Swiss firm involved in Russia gas conflict

15th January 2009, Comments 0 comments

RosUkrEnergo's role in the Russian-Ukrainian gas conflict is questioned.

ZURICH - In the midst of the Ukraine-Russia gas dispute, the role played by a Swiss-based firm, RosUkrEnergo, as an intermediary between Russian gas giant Gazprom and Ukrainian interests, is puzzling observers.

The normally hugely profitable firm was recently selling Russian gas to Ukraine at a loss, and its ownership structure is equally confusing, analysts said.

"Since the very beginning people were asking questions about the necessity of RosUkrEnergo ... We see no need for intermediaries to do the work that Gazprom can do for itself", said Diarmid O'Sullivan, a member of the non-governmental watchdog Global Witness.

Located in the central Swiss canton of Zug, a low-tax haven that is home to major global commodity traders, the firm is jointly owned by Gazprom and Ukrainian entrepreneurs through an Austrian company, Centragas.

Formed in 2004, the intermediary employs four people in Switzerland and reported sales of about USD 10 billion dollars (EUR 7.6 billion, CHF 11.2 billion) in 2007.

It says it purchases gas from Uzbekistan, Turkmenistan and Kazakhstan and covers about three-quarters of Ukraine's gas needs. About a fifth of the company's gas goes to Europe, mainly Poland, Hungary and Romania.

Ukrainian Prime Minister Yulia Tymoshenko, who used to work in the gas industry, on Wednesday accused RosUkrEnergo of causing the breakdown in negotiations between Russia and Ukraine in December.

"The negotiations collapsed because Ukrainian politicians tried to keep RosUkrEnergo as an intermediary", she told reporters.

Meanwhile in Moscow, Russia's Audit Chamber said it was launching an investigation into the Russia-Ukraine gas trade, including a focus on the role played by RosUkrEnergo.

"We don't understand where the money is going. Ukraine is not paying us and this concerns above all RosUkrEnergo", said Audit Chamber head Sergei Stepashin.

Global Witness, which works against corruption in international trade, noted that it "can't see any reason for RosUkrEnergo to be in the trade" of gas between two former Soviet bloc countries.

In October 2008, Russia and Ukraine signed a deal that allows Gazprom and Naftogaz to conclude direct contracts from 2009, the NGO noted, expressing surprise that "the intermediary is still there".

Asked about its role as an intermediary, RosUkrEnergo's spokesman would only say that he was "happy if we did not have to continue to do business at a loss" in Ukraine.

The company could develop into an independent exporter of gas for Europe, he added.

[AFP / Expatica]

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