Russ Oil-Gas

HOT January 17, 2006 The Moscow Times By Catherine Belton Staff Writer –
Gazprom appeared to be going into damage control over its handover of all Ukraine gas sales to middleman Rosukrenergo, with CEO Alexei Miller saying late Sunday that Naftogaz Ukrainy should take a 50 percent stake in the trader to improve transparency. "The ownership structure of the joint Russian-Ukrainian venture Rosukrenergo should become absolutely transparent," Miller said on Rossia state television. "Russia has said several times over that it would be right if the founders of this joint enterprise were to be Gazprom and Naftogaz Ukrainy." Gazprom deputy head Alexander Medvedev, meanwhile, insisted during a conference call for investors Monday that Gazprom's 50 percent stake in the trader was "absolutely transparent." The other half is held by Raiffeisen Zentralbank on behalf of unidentified beneficiaries. Medvedev said the use of the company as a middleman had been the only way out of "deadlock" with Ukraine. The statements by the Gazprom executives came amid a growing furor about the gas trader, which in Russia's Jan. 4 deal with Ukraine suddenly gained the right to handle all sales to Ukraine. The deal also gave it the potential to nearly triple its exports to lucrative markets in Europe, potentially diverting hundreds of millions of dollars away from Gazprom. Parliaments in both Moscow and Kiev have demanded to know who is behind Rosukrenergo, which was set up in summer 2004 to handle sales between Turkmenistan and Ukraine and just last summer was under investigation by the Ukrainian security service, or SBU, for alleged links to Ukrainian-born reputed crime boss Semyon Mogilevich. Both Mogilevich and Rosukrenergo have denied any links. Naftogaz Ukrainy retorted Monday by saying it had made a proposal to buy the 50 percent stake held by Raiffeisen last summer. Rosukrenergo, however, did not answer its proposal, said Naftogaz spokesman Dmitry Marunich, who also said he was at a loss to say who stood behind the Raiffeisen stake. Ukrainian Fuel and Energy Minister Ivan Plachkov made several calls earlier last year for Naftogaz Ukrainy to take a direct 50 percent stake in the venture. But since SBU chief Oleksandr Turchinov stepped down amid a purge of Yulia Tymoshenko's government, effectively ending the investigation, the Ukrainian side has gone silent. Turchinov has said Yushchenko personally asked him to stop the investigation, telling him to "stop persecuting my men" and saying that it was upsetting the Kremlin. Yushchenko has praised the January deal as a "wonderful result." Some observers have suggested that Russian officials could be behind the company. Others have pointed the finger at Ukrainian officials. During Monday's conference call, Medvedev shed little light on Rosukrenergo's ownership structure. He said Gazprom's half would now be held directly by Gazprom and not by its banking unit, Gazprombank, as before. And, as far as the Raiffeisen side of the venture is concerned, he said: "I have no reason to doubt that the investor that represented Ukraine's side in the signing of the documents -- Raiffeisen Investment -- is the investor in this company." While Gazprom under Miller rejected independent gas trader Itera as a middleman for Turkmen gas trade, it also tried to make Rosukrenergo's predecessor, Eural Trans Gas, more transparent, he said. "Unfortunately, we failed," he said. "But with Rosukrenergo, for the Russian side we have an absolutely transparent situation," he said. He confirmed details of the agreement that were disclosed by Tymoshenko, saying Rosukrenergo would buy 56 billion cubic meters of gas from Central Asia and 17 bcm from Russia. Medvedev dismissed speculation that Central Asia would not be able to provide the volumes agreed under the deal. "At present we have no doubt about being able to meet the energy needs of Ukraine," he said. He defended Rosukrenergo's role in taking over all sales to Ukraine as being the only way out of stalemate with Ukraine. Some investors believe that Gazprom should have done so directly itself. "When all our proposals were being rejected, the use of this company allowed us to get out of this deadlock." Ukrainian Prime Minister Yuriy Yekhanurov, however, said last week that Russia forced Ukraine into accepting Rosukrenergo as the only way out. He also told Ukraine's Channel Five television that "Ukrainian interests are not represented" in Rosukrenergo.