gas prices while Ukraine’s economic crisis makes it difficult to pay for its gas deliveries.

Testing of Power Equipment at Chernobyl NPP

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Chernobyl NPP ORU substationChernobyl Nuclear Power Plant chief electrician Sergey Zhovner has discussed the implementation of integrated testing at the ORU, 750 kV “Kiev” substation. The activities, which started in early 2008, include the overhaul of power equipment necessary for the uninterrupted transmission of voltage and subsequent installation and adjustment of new protection panels.

Even though the substation equipment has been in operation for 25 years, and its maintenance and support are more costly due its location in the Chernobyl Exclusion Zone, the Chernobyl NPP has continuing obligations to Ukrenergo to maintain ORU in technically good condition.

This work is part of the first phase of planned modernization of Ukraine’s entire electricity grid. Expected long-term results are the improved reliability of the country’s entire energy system, especially Kyiv.

The Chernobyl ORU substation is expected to be fully decommissioned after 2015.

Romania Announces Changes to Its Energy Sector

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Russia has spent much of 2007 positioning themselves to be a major global energy supplier. Similar to Russia, but with a different strategy, Romania is taking steps to become a major regional energy supplier to the European Union.

The Romanian government recently announced it will create a new holding company that will consolidate state-owned nuclear, thermal and hydro-electric companies. This overhaul of Romania's energy sector is the first step in a plan that will ultimately allow the country to generate energy exports to other European Union countries by 2020.

It will be interesting to see Russia's response to Romania's plan. I can see President Vladimir Putin being very unhappy about this announcement. It steps on Russia's toes and will provide European nations with an alternative source of energy. Russia has used bullying tactics in the past to get what they want, but that approach will no longer work if viable alternatives exist.

Romania is not energy self-sufficient, depending on Russia for some of its current energy needs. I wonder whether Russia will lessen or discontinue gas and oil supplies to Romania as a childish response to the Romanian announcement. They have reacted like this before, so it would not be surprising to see it again.