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Is Now A Good Time To Buy Energy Stocks?

Is Now A Good Time To Buy Energy Stocks?

Two bearish factors are weighing…

Nuclear Incident Leaves Doubts Over Ukraine’s Energy Security

Sometimes it seems Ukraine and energy just don’t mix. Its relationship with Moscow, maintained today only for the sake of buying desperately needed Russian gas, is patchy at best. And recently Russia has halted coal shipments to Ukraine.

And then there’s the worst nuclear disaster in history: Chernobyl in 1986, back when Ukraine was a Soviet socialist republic.

There was another nuclear accident in Ukraine on Nov. 28, though by all accounts it was much less dangerous. Yet its effects are being felt in a nation already short of fuel and fighting well-armed Russian-backed rebels in its east.

Related: Scrapping South Stream Underscores Russia’s Weakness

The latest accident wasn’t acknowledged until Dec. 3, when Prime Minister Arseniy Yatsenyuk, presiding over the first meeting of his new cabinet, asked Energy Minister Volodymyr Demchyshyn to report on the accident. It was Demchyshyn’s second day on the job.

“There is no threat … there are no problems with the reactors,” Demchyshyn said. He emphasized that the accident had been caused by a short circuit in the power-output system one of the facility’s six reactors and “in no way” involved power production itself.

Demchyshyn said the accident at Zaporizhzhya, Europe’s largest nuclear power plant, had left several small municipalities without electricity, according to local officials, but would be back on line by Dec. 5.

Meanwhile, four of the plant’s six reactors have continued operating, the Russian television network RT reported, quoting the plant’s website. One of the reactors had been undergoing scheduled maintenance at the time of the accident, RT said.

The results of the Zaporizhzhya accident alone seem limited, but Ukraine’s coal shortage is making matters worse. Demchyshyn said Dec. 3 that he hoped to arrange voluntary cutbacks on energy use in the country and persuade some businesses to operate at night, when electricity demand is lower.

Some blackouts have been necessary, though, and the power company Kyivenergo said it was shutting power only to factories, not homes. It, too, urged its customers to use less power.

Related: Ukraine’s Next Energy Minister Will Be Bought and Paid For, As Usual

Ukraine’s coal crisis, coinciding with the onset of wintry weather, is made worse because the country’s own coal region is where government forces are fighting insurgents and resulting in virtually no access to its own abundant coal.

Ukraine has long been one of Europe’s chief coal producers: In 2013 it produced 60 million metric tons of coal. But fighting in the country’s east has shut down 66 coal mines, leaving only 60 more still in service. Before the conflict, Ukraine used coal to generate about 40 percent of its electricity.

The Chernobyl accident, which was caused by human error, led to several explosions that sent a cloud of radioactive dust over northern and western Europe. Belarus, Russia and Ukraine have estimated the death toll from the disaster at only a few thousand. But the environmental group Greenpeace says the accident will eventually cause up to 93,000 extra cancer deaths worldwide.

By Andy Tully of Oilprice.com

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