Zelensky's deoligarchization: Ukrainian authorities ready to give Kolomoisky Ukrnafta back?

Author : Olena Holubeva

Source : 112 Ukraine

Having lost PrivatBank, oligarch Ihor Kolomoisky wants to win back at Ukrnafta, where he has been a minority shareholder for many years
20:51, 15 November 2021

Ukrainian oligarch Ihor Kolomoisky

Kolomoisky is trying to recover money or gas from Naftogaz as to compensation for that which was produced by Ukrnafta in 2006-2013. and allegedly withdrawn by the state without payment and delivered to the population. In the Stockholm arbitration, the oligarch sought compensation in the amount of more than $ 5 billion, which exceeds the spending of the Ukrainian budget on education and science and is about half of the cost of paying pensions. The arbitration court refused to satisfy these claims.

However, in April (after the change in the leadership of Naftogaz), Ukrnafta resumed the consideration of the case on the allegedly expropriated gas in a Ukrainian court. According to our sources, on November 29, an amicable agreement may be concluded in this case, according to which Ukrnafta may recognize the right to a volume of up to 9 billion cubic meters. m of gas. This is despite the fact that the cost of each billion cubic meters in market equivalent already reaches $ 1 billion.

Related: Russia investigates case against Kolomoysky on theft of raw materials in Tatneft, - media

It is clear that the state will not be able to pay such money to Kolomoisky. He is not counting on this. However, if NJSC recognizes a debt to Ukrnafta, Kolomoisky will be able to receive the most delicious assets of Ukrnafta in the course of the division of the company, which is also scheduled for the end of November, to pay it off. In the worst case, Naftogaz may still owe Kolomoisky. According to such a simple scheme, bypassing the Stockholm arbitration tribunal and its decision, the Ukrainian state can give the oligarch from Dnipro one of the most profitable state-owned companies in the country.

In June 2015, three Cypriot offshore companies Littop Enterprises Limited, Bridgemont Ventures Limited, and Bordo Management Limited, through which the Privat group of Igor Kolomoisky and Gennady Bogolyubov controls 42% of the shares of the largest semi-state oil producer Ukrnafta, filed a claim with the Stockholm Arbitration Court to recover more than $ 5 billion from Ukraine in the dispute over gas produced by Ukrnafta in 2006-2013. and was supplied for the needs of the population. In February of this year, the Stockholm Arbitration Court dismissed the claim. Interestingly, on the Jus Mundi website (an open database of international law and arbitration decisions) in the text of the decision on the SCC Case No. V 2015/092 notes that "the applicant does not inspire confidence, including due to the fact that his obtaining managerial control over Ukrnafta may be associated with bribery and corruption."

After that, the dispute spilled over to Ukraine. On April 29, the Kyiv Economic Court ruled to reopen case No. 910/3660/18 with Ukrnafta's claims against NJSC Naftogaz Ukrainy on the “recovery of unreasonably acquired property”.

The media drew attention to the fact that the decision of the Ukrainian court to reopen the case was made the day after the change in the leadership of Naftogaz - Andriy Kobolev was removed, and Yuriy Vitrenko was appointed to the post of chairman of the board. In this regard, the press service of Naftogaz stated that the change in the leadership of the state company and the resumption of the litigation are not interconnected, since the decision to change the leadership was made on April 28, and the appeal to the court office to reopen the case came from Ukrnafta practically a week earlier - April 19. This argument does not stand up to criticism, since the decision to replace Kobolev with Vitrenko was planned much earlier than April 28.

Related: Kolomoisky, Akhmetov, Pinchuk trade with Russia: Ukrainian authorities have no questions to them

The media are full of materials that reasonably speak of Vitrenko's loyalty to Kolomoisky. At the end of 2018, Yuriy Vitrenko was appointed curator of Ukrnafta, and at the beginning of 2019 he headed the company's supervisory board. Quite quickly Vitrenko and Kolomoisky agreed to solve the company's tax problems. More than $ 30 billion in debt had to be repaid by the state without the participation of minority shareholders, who formed this debt. And in the summer of 2019, Kolomoisky called Vitrenko his favorite among candidates for the post of prime minister.

Then Vitrenko never became prime minister. At the end of last year, Kolomoisky, according to a number of media outlets, which was confirmed by our sources, tried to push through the appointment of Vitrenko as Minister of Energy. And again it didn’t work. But it turned out with the appointment of him to the post of head of Naftogaz. And now many industry experts and journalists in conversations fear that the Naftogaz management loyal to the oligarch will make concessions on the "gas" business with all the ensuing consequences.

The story of the controversial gas, which, according to minority shareholders, was taken from Ukrnafta illegally and was used by Naftogaz for the needs of the population, began in the early 2000s. In 2001, even before Kolomoisky came to Ukrnafta, the Cabinet of Ministers adopted Resolution No. 1729, which regulated the supply of gas to the population. This document, in particular, stipulated that all gas producers in which the state owns a controlling stake must transfer all the commercial gas produced by them to Naftogaz to meet the needs of the population. Gas was purchased at a price set by the state regulator.

After Kolomoisky came to Ukrnafta during 2003-2007. the company refused to sell gas to Naftogaz at the price set by the regulator, claiming that it was below the cost of production. Ukrnafta's management did not sign the gas transfer and acceptance certificates and argued that the company's gas was “somewhere in the gas transportation system or underground storage facilities,” which at that time was controlled by Ukrtransgaz. Only in 2007, Ukrnafta agreed to sell gas to Naftogaz for the needs of the population. This happened after the interim commission of inquiry of the Verkhovna Rada on checking the situation of supplying gas to Ukrainian consumers accused Ukrnafta of selling gas intended for the population to industrial enterprises.

In compliance with the law and government decisions, Naftogaz supplied gas produced by Ukrnafta to the population until 2012. The NJSC was allegedly ready to pay for gas at the prices set by the regulator, but the management of Ukrnafta, loyal to the oligarch, simply refused to draw up agreements on the sale and purchase of this gas.

Related: Ukraine did not get documents from US regarding Kolomoysky sanctions, - National Security Council

In response, Naftogaz is filing numerous lawsuits against Ukrnafta in order to recognize the agreements on the sale and purchase of the selected gas, concluded on the terms set by the state. The next hearing on one of these claims, No. 8/88, was scheduled for November 24 by the court.

Thus, the main point of litigation between the minority shareholders of Ukrnafta and Naftogaz is that Ukrnafta is seeking to return the physical volume of gas to it or to pay monetary compensation in the market equivalent of its value (in the Stockholm Arbitration). Initially, it was about the controversial gas in the amount of about 10 billion cubic meters.

In May 2014, Ukrnafta won a victory in the Supreme Economic Court, which confirmed its right to only 2.062 billion cubic meters. m of gas. In March 2018, Ukrnafta filed a lawsuit with the Economic Court demanding to recover the remaining 8.03 billion cubic meters from Naftogaz. m of gas. In April 2018, the proceedings on this and all related cases were suspended. According to our sources, this happened on the basis of an informal agreement to end disputes in Ukraine pending a verdict by the Stockholm Arbitration. This case has now been reopened. In August, Ukrnafta raised its claims to nine billion cubic meters of gas.

The text of the "expanded position of NJSC Naftogaz of Ukraine" in relation to the lawsuit of Ukrnafta, which was published on the official website of the NJSC yesterday, says that information that Naftogaz has reached an agreement with businessman Igor Kolomoisky or has signed an international agreement with Ukrnafta. the agreement, or agreed to give 3.5 billion cubic meters of gas or another volume of gas or cash, is not true. "The assumptions that Naftogaz has already given some volumes of gas to Kolomoisky are also untrue. Naftogaz has not transferred any volumes of gas or financial resources to Ukrnafta since the moment it was headed by Yuriy Vitrenko (April 28, 2021), "the text says.

It is also noted that Naftogaz does not agree with the claims of Ukrnafta regarding the transfer of 9.07 billion cubic meters to it. m on account of allegedly taken from the company without payment in 2006-2012. And he also does not agree with Ukrnafta's demands to compensate it for the cost of the disputed gas volumes at the current market price.

