Joint Initiative on Gas Sector Reform (05/25/97)

FIRST PLENARY SESSION OF U.S.-UKRAINE BINATIONAL COMMISSION

Joint Initiative on Gas Sector Reform

Following is the text of the Joint Initiative on Gas Sector Reform issued by Vice-President Al Gore and President Leonid Kuchma on May 16.

As part of their work as co-chairs of the inaugural plenary session of the U.S.-Ukraine Binational Commission, Vice-President Gore and President Kuchma announced a joint initiative to develop by the end of 1997 a strategy and action plan leading to a market-oriented, competitive, transparent and effficient gas sector in Ukraine. President Kuchma expressed his commitment to create a sound legal and regulatory framework to attract international strategic investment in the gas system, including major transit pipelines. The action plan will propose specific measures for private investment in Ukraine's transit system and serve as a basis for legislative proposals. Vice-President Gore commended President Kuchma's leadership on this key energy initiative and committed to work closely with Ukraine, the international financial institutions and other potential partners.

Vice-President Gore and President Kuchma noted that this initiative can enhance Ukraine's energy security, increase revenues, reduce losses from the gas system, advance Ukraine's integration with Europe and the West, and improve the quality of service for neighboring states that produce and consume gas. Ukraine's gas transit system represents a major national asset which requires large-scale investment. Gas sector restructuring with strong commercial management and effective regulation could attract major international equity investment and support system rehabilitation and upgrades.

President Kuchma outlined specific principles to structure this initiative, which Vice-President Gore strongly endorsed:

competition in gas transit, storage and marketing;
participation by international energy corporations offering advanced technology;
independence and viability of regulatory authorities to ensure transparent and even-handed regulation;
sound financial and management practices following international commercial standards;
non-discriminatory access to pipelines for shippers and consumers; and
protection of the local and global environment;

President Kuchma underscored his intent to propose legislation and to facilitate rapid gas sector reform. He noted that this initiative will benefit Ukraine and other countries. Vice-President Gore affirmed the intention of the United States to work in partnership with Ukraine, as well as support ongoing efforts by the World Bank and other international financial institutions, throughout this process.

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