Who will get the wealth of the Black Sea shelf?

Without a doubt, the loss of the Crimean shelf is not just a loss of natural gas and oil fields, but also a change in the priorities of the future in ensuring the energy security of Ukraine. However, not everything is so simple, and not everything is as simple as it seems at first glance. To fully understand the situation, it is necessary, first of all, to analyze what happened in Crimea, and what consequences this will lead to Ukraine, Crimea and Russia.

News of Ukraine 2517 15 апреля, 2014 forbes.ua

The issue of the annexation of Crimea has already received sufficient coverage and means only one thing: the international community does not recognize Russia's right to the territory of Crimea, acquired as a result of actions contrary to international law. By the way, not only international, but also Ukrainian and Russian. As a result, such actions cannot give rise to legal consequences for parties that do not recognize such annexation.

One of the difficult, but sufficiently obvious questions is the question of the need for the Russian Federation to conduct additional exploration and begin exploitation of natural gas and oil fields on the Crimean continental shelf. Why invest in a very long-term result when gas already in the pipes leading from Russia to Europe is in less demand and prices for it are falling more and more?

The only reasonable explanation for the continued investment would be to meet Crimea's own needs for natural gas. But Crimea, even now, without a significant deficit, covers its needs at the expense of gas transported through the territory of Ukraine from the same Russian Federation (which, firstly, is cheaper than the development of new fields or the construction of new pipelines through the Kerch Strait, and secondly, it will provide additional sales of natural gas produced in Russia), and partly due to its own production. This situation in no way makes it promising to expand Crimea's own gas production, and possibly its export supplies. Due to the status of the territory of Crimea as an occupied / annexed territory, its goods will have a special status and, most likely, cannot be acquired legally by foreign companies. Such restrictions will operate both to avoid conflicts with Ukraine, which de jure owns this gas, and to avoid international sanctions. Then why should Gazprom make such large-scale investments?

It should be understood that Ukraine does not plan and does not even allow steps as a state policy that could lead to a humanitarian catastrophe on the peninsula. Ukrainian enterprises will not stop supplying water, electricity or gas to the Ukrainian population in the temporarily occupied territory of Crimea. Therefore, the issue of providing natural gas to enterprises and the population of the ARC can be resolved without excessive costs and conflicts. What can change, and most likely will change in the near future, is the tariffs.

The fate of the Production Distribution Agreements (PSA) signed in November 2013 by the Cabinet of Ministers of Ukraine with ENI and EdF (the volume of projected investments is over $ 4 billion; the implementation period is 50 years) is rather complicated. The statements of the self-proclaimed Crimean government on the nationalization of Crimea's natural resources are just as groundless and illegal as the acts on Crimea's self-determination and annexation to Russia. Nationalization is recognized by most countries in the world and is even provided for in a number of international documents, such as the 1974 Charter of Economic Rights and Freedoms of States. However, both it and other documents - including the national ones of most states - provide for the procedure for confiscation. The actions of the self-proclaimed government of Crimea to nationalize the property of Ukraine contradict not only the norms of international law,

Based on this, experts expect that all foreign investors will soon freeze their projects in Crimea and will wait for the resolution of this conflict situation in the international legal plane. Despite the experience of the same ENI with Lukoil (as, for example, in Egypt) and other Russian companies, their international image is dearer to them than immediate profit.

As for the losses that these companies may incur on the territory of Crimea, they will come down to the costs that they already incurred at the preliminary stage of work on the documentation. Practical development work has not begun to date, and therefore, large losses are not expected here. Rather, the events in Crimea and eastern Ukraine will have a negative impact on cooperation with Russian companies, since their credibility is largely undermined by the unpredictability of the Russian government's actions.

As for the fate of the agreements themselves, their effect is likely to be suspended until the situation around the annexation of Crimea is resolved. It seems that the parties will not rush to refer to the force majeure clauses to terminate the PSA.

Speaking about the ways of resolving this situation as a whole, it should be noted that today, in the context of the conflict between Ukraine and Russia, the actions and decisions of the Russian Federation in relation to Crimea cannot be recognized by Ukraine, accordingly, agreements cannot be concluded on any settlement of disputes regarding rights Crimea / Russia on Ukrainian property in Crimea, including natural resources on the territory of the ARC and on the continental shelf. Also, foreign investors will not enter into contractual relations with the Crimean or Russian authorities in relation to deposits.

However, many Ukrainian and foreign companies have invested in the development of their business on the territory of the ARC and are quite rightly concerned about the future of both their assets and investments, and their business in Crimea as a whole (concluded contracts, personnel, etc.). The position of the Crimean self-proclaimed government does not always correspond even to the federal legislation of the Russian Federation, therefore it is very difficult to predict their direction and sequence. Statements on the nationalization of state property of Ukraine in Crimea and the first decisions of the Crimean State Council indicated port infrastructure enterprises and agricultural enterprises located in the ARC among the objects of nationalization. This approach cannot be perceived otherwise than the seizure of Ukrainian state property. The same question will arise about the property of the Ukrainian trade union and other public organizations located in the ARC. It is interesting to see how the Crimean government will react to the property of other states located on the territory of the ARC.

The current trend in the development of events in Crimea leads to the isolation of not only the Russian Federation, but also the Crimea, and not so much from Ukraine (after all, Ukrainian citizens live there), but from foreign investors and financial institutions.