At the same time, in its reporting for the first half of 2021, Naftogaz openly admitted that Ukrtransgaz's underground storage facilities store 0.7 billion cubic meters of Ukrnafta gas. That is, even now Ukrnafta's minority shareholders may demand to transfer gas worth almost UAH 20 billion to them.

It should be noted that Ukraine has already recognized the right of Ukrnafta minorities for 2.06 billion cubic meters. m of gas - the volume by which the company won a case in the Supreme Economic Court in 2014. This volume was closed as a result of a deal in which Ukrnafta was exempted from tax debt.

Related: U.S. accuses Ukrainian oligarch Kolomoisky of stealing, laundering billions of dollars

The debt was formed in March - August 2015, when, before the resignation, the previous management (Kolomoisky agreed to the appointment of six representatives of the new Naftogaz team to the Supervisory Board of Ukrnafta and the appointment of Mark Rollins to the post of chairman of the board) signed about 450 contracts, due to which Ukrnafta lost the ability to pay taxes to the state. Under these agreements, the company sold its crude oil on a deferred payment basis or paid in advance for refined products on a deferred payment basis.

Exactly how much gas Naftogaz will be ready to give to Kolomoisky at the expense of the old debt and, most importantly, at what price is unknown. We can only find out from the text of the settlement agreement, the signing of which is scheduled for November 29. Of course, if its text is public. And the agenda of the extraordinary meeting of shareholders of Ukrnafta, which is scheduled for November 30, will consider draft decisions on "providing consent to the settlement of a dispute over natural gas produced by PJSC Ukrnafta in 2007-2013 (including on the basis of agreements on joint activities ", as well as" a draft agreement on an amicable agreement in the framework of court case No. 910/3660/18 - on the recovery of 9 billion cubic meters of gas from the NJSC).

Over the past three years, the government has been preparing for the division of Ukrnafta's assets between the state and Kolomoisky. The final configuration will be approved at an extraordinary meeting of Ukrnafta shareholders on November 30.

It is noteworthy that back in 2018, Mark Rollins, who at that time was the CEO of Ukrnafta, confirmed that the division of Ukrnafta by selling part of its assets to private shareholders or NJSC Naftogaz is considered as one of the options for paying off the tax debt...

At that time a configuration was being considered, in which gas and gas condensate fields were diverted to Naftogaz, and the oil division (production and retail network of 537 gas stations), LPG plants to Privat.

Related: U.S. accuses Ukrainian oligarch Kolomoisky of stealing, laundering billions of dollars

What do we have now? Ukrnafta has already been cleared of debts, but Naftogaz is burdened with a debt for gas taken over ten years ago. Of course, much will now depend on how much Naftogaz's debt on the disputed gas will be recognized and at what price this gas will be taken into account. If the state decides to follow Kolomoisky's wake, then in the worst-case scenario, the recognized volumes of gas and their price will even cover the cost of Ukrnafta's gas business, which may force the state to transfer all the best and most profitable assets to Kolomoisky.

Ukrnafta's gas business is a small part. It only generates a tenth of the company's revenue. If Naftogaz had no debts and, as expected, the oil business went to Kolomoisky, and the gas business to Naftogaz, then, in theory, Kolomoisky would have to pay extra. But now everything rests on the price and volume of Naftogaz's debt for the gas taken away from the population about ten years ago. 

The case of the controversial nine billion cubic meters. m is in the first instance. At the same time, the date for the division of assets, in which the court's decision will definitely play an important role, has already been set for November 30. In addition, the parties are ready to conclude an amicable agreement.

Such compliance of the management of Naftogaz and Ukrnafta may be due to the fact that Vitrenko, when he was the curator of Ukrnafta from Naftogaz in 2019, led Oleg Gez, manager of the company from the orbit of Igor Kolomoisky, through a competition to the leadership of Ukrnafta. It was with him that Vitrenko signed an agreement to write off Ukrnafta's tax debt, and now, it seems, is ready to agree on two other important issues. It remains only to find out whether it is in the interests of the state or Kolomoisky.

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