PROBLEMS AND PROSPECTS OF DEVELOPMENT OF THE OIL REFINING INDUSTRY IN UKRAINE

Abstract

The article establishes the reasons that led to a significant reduction of oil refining in Ukraine. Despite the considerable project capacity of the plants, inefficient government regulation, improvidence of the owners, insufficient amount of Ukrainian crude oil, uncivilized economic competition reduced the actual capacity of the refineries in Ukraine for primary oil refining from 50.7 to 13.6 million tons per year. The article shows that restoration of effective work of at least four of the seven large plants is unlikely. In fact, this means that "large" processing for Ukraine has already been lost (with an annual volume of more than 10 million tons of crude oil). It is proved that the full suspension of the oil processing in Ukraine is a threat to its energy security. Already now, using political instruments on the Republic of Belarus, the Russian Federation is able to block two-thirds of the oil products that are needed by the Ukrainian economy.

The article establishes the medium term target of the oil refining industry. The best alternatives to the development of the industry are the preservation 1–2 petrochemical plants, which will be invested funds to guarantee deep oil processing of up to 5 million tons of crude oil per year. In addition, it is necessary to operate 15–20 small-scale enterprises that are able to use crude oil of low-yield and off-balance-sheet fields and to provide consumers with fuel of acceptable quality, first, in regions that are not attractive to leading market participants. The mechanisms and policy instruments that are able to achieve a certain target and enhance the energy security of the Ukraine are proposed. These policy instruments are the following: creating transparent, understandable and identical for all "rules of the game" in oil production and processing; removal of unnecessary bureaucratic barriers; protection of property rights; inventory of active and canned oil wells; an independent evaluation of projects for the modernization of refineries and the identification on its basis, etс. In the future, it is planned to develop draft regulatory acts that are aimed at achieving the target, which is determined.