Phantom gas deal embarrasses Kiev

‘Outrageous, tragi-comic’

KIEV, Dec 2, (AFP): It was hailed as the historic deal that would finally end Ukraine’s reliance on Russian gas imports and ensure its energy independence forever.

But then Ukraine’s announcement it had signed an agreement with Spanish firm Gas Natural Fenosa as the first foreign investor in a planned LNG terminal off Odessa hit a snag.

The Spanish company denied ever having signed any contract.

A Spaniard with a Catalan name signed the deal on November 26, apparently on behalf of Gas Natural. But quite who he was acting for and the circumstances of the situation remain a mystery.

“The documents were signed. A representative of the Spanish company initialled them. Now questions are being asked about whether he was authorised to do so,” said Ukrainian Energy Minister Yuri Boiko after doubts were first raised.

The Ukrainian government initially said the documents had were going to be signed by Jordi Garcia Tabernero, the external relations chief for the firm.

But then it emerged the Spanish signatory was Jordi Sarda Bonvehi, who Ukraine now says is a professional gobetween who works in the interests of Spanish companies but is not a direct employee of Gas Natural.

Denied

Gas Natural denied it has signed any contracts and was “sending a formal notice to the person who, according to media reports, seems to have claimed to represent the company at an event that took place in Kiev last Monday.”

“This person does not represent the company,” it said in an emailed statement.

The confusion is a huge embarrassment not just for the head of the Ukrainian investment agency, Vladislav Kaskiv, who signed the deal, but the entire government of President Viktor Yanukovych.

Prime Minister Mykola Azarov and Boiko were present at the signing ceremony in Kiev. Kaskiv boasted at the time that “November 26 can be called the Day of Ukraine’s energy independence.”

“It’s a scandal that is both outrageous and tragi-comic,” said Ukraine’s leading online daily Ukrainska Pravda.

The state investment authority said in a statement Friday that Gas Natural has now notified Kiev that Bonvehi was not their representative and had exceeded his authorities in signing the agreement.

It noted — with a degree of apparent relief — that there were “no financial or legal” obligations in the agreement that was signed.

But the agency also lashed out at “third parties” for whom the “misunderstanding” was a tool to undermine Ukraine’s bid to find energy independence.

According to the head of the LNG project Vitaliy Demyanyuk, Bonvehi had organised a visit of representatives of Gas Natural to attend the ceremony in Kiev.

Infuriated

But when they did not in the end come to the Ukrainian capital he decided “he could sign the agreement himself and sort out the question of authority later. But this then infuriated Gas Natural.”

Ukrainian media quoted Bonvehi as saying: “I thought that I could sign it and then clear it with the company.”

Despite the farcical situation, the 846 million euro ($1.1 billion) project is of huge importance for Ukraine. When completed it aims to allow the import of 10 billion cubic metres of gas a year which would arrive in the Black Sea by ship as LNG (Liquified Natural Gas).

Above all it would help the country loosen its dependency on gas imports from Russia, which Kiev complains are too costly and give Moscow an unwelcome political lever in the country.

Pro-Kremlin former Ukrainian presidential chief of staff Viktor Medvedchuk could not hide his glee over the misfortunes, asking on his blog how “such people (as Kaskiv) are allowed on a state level” to be involved in such projects.

Medvedchuk, an implacable foe of the 2004 pro-Western Orange Revolution, is seen by many commentators as a champion of Russian interests in Kiev and a friend of President Vladimir Putin.

Another mystery is whether Russia played any role in the whole farce – Ukraine gaining energy independence would undermine its political influence and deprive state gas giant Gazprom of billions of dollars in energy receipts.