Ukraine’s President Viktor Yushchenko has called for an investigation into a natural gas trading company that analysts view as a tentacle of Russia’s Gazprom, describing its refusal to supply industrial consumers as a “threat to national security.”
While refraining from directly pointing the blame at the Kremlin, Mr Yushchenko on Friday expressed his concern and appealed to the country’s anti-monopoly committee to investigate the actions of Ukrgaz-Energo, a company considered loyal to Russia’s state-controlled Gazprom.
Mr Yushchenko said he was disturbed that Ukrgaz-Energo had refused to supply gas to 16 of the country’s largest industrial enterprises.
Moscow has significantly strengthened its grip over Ukraine’s gas sector since a controversial accord was inked in January between both countries ending days of supply shortages to Europe. Ukraine, whose pipelines pump a majority of Russia’s supplies to Europe, agreed to a price increase of nearly double what it had paid. This autumn, Ukraine agreed to an additional 40 per cent increase starting 2007 paying an import price of $130 per 1,000 cu m.
The January accord also gave Swiss-registered RosUkrEnergo, owned by Gazprom and Ukrainian businessmen, monopoly rights to supply Ukraine with Russian and Central Asian gas.
The accord gave Gazprom a claim to Ukraine’s domestic market through its indirect ownership in Ukrgaz-Energo. In signing the accord, Kiev agreed to yield Ukrgaz-Energo the right to supply industrial consumers, driving Kiev’s state energy giant, Naftogaz, into cash flow and solvency problems. Ukrgaz-Energo is a joint venture owned on by RosUkrEnergo and Naftogaz.
Volodymyr Saprykin, an energy analyst in Ukraine, said warnings that Gazprom would have significant influence in a joint venture co-owned with Naftogaz are proving true. One fear is that Ukrgaz-Energo is being used as an instrument to squeeze Ukrainian industrial giants “forcing them to fall under the ownership of Russian companies, possibly even Gazprom affiliates,” Mr Saprykin said.
Ukrgaz-Energohas defended its policy arguing factories at hand are controlled by Ukrainian businesses that control large amounts of gas stored underground. Freeing up the underground storage facilities ahead of the peak winter period could grant RosUkrEnergo a larger role in the lucrative business of filling peak winter demand in Europe.
