BBC: Ukrtransneft and Ukrneft: two stories with a common denominator

Since March 19, the Supervisory Board of Ukrtransneft decided to remove the chairman of the board of the company, Alexander Lazorko, from his post, and the Verkhovna Rada approved changes to the law on joint stock companies, which, according to its developers, should return control of Ukrneft to the state, the situation Around these two enterprises, the conflict escalated to the point of armed confrontation.

The Chairman of the SBU stated on the President’s instructions that “every person who is in Ukrnafta was disarmed, and the Minister of Internal Affairs gave businessmen and their security structures a day to withdraw their employees with weapons from public places.

The confrontation around the two oil assets broke out quite unexