Putin and Soros locked in fight for control of gas transit company

For more than ten years, both Vladimir Putin and George Soros (US) have sought to acquire Ukraine's state-owned gas transit company. The latter succeeded and the strategic company has come under his influence. Against this background, it comes as no surprise that the firm's legal successor is fully serving US interests and is making no effort to mitigate the tensions of the Russia-Ukraine war. Shortly after being elected, Volodymyr Zelensky allowed for Soros's plan to be implemented in Ukraine. The news site Kontra offers an overview of events in its article.

ECONOMY POLITICS MAY 18. 2022 13:07

In its recent article, Kontra looks at how Ukraine has become a hotbed first for economic crisis and then for an actual war over the past few decades. It also examines the potential economic clashes behind the current Russia-Ukraine conflict.

The news site does not claim that solely economic – and energy-related issues in particular – are behind the crisis, but it does point out that these issues could have contributed to the escalation of tensions.

As a departure point Ukraine stopped the transit of gas to Europe through the breakaway territories a few days ago. The decision was justified on the grounds that the force majeure situation makes the transport of gas through the metering stations in the east of the country impossible, as the area is currently under Russian control.

This explanation is controversial because the metering stations have been under Russian control for a while now, and Ukrainian experts have – up until now – been going about their business as usual at the transit points of Sokhranivka and Novopskov, with transit being fully ensured. “We received no complaints from our partners,” a Gazprom representative said after the incident.

The move carries a strong blackmail potential as one third of the gas, about 32.6 million cubic metres, gets transported through this point to Europe.

One does not have to be a geopolitical expert to establish that the primary goal of Ukraine – and that of the forces behind the country – is to trigger an oil and gas embargo against Russia (opposed by Hungary) and to promote Europe’s independence from Russian gas, Kontra writes.

This means they are serving a goal that is purely political in nature.

In order to explore the background of the events, Kontra took a closer look at the company that supplies gas through Ukraine to Europe.

The company is barely a few years old

One could say that the Gas Transmission System Operator of Ukraine, Limited Liability Company, a state-owned company that transports gas via pipelines to Europe, has a long history, but it would be a false statement.

It was set up on 4 February 2019 with the aim of creating an energy company that meets European Union regulations, at least this is what one can read in the introduction section of the company history.

The current status of the company emerged more recently, on 1 January 2020 – already under the leadership of the current president, Volodymyr Zelensky – when LLC Gas TSO of Ukraine was fully separated from the Naftogaz Group and its 100-per-cent stake in the registered capital was transferred to the state-owned JSC Mahistralni Gazoprovody Ukrainy (MGU) company.

Unsurprisingly, the official CV of Sergiy Makogon, CEO of Gas TSO of Ukraine reveals that he has studied in the United States and worked for large multinational companies. Previously, he was also active at Naftogaz.

The sole owner of the owner company is the Ukrainian state, represented by the Ministry of Finance, according to MGU company data.

With its sixth sanctions package, the European Commission would extend an embargo on Russian gas and oil. Of course, the European Union cares little about the consequences. The point is the optics of looking like “good (moral) people”. We examined the current situation with Dr Oliver Hortay, the head of Energy and Climate Policy Division at Szazadveg Foundation.

MGU, the state-owed company that owns the gas transmission firm, was registered at the Kyiv court not much earlier, on 19 January 2017. The Ukrainian state, represented by the ministry, has been registered as the owner, but the company data reveals an interesting detail: the ministry has only 11 per cent of the voting rights in the company. The question arises as to who holds the remaining 89 per cent?

The acting CEO of MGU is Oleksandr Lisnichenko (now presumably vested with full powers). His appointment was justified by his past professional experience.

And although not much information about the CEO is revealed on MGU’s website, two things can certainly be discerned from his statements: he is pro-EU and anti-Russia. His career path shows that he has been in contact with a number of foreign multinationals, such as Nestle or Shell.

A document obtained by Kontra reveals that Mr Lisnichenko boasts high level US government ties, having previously been officially invited to one of Rick Perry’s 2018 speeches along with many other important US and Ukrainian leaders.

That is, a year before the major transformation, he had consulted with influential American leaders.

 

 

Mr Perry was the US secretary of energy at the time.

Documents obtained by the news site prove that Mr Perry maintained rather intense contact with Ukrainian political and economic leaders, including the head of the Ukrainian state-owned company, Naftogaz, which was later split up.

The document below, for example, presents the scenario for a cocktail party in 2017 attended by the top Ukrainian leadership, including the heads of Naftogaz.

 

In other words, two tried-and-tested men with American connections are at the helm of the Ukrainian gas transit company.

Old conflict revisited

As can be seen

Ukraine’s current blackmail is not without antecedents, and the fight in the background of the separated company is between no lesser names than Vladimir Putin and George Soros.

To start with, it is worth noting that a significant part of the gas pipelines in Ukraine were built during the Soviet era, by the Soviet Union. Following the disintegration of the Soviet Union, a significant part of the gas fields remained on Russian territory, but the transit pipelines to Europe were located partly in Ukraine and partly in Belarus. With the independence of Ukraine in 1991, the gas pipelines in the country turned into a constant source of conflict. Naturally, the firm organising gas transmission was one of Ukraine’s most important state-owned companies.

According to an article published by Forbes, the monopoly position of Naftogaz was the main cause of all the conflicts. The article recalls that George Soros himself described Naftogaz as “the gas monopoly that is the main source of corruption and budget deficits in Ukraine”.

This is a good communication strategy if anyone wants to take control of a large company with an uncertain future, Kontra comments.

It’s a fact, however, that the Ukrainian takeover of the pipelines has led to innumerable disputes as early as in the 2000s.

