Via The Kansas City Star, an interesting article on Rosukrenergo, the mysterious firm that had acted as the intermediary between Russia & Ukraine on gas sales. As the report notes:

When Ukraine and Russia ended their clash over natural gas supplies last month, resuming the flow to more than a dozen European countries, the agreement focused a spotlight on a mysterious firm that suddenly was cut out of the deal.

Over the four-plus years of its existence, Rosukrenergo – short for Russia-Ukraine Energy – had collected billions of dollars, much of it as the sole intermediary for gas pumped to Ukraine from Russia.

The man largely responsible for pushing Rosukrenergo aside was Russia’s powerful prime minister, Vladimir Putin. One motive appears to be getting even with his Ukrainian nemesis, President Viktor Yushchenko, who’s enraged Putin by applying for NATO membership and supporting Georgia in its war with Russia last year. Yushchenko’s government, Putin hinted publicly, was getting money from Rosukrenergo or its management.

Putin’s partner in the deal, Ukrainian Prime Minister Yulia Tymoshenko, stood to benefit politically by nipping a rumored cash source for Yushchenko and another leading Ukrainian politician.

That’s just the simplest interpretation of a tangled, post-Soviet story of riches and power, however. For the West, the company is a reminder of how unpredictable and opaque business ventures still are in the former Soviet bloc, a big problem especially for Europe, where some 25 percent of natural gas comes from Russia.

It’s also a warning post of sorts for U.S. foreign policy, which under President George W. Bush presented Ukraine as a beachfront of democracy despite rampant problems with corruption and political rivalry that make the country look like the Wild West.

Little is known about Rosukrenergo, half-owned by the Russian state gas monopoly Gazprom, which has close ties with the Kremlin. A Ukrainian businessman, Dmitry Firtash, owns 45 percent; his name has been associated with a reputed mafia boss who’s wanted by the FBI on fraud charges, but he denies any business dealings between them.

The details are further clouded by Ukraine’s political infighting. Russian authorities also consistently refuse to discuss the country’s financial dealings, which have included accusations that officials in Moscow also profited from Rosukrenergo.

One thing is certain: The description that Firtash offered can be discounted. “Rosukrenergo is a normal company, just like any other,” he recently told Ukrainian television.

Who is Firtash, and where does Rosukrenergo’s money really go?

Ukrainian officials who ought to know can’t say. “This is a shadow kind of company that we still officially have not got any information on. Who is their shareholder? Who is their beneficiary?” said Ukraine’s deputy justice minister, Evhen Kornichuk, who is a member of Tymoshenko’s party. “That might be Firtash; who else?”

Still, there’s been no proof that the company acted improperly or that politicians were pocketing money.

A clue to Rosukrenergo’s central role in the dispute came from Putin, who attacked the firm – without naming it – and Yushchenko’s administration about a week after Russia shut off the gas.

“I think what matters most for the Ukrainian government is not the gas price,” Putin said during a meeting with reporters, “but rather the opportunity to retain certain intermediaries to use the dividends for private purposes, to accumulate personal wealth and obtain financial resources for further political campaigns.”

When the deal was announced Jan. 19, Putin, with Tymoshenko sitting next to him, said that Rosukrenergo was out of the picture. “All the intermediaries are to be extracted from the payment structure,” he said.

This entry was posted on Monday, February 16th, 2009 at 1:16 pm and is filed under Russia, Ukraine.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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