Vitrenko secured gas supply worth 20 billion UAH in favour of Kolomoisky
02.11.2021   //  

Originally published by Nashi Groshi.

The saga of extraction of another pile of billions from Naftogaz in favour of the group of Igor Kolomoisky, who entrenched in Ukrnafta, is coming to an end. The story concerns lawsuit №910/3660/18, according to which the state-owned Naftogaz may lose at least 700 million cubic meters of gas in favour of so-called “Privat” group. Or maybe 3.5 billion cubic meters. Or even 9 billion cubic meters. And this is despite the fact that now one cubic meter of gas costs 1 USD in Europe. That means that 1 billion cubic meters of gas is 1 billion USD. They only have to finalize settlement agreement with Kolomoisky, which has already been announced at the meeting of shareholders of Ukrnafta.

Tightening the stranglehold

In 2018, Ukrnafta filed the lawsuit against Naftogaz to recover 8 billion cubic meters of gas from its parent company. It was natural gas, which Ukrnafta allegedly extracted in 2007-2013. And Naftogaz took it for sale to the population at reduced low price, and did not pay for it at all.

The current recovery from Naftogaz was initiated by minority shareholders of Privat group of Ukrnafta, namely, offshore companies Littop, Bridgemont, and Bordeaux. During the presidency of Kuchma, managers of Kolomoisky received control over the state-owned company at the management level using bribery and have not given up control over financial flows since then. At the same time, the Specialized Anti-Corruption Prosecutor’s Office, headed by Kholodnytskyi, closed the case regarding that bribe because it did not see the corpus delicti in that bribe, although Kolomoisky himself personally admitted it at the meeting of the Investigative Commission of the Verkhovna Rada.

Since 2018, the lawsuit did not actually move until 2021, which can be seen in the court register. The first court decision, after the case was reopened, took place on April 29. This is the same day when Yuriy Vitrenko was appointed chairman of Naftogaz. And the active work started.

Ukrnafta has increased its claim to 9 billion cubic meters of gas. But, of course, this was absolutely psychological pressure with the view to “ask more – they will give more”. Because it is clear that “not to give” is no longer an option.

Fixed game?

On October 26, representatives of all parties gathered in the Economic Court of Kyiv. And representatives of Naftogaz allegedly informed the court behind closed doors that they recognized claim for 3.5 billion cubic meters of gas for Ukrnafta. We say “allegedly” because as of today today there is no respective court decision in public access in the Court Register to officially confirm this.

However, the consolidated interim financial report of Naftogaz for six months until June 30, 2021 have just been published (download PDF). And the writing is on the wall:

“Ukrtransgaz stores about 0.7 billion cubic meters of this volume in underground storage facilities”.

Thus, Naftogaz actually admitted that it currently has 700 million cubic meters of gas to return to Kolomoisky.

In turn, Ukrnafta, still controlled by Kolomoisky, announced the convening of extraordinary shareholders’ meeting on November 30. The draft agenda proposes to consent to settlement of dispute over natural gas produced by Ukrnafta PJSC in 2007-2013 (including on the basis of agreements on joint activities), or to conclude settlement agreement within the court proceeding № 910/3660/18.

This meeting should take place after meeting in the Economic Court of Kyiv on November 29, where parties will also have opportunity to reach agreement on resolving the issue.

What will Ukraine lose?

We are talking about loss in the amount of 0.7 billion cubic meters of gas in the best case scenario. This is significant part of our total reserves for winter, which amount to about 18 billion cubic meters. Ukraine definitely will not have enough fuel to survive until spring without this gas. Therefore, it is most likely that settlement agreement or other deal will not be about physical withdrawal of fuel from underground gas storage facilities. And Kolomoiskyi will immediately “sell” extracted fuel back to Naftogaz at a current market price. Now, it is 1 USD per 1 cubic meter.

It is about 20 billion UAH in our currency. And in recent weeks, Ukrtransgaz received slightly larger amount, namely 27 billionin UAH, on its accounts, and according to the instruction of authorities, another 20 billion UAH are to be credited by one of the state-owned banks. That means that Kolomoisky will have something to be paid from.

Although it would be just a wild decision if Naftogaz takes such step at the beginning of heating season. Because we are talking about expected loss only in the court of the first instance. In fact, it is possible to delay the consideration of the case in appellate instance until spring. The proposed conclusion of settlement agreement or some other agreement with Kolomoisky right here and right now based on the result of decision of one judge and several managers of Naftogaz is just a complete failure.

Yuriy Nikolov, Nashi Groshi