In general, the price set by Russia’s Gazprom was deemed too high by the Ukrainians, who failed to pay their debts. This produced some settlement disputes, and Russia ended up blackmailing Ukraine by stopping its gas transfers, while the Ukrainians tapped the gas pipelines heading to Europe.

The situation deteriorated to a point where – in January 2009 – Russia halted its gas transfers in the dead of winter and the two sides could only agree on the price of gas and the continuation of gas transfers with European mediation.

After unending disputes, then Russian Prime Minister Vladimir Putin initiated the fusion of the Russia’s Gazprom – in charge of gas extraction – and the Ukrainian Naftogaz, responsible for its transfer. There was a chance for the deal to be concluded, as Ukraine was led by pro-Russian President Viktor Yanukovych.

The merger would have solved the issue of securing the gas transfers to Europe, would have attracted Russian investment into Ukraine and would have promoted economic integration. It is also worth noting that it would have resulted in a price decrease for European consumers, according to experts. But the Ukrainian company (now under US supervision) would have come under Russian control.

The merger, however, never materialised due to the protracted tug of war and, of course, the Maidan Revolution.

This article does not discuss the 2014 revolution in Kyiv, but it is worth mentioning that one of the ignition points of the revolution was the fact that Viktor Yanukovych rejected the trade agreement with Europe and accepted the longer term and cheaper Russian contract.

This commitment was followed by an uprising and bloody clashes, after which Mr Yanukovych was ousted by the Ukrainian parliament in February 2014. The Russians later annexed the Crimean peninsula, and tensions have escalated between the two countries. Thus, the fusion of Gazprom and Naftogaz went down the drain.

George Soros emerges from the background

The fusion fell through and, following the change of government, it became clear that someone else was also vying for the acquisition of the Ukrainian state company, which boasted huge profits and an even bigger political influence. This person is none other than George Soros.

In an in-depth article published in 2016, Forbes wrote that after the 2014 Maidan Revolution and gaining influence in politics, Soros personally made sure his trusted people were put at the helm of strategic Ukrainian companies, like Naftogaz.

The management of Naftogaz was then taken over by a group of young former investment bankers with a good command of English, namely Andriy Kobolyev, Yuriy Vitrenko and Oleg Prokhorenko, with Kobolyev becoming the CEO of the Ukrainian state-owned company.

They were rumoured to be put in their current positions by Mr Soros, who wanted to introduce sweeping reforms in Naftogaz. In his interpretation, the reforms would have meant slicing up the company and privatising the pieces.

In an earlier article, the Hungarian Magyar Idok portal wrote that Naftogaz CEO Andriy Kobolyev had met with Mr Soros in person in London, between 1 to 4 November 2017, to “discuss Naftogaz’s privatisation plans” according to an official, publicly available document from the company.

Again, we are talking about the fate of a strategic, state-owned Ukrainian company.

The portal also points out that Mr Soros and Mr Kobolyev had also met two years earlier, on 10 November 2015, to discuss their privatisation plans with Georges Massoud, a representative of the McKinsey consulting firm in Kyiv.

Besides occupying the company, Soros also put enormous pressure on the Ukrainian leadership through its other propaganda organisations, such as Transparency International and the left-wing press, pushing state leaders in the direction of slicing up the gas giant – something that did happen later – under the usual slogans of stopping “Russian energy influence” and “corruption.”

As a result, the company became subordinated to Mr Soros and the United States.

As for his determination in this endeavour, Mr Soros himself argued for it on his website, in a piece specifically on Ukraine in 2015:

Reformers in the new Ukrainian government are promoting a radical “big bang” reform agenda that should have a dramatic impact. This programme seeks to break the stranglehold of corruption by reducing bureaucracy, better pay for remaining civil servants and dismantling Naftogaz, the gas monopoly that is the main source of corruption and budget deficit in Ukraine, the speculator wrote.

Zelensky has carried out the order

And, after the election of Volodymyr Zelensky, who many see as an American puppet, he did his bidding and carried out the break-up of the strategic state-owned company, and with it the transfer of Ukrainian gas companies to US interests.

Let’s see how fast this went:

  • Zelensky became president in May 2019,
  • Oleksandr Lisnichenko became Acting CEO of MGU on 15 September 2019,
  • a few days later, on 18 September 2019, the Ukrainian government approved the separation of the Ukrainian gas transmission system operator LLC Gas TSO of Ukraine from Naftogaz (a phased plan, to be precise), and
  • on 1 January 2020, the complete transformation had already taken place.

And now, in the midst of a protracted and bloody war, the Ukrainians are trying to blackmail the Russian side with the help of the US-trained figures behind them.

The aim: to end economic cooperation between Europe and Russia

An article published by the Hungarian media outlet Portfolio cites an analysis by Norwegian oil analyst Rystad Energy as a hidden reason for the Ukrainians’ decision to partially cut off Russian gas supplies through the Sohranyivka gas metering station, which could be a stumbling block in European countries’ plans to fill their underground gas storage facilities. “Ukraine, as a key transit country for Russian gas, has for the first time disrupted European gas supplies by declaring force majeure. The domino effects of the withdrawal of another pipeline from the European gas network and the loss of tens of millions of cubic metres of gas per day will complicate the European countries’ ideas on filling up their gas storage facilities,” their experts were quoted as saying.

The article explains that, according to the experts,

the new complications over gas transit will only accelerate Europe’s abandonment of Russian gas supplies. And this would fulfil the long-cherished dream of the United States and George Soros to reduce dependence on Russian gas and expand its own influence.

The article published by Kontra shows that the current Russian-Ukrainian conflict has not just started and is not limited to the control of the territory of Donetsk, but is indeed about Europe’s energy dependence, and therefore about money and even more about political influence.

 

ECONOMY POLITICS

Tags:

george soros, naftogaz, ukraine, usa, volodimir zelenszkij