Story of “Yuzgaz B.V.”, or how not to lose the biggest shale gas field

The fate of the largest shale gas field is being determined today. There are two options: either to attract real investors, or to give Yuzivka field for a song and even with additional bonuses to same old oligarchs in investors’ clothing.

In 2013 we got excited that the European giant «Shell» wanted to extract shale gas in Ukraine, due to which it would be possible to abandon the imported gas for at least several decades. Unfortunately, because of the war, «Shell» walked away, and Ukraine has lost billions of dollars of investment and cheap gas. But the place in the sun couldn’t stay empty for long and, suddenly, another European company – “Yuzgaz BV” – decided to supplant. Only this time the company was a dark horse with a few-month history of activities and associated with Ukrainian oligarchs. Its founder is Emerstone Energy investment fund, a member of the Emerstone Capital Partners owned by businessman Yaroslav Kinakh.

When the national joint stock company “Nadra Ukrayiny” announced a competition to attract investors, this exact company got a landslide victory. However, the conditions of the competition and information about the participants were not publicly announced – neither the media nor the public knew about the competition, and even MPs are not informed about the beneficiaries of the companies.

Only when we paid attention to this the Government suddenly “came round”, and at the meeting on November 2, 2016 it rejected the company’s application to participate in the development of gas storage facilities.

However, the devil is in the details. According to our legislation, within 3 months of receipt of a request for the consent to assign the rights and obligations of the investor, the Cabinet of Ministers shall either officially refuse the transfer or agree to it. In the case of absence of such a refusal, it is believed that the Government accepts the proposal under the principle of a tacit consent. In our situation no one has seen a written refusal – we have only heard about it.

At the meeting of the Government, Volodymyr Hroisman urgently instructed Energy Minister Ihor Nasalyk to prepare a justified refusal for “Nadra Yuzivska” and “Yuzgaz B.V.” within the subsequent 24 hours. It would seem that this whole “Yuzgaz B.V.” thing should be over now; however, there is still no proof the Ministry has complied with the instructions of the Prime Minister.

Taking into account the fact that this decision of the Government is verbal and recorded only (!) in the minutes of the meeting, there is a reasonable suspicion that “Yuzgaz B.V.” has not received an official refusal after all. Back on November 15, 2016 together with my colleagues we appealed to the Cabinet of Ministers and the Ministry of Energy to provide a copy of the written refusal sent to “Yuzgaz B.V.”. I have neither received a copy of the response nor any information about its existence. I was told that the refusal was in the minutes, but for some reasons I was denied to see them. Most likely, “Yuzgaz B.V.” has not seen any of them either.

This is not the first time that the Ministry gives evasive replies. One might get a strong impression of sabotage and ignoring. It feels as if you were communicating with yourself while the representatives of the Ministry do not hear you because they are in another dimension.

Since deputy’s appeals prove to be ineffective, on December 13, 2016 I was forced to file, together with Mustafa Nayem, a crime incident report against the Minister of Energy in connection with the failure to provide/provision of an incomplete and untimely response to the deputy’s appeal. On December 27, 2016 Kyiv Prosecutor’s Office informed me there were “no grounds for making an entry in the Unified Register of Pre-Trial Investigations”. On January 13, 2017 I filed a lawsuit against the prosecutor’s office investigator. On January 26, 2017 Pechersk court of Kyiv upheld my complaint and ordered the Prosecutor’s Office to open a criminal proceeding. And finally, on February 2, 2017 Kyiv Prosecutor’s Office informed me about the opening of a criminal proceeding against the Minister of Energy upon the fact of a possible criminal offense under Part. 1, Art. 351 of the Penal Code (obstruction of the activities of a people’s deputy). Here’s a long history of failed communication with the Ministry of Energy.

It is worth to pay tribute to the Prime Minister, who is launching very correct mechanisms of the Ukrainian economy recovery, in particular in the mining industry. But when it comes to the performance of his tasks and instructions by the Ministry of Energy, the latter is doing everything possible to avoid performing them. If we go on having such a gap in the executive branch, if the Ministry remains deaf to the cries of those who see their mistakes, we will lose our best state assets and will forever remain the “third world” state.

The oligarchs, on the contrary, will continue to prosper at the expense of the Ukrainian people’s property. We all know very well how they are using our strategic resources at the example of the situation with coal…

Viktoriya Vojtsitska
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