Ukraine Gas Deal a $1.1bn Fake
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 last 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.
By. Jen Alic of Oilprice.com
ENDS