It’s creeping up on us in news about the natural gas sector, which gave birth to many of these giants in Ukraine. But the new battle has begun among key players in the market. It’s going to be dirty, it will have plenty of winners and even more losers, including mortal folks who will get many bills to foot.
The key cast of this drama includes “The Family” and the “gas lobby.”
“The Family” is a group of people close to the elder son of President Viktor Yanukovych, Oleksandr.
The “gas lobby” includes billionare Dmytro Firtash, former co-owner of RosUkrEnergo, which used to be the monopoly supplier to Ukraine until 2009. His associates include presidential chief-of-staff Serhiy Lyovochkin and Deputy Prime Minister Yuriy Boyko.
These groups have clashed in a battle over the Ukrainian gas market and the first casualty is already clear.
Earlier this month, the head of state gas giant Naftogaz Ukraine, Yevhen Bakulin, wrote a letter to the energy minister, complaining that his company is falling short of contracted volumes of Russian gas, which might outrage Russia’s Gazprom and result in financial sanctions for Ukraine.
Gazprom has already billed Ukraine $7 billion in January for failing to adhere to the take-or-pay condition in the gas supply contract, but stopped short of arbitration.
In his letter, Bakulin complained that Switzerland’s Ostchem Gas Trading AG, a company that belongs to Firtash, imports “volumes that almost fully cover the needs of industrial consumers in Ukraine for imported gas without agreeing it with the company and without signing relevant annexes on the reduction of supplies under contract,” Ukrainian media reported.
Bakulin says Naftogaz imported nothing from Russia in March, and asked Energy Minister Eduard Stavytskiy “during talks with Russia to settle the issue”of Naftogaz’s status as sole importer of Russian gas and the threat of potential financial sanctions against the state company, which is already deeply in the red.
Altruistic as it sounded, the letter contained a catch for the minister. Stavytskiy, who is tied to “The Family” group, has not been responsible for negotiations with Russia, and has no jurisdiction over the state of affairs with the Russian gas contract. Yet he will look responsible for the failure of Naftogaz and any troubles (including fines) with Gazprom. And it seems that it was not an accident that this letter was leaked to the Ekonomichna Pravda website.
Deputy Prime Minister Boyko Bakulin has traditionally been responsible for Russian gas negotiations. Bakulin is also considered to be a part of the RosUkrEnergo group, and this letter looks like an attempt on the part of one group to set up another.
On the other hand, “The Family” is also starting to import gas to Ukraine, undermining the status of state-owned Naftogaz. VETEK, a company that belongs to Serhiy Kurchenko, the young millionaire and the newest addition to the cluster of Ukraine’s energy oligarchs, said this week that it started to import gas from Hungary in March by reversing Ukraine’s pipeline.
So far, the volume is quite small, just 90 million cubic meters per month. It pales in comparison to Ostchem’s 1.76 billion cubic meters, which it imported in March, according to rbc.ua business website.
But 27-year old Kurchenko is new on the market, too. He came into the spotlight last year with a number of acquisitions, and is considered to be a part of “The Family” group.
“The Family” has been growing in influence over the last year. The group’s leader, Serhiy Arbuzov, was promoted to the deputy prime minister’s position at the end of last year, and is often named as the potential next prime minister.
The speed of “The Family’s” penetration into power and business has been scary for the rest of the nation’s oligarchs. It’s not just the scope, it’s the precedent of the president clearly favoring and representing one of the power groups.
It seems that many outside of Ukraine are also annoyed. On April 24, the day Kurchenko’s company made an announcement about reverse gas supplies to Ukraine, Russia’s Gazprom blasted the nation for it, accusing Ukraine of tricks with documents. Gazprom chief Alexei Miller said Russia will investigate the operations.
Kyiv Post editor Katya Gorchinskaya can be reached at [email protected].
