03/09/2009 |

No evidence Naftogaz owns disputed natgas: Ukrainian president

Kiev (Platts)--9Mar2009

Ukraine's security service the SBU has not seen any evidence to back up
Naftogaz Ukrayiny's claim that it legally acquired 6.3 billion cubic meters of
natural gas previously owned by RosUkrEnergo, a top official at President
Viktor Yushchenko's office said late Sunday.

Viktor Baloha, Yushchenko's chief of staff, said government officials
have refused to show investigators contracts related to the acquisition.

"My vision is that the contracts must be provided to find out whose
property this is," Baloha said in an interview with Inter television late
Sunday. "In this given case we clearly understand that this is not the
property of Naftogaz."

The SBU deployed its Alfa special forces unit last week to enter the
offices of Naftogaz Ukrayiny as part of the investigation into how the state
energy company had acquired the RosUkrEnergo gas.

The investigators are focusing on the January 19 contracts between
Gazprom and Naftogaz Ukrayiny, according to which Gazprom allegedly sold
RosUkrEnergo's gas at below the market price to Naftogaz.

The deal ended a gas price dispute between Naftogaz and Gazprom and led
to the resumption of gas transit via Ukrainian gas pipelines to markets in the
European Union.

The deal anticipated that 11 billion cu m of gas owned by RosUkrEnergo
would be sold to Naftogaz at $1.7 billion, or about a half its market value.

Gazprom owns a 50% stake in RosUkrEnergo, while the other 50% is owned by
Ukrainian shareholders.

Prime Minister Yulia Tymoshenko's government has been keeping the
contracts secret for almost two months, citing a confidentiality agreement
with Gazprom.


Yushchenko and Tymoshenko, who are seen as rivals at the upcoming
presidential election due in January 2010, have been increasingly at odds over
a number of issues, including the natural gas sector.

The SBU investigation is part of the emerging standoff between the two.
Yushchenko controls the SBU while Tymoshenko controls Naftogaz.

A local Kiev court ruling last week demanded that the SBU suspend the
investigation for several days until the court could look into the matter.

The SBU failed to get the contracts it had been seeking at the offices of
Naftogaz, but said it will continue its attempts to obtain them.

"We'll keep asking 'where are the contracts?' until we get a reply. If
the papers appear to be missing, this would be a criminal case," Valeriy
Khoroshkovskiy, a deputy head of the SBU, told Inter on Sunday.

Last week Naftogaz refused to provide the contracts and Gazprom said that
First Deputy Prime Minister Oleksandr Turchynov, Tymoshenko's closest ally,
had been keeping them in his office in the Cabinet of Ministers.

The SBU has switched its attention to Turchynov, Khoroshkovskiy said.

"We submitted our inquiry saying that we need to get those papers. I want
to stress that if we don't get the response, let them not be surprised if Alfa
shows up in the Cabinet of Ministers," Khoroshkovskiy said.

Naftogaz moves 110 billion cu m of Russian gas to markets in the EU
annually, and needs to burn at least 6.3 billion cu m of gas to run turbines
that move the gas along the pipelines.

Without access to the 11 billion cu m of extra gas, Naftogaz may face
shortages this year and be unable to ensure transit of Russian gas to the EU,
according to analysts.


  • 2009.03.09 |

    $154. $360?

    The deal anticipated that 11 billion cu m of gas owned by RosUkrEnergo
    would be sold to Naftogaz at $1.7 billion, or about a half its market value.

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