Ukraine Crushed in $1.1bn Fake Gas Deal

Jen Alic | Thu, 29 November 2012
http://oilprice.com/Energy/Natural-Gas/Ukraine-Crushed-in-1.1bn-Fake-Gas-Deal.html

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Certainly the folks at Gazprom are having a good snicker, reveling in the mockery that has been made of what should have been a landmark Ukraine-Spain gas deal that would have loosened Russia’s gas grip on Kiev.

Everyone wondered how Russia would respond to Ukraine’s attempt at gas independence. But this is what happens when you mess with Gazprom.

It was a horrible moment for Ukraine on Monday—all the more horrible because the whole event was televised—when the historical $1.1 billion deal it was about to sign with Spain’s Gas Natural Fenosa turned out to be fake.

Why was the deal historical? It would have secured $1.1 billion in investment for the construction of Ukraine’s first liquid natural gas (LNG) terminal on the Black Sea and a pipeline connecting the country’s vast gas network to the terminal.  

More to the point, this would enable Ukraine to import by tanker up to 10 billion cubic meters of European gas at a price 20% cheaper than Gazprom. Even more to the point, it would be a major first step toward reducing Ukraine’s dependence on Russia.

The deal was that investors had apparently signed agreements through a newly formed consortium for the construction of the $1.1 billion LNG terminal.

Here’s how the ill-fated signing ceremony went down:

While Ukrainian Prime Minister Mykola Azarov and Energy Minister Yuriy Boyko were cutting the ribbon on the construction of the terminal in a live televised ceremony, the country’s investment chief, Vladislav Kaskiv, was attending the official investment signing ceremony elsewhere, also via live video feed. This is where walls caved in very suddenly.  

Signing on behalf of Fenosa was one Jordi Sarda Bonvehi. At the 11th hour, Fenosa let it be known that they have no idea who Bonvehi is and that he certainly does not represent the company in any way. Fenosa apparently had no idea it was signing a landmark agreement with Ukraine.

Kiev was necessarily taken aback, and Bonvehi remained conveniently silent at the signing ceremony once the news broke out.

Of course, what no one knows is how Ukrainian authorities were led to believe—during multiple rounds of negotiations—that Bonvehi was a Fenosa representative.

The story being bandied about by authorities in Kiev is now that Bonvehi was under the impression that Fenosa would sign the deal with Ukraine and that he would be given the authority to sign the deal retroactively.

But Fenosa denies it has ever considered such a deal and continues to deny any relationship at all with Bonvehi.

So where does that leave us? It leaves Ukraine in the lurch. There is no way it can fund this terminal on its own, despite its claims to the contrary. We probably don’t have to look much further than Gazprom and the Ukrainian oligarchy to find where this beautifully crafted charade was hatched.

In the meantime, Bonvehi—if such a person of that name even exists—remains elusive. No one knows who he really is or who he really works for.

More than anything, it’s an advertisement for due diligence.

Gazprom plans Africa gas grab

http://www.ft.com/cms/s/0/ac1749e6-bb13-11dc-9fbc-0000779fd2ac.html

Gazprom plans Africa gas grab
By Matthew Green in Abuja and Catherine Belton in Moscow
January 4 2008

Gazprom, Russia’s state-owned energy group, is seeking to win access to vast energy reserves in Nigeria in a move that will heighten concerns among western governments over its increasingly powerful grip on gas supplies to Europe.

A senior Nigerian oil industry official, who declined to be named, said the company was offering to invest in energy infrastructure in return for the chance to develop some of the biggest gas deposits in the world.

The Russian move is part of a courtship that saw Vladimir Putin writing to Nigeria’s leader, Umaru Yar’Adua, last year to seek energy co-operation.

Gazprom’s efforts are likely to cause concern among European governments anxious about their dependence on Russia for a quarter of gas imports. The country’s readiness to cut off supplies has alarmed EU governments.

“What Gazprom is proposing is mind-boggling,” the Nigerian oil official told the Financial Times. “They’re talking tough and saying the west has taken advantage of us in the last 50 years and they’re offering us a better deal ... They are ready to beat the Chinese, the Indians and the Americans.”

Gazprom representative Ilya Kochevrin confirmed the talks with Nigerian officials. “We made a decision to go global in terms of acquiring assets and developing strategy outside Russia. Africa is one of our priorities,” he said.

Any move by Gazprom to establish itself in Nigeria, long dominated by companies such as Royal Dutch Shell, Chevron and ExxonMobil, would reinforce a global trend of state-backed energy companies challenging western rivals.

Although Nigeria is an important provider of liquefied natural gas to the US and Europe, western energy companies have historically focused on producing and selling oil from Nigeria, which is Africa’s biggest producer of crude. However, demand has prompted plans for more facilities to cool natural gas into the liquid state, which makes it possible to ship to Europe and elsewhere.

The Nigerian official said Gazprom executives had visited Abuja in mid-December with a range of proposals to revamp the underperforming gas sector.

A Gazprom document, seen by the FT, says it can offer “strong technical expertise and financial resources”.

The Nigerian official said Gazprom was also competing with international banks to take over funding the government’s share of ventures with western oil companies, hoping to win gas exploration blocks and approvals to build LNG plants in return.