What Perry was doing in Ukraine
WASHINGTON — Robert Bensh, a Houston energy investor, spent the past two decades developing a small oil and gas business in Ukraine.
Early this year, Bensh got a call asking him to meet at Houston’s George Bush Intercontinental Airport with Energy Secretary Rick Perry, who was looking for an independent assessment of the former Soviet state’s energy sector.
“We met at the airport, when he was on his way back from Austin or Round Top,” Bensh said, referring to the small town where Perry owns a home. “I told him, ‘You have a brand new government that’s open to reform and outside investment.’”
Long before the revelation that President Donald Trump asked Ukraine’s newly elected president to investigate whether Democratic presidential hopeful Joe Biden helped kill an investigation into his son’s work for a Ukrainian natural gas company, Perry
was becoming increasingly engaged in a country viewed by U.S. officials as critical to countering Russian influence in Europe.
Perry has denied any effort to pressure the Ukrainians regarding Biden, and so far no evidence to the contrary has surfaced.
But through his efforts to reform Ukraine’s staterun energy sector and open new markets for U.S. oil and gas companies, the former Texas governor has stepped into a geopolitical imbroglio.
Last week, top House Democrats subpoenaed Perry’s records on the Trump administration’s interactions with Ukraine.
Attention only is expected to increase after a State Department official testified to Congress on Tuesday that the White House had assigned Perry — along with Gordon Sondland, ambassador to the European Union, and Kurt Volker, then an envoy to Ukraine — to put pressure on Ukraine, dubbing them the “three amigos,” said Rep. Gerry Connolly, DVa., according to media reports.
Ukraine’s energy sector long has been criticized as a corrupt postSoviet cabal of oligarchs and patronage jobs, supported by the huge fees they earn for transporting Russian natural gas to western Europe.
A report by the International Monetary Fund earlier this year
found executives at the staterun energy company Naftogaz had secretly diverted natural gas from households to industry, cutting into the company’s revenues.
“Ukraine has a long history of energy corruption, going back 25, 30 years,” said Edward Chow, a former top executive in Chevron’s international affairs division and now a fellow at the Center for Strategic and International Studies in Washington.
Located between Russia and Poland, with the largest land mass of any European country besides Russia, Ukraine has figured prominently in the foreign policy of American presidents going back to the late 1980s.
Tensions rose in 2014 when Russia invaded and seized Ukraine’s Crimea region, prompting the Obama administration to impose sanctions on Moscow — creating a diplomatic logjam that hadn’t much changed when Trump selected Perry to be his energy secretary three years later.
Like Cabinet members before him, Perry governor urged Ukrainian officials to overhaul the management of its energy sector, end the monopoly of Naftogaz and allow Western oil companies to operate there.
Production from the country’s sizable gas reserves now is onethird of what it was in the 1970s, after decades of under investment.
Perry, meanwhile, was eager to find new markets for U.S. energy companies, in particular the grow
ing number of liquefied natural gas export terminals along the Gulf Coast.
“When you have Russia playing at its games, it’s going to scare away a lot of majors and the independents,” an Energy Department official said. “We saw a significant opportunity for (Ukraine) to be Westernorientated after essentially being a puppet of Russia.”
Perry won an early victory when he helped broker a deal for Ukraine to buy U.S. coal.
Getting American LNG to Ukraine hasn’t proven as easy, complicated by Ukraine’s lack of terminals to convert LNG back into a gas for distribution. In addition, Russian gas is far cheaper, Chow said.
After a meeting with former Ukrainian President Petro Poroshenko in November, Perry returned to Texas eager to get U.S. companies into Ukraine and started putting out inquiries on who in Texas knew the country’s energy sector.
Along with Bensh, he spoke with Michael Bleyzer, a Ukrainianborn energy investor in Houston and critic of Russian President Vladimir Putin, who donated $20,000 to Perry’s 2010 gubernatorial campaign.
“The conversation we had was, ‘How do we make Ukraine less dependent on Russian natural gas?’” Bleyzer said in an interview.
After Ukraine’s new President Volodymyr Zelenskiy won election in December, officials in his administration asked Perry for energy experts who might be able to advise them, the Energy Department said.
Perry would give them the names of both Houston businessmen, along with two wellknown energy experts from the consulting firm IHS Markit — Dan Yergin, a PulitzerPrize winning energy historian, and Carlos Pascual, a former U.S. ambassador to Ukraine.
That prompted media reports that Perry was attempting to fill Naftogaz’s supervisory board with his cronies from Texas, an allegation Perry has denied.
U.S. and European officials long have hoped to better integrate Ukraine into Europe’s gas network to reduce Europe’s dependence on Russia — for which it relies on 40 percent of its supply.
The European Union currently is working with Ukrainian officials to break up Naftogaz, with plans to spin off the pipeline subsidiary Ukrtransgaz before the end of this year, an initiative Perry supports, an Energy Department official said.
At the same time, amid regular meetings with Ukrainian officials and a trip to Zelenskiy’s inauguration at Trump’s behest, Perry has launched an international working group to increase the diversity of gas supplies into Europe at a time when its domestic production is declining.
Among the items under discussion is the construction of a pipeline into Ukraine from Poland, which recently built an LNG import terminal and has another in the works.
Earlier this year, Poland’s gas utility signed a deal to import 3.5 million metric tons of LNG a year from Venture Global LNG, which is developing two export terminals in Louisiana, beginning in 2023.
“The U.S. has had an interest for years in weaning Europe from its dependence on Russian natural gas,” said Joe Barnes, a former diplomat with the State Department. “With substantial U.S. LNG exports, there is the possibility of Ukraine as a potential market. It makes perfectly good sense for them and for us from a geopolitical perspective.”
But doing so will mean breaking the decadeslong cycle of corruption in Ukraine, where politicians long have viewed the energy sector as a source of personal wealth.
For instance, Burisma Holdings, the natural gas company where Biden’s son Hunter served as board member until earlier this year, is owned by Ukraine’s former minister of ecology and natural resources, Mykola Zlochevsky.
“Burisma claims to be largest private nonstate producer of gas in Ukraine, which somehow magically acquired its licenses (for drilling.) It’s an insider, crooked deal,” Chow said. “Everyone’s concerned about corruption in Ukraine, and nobody does anything about it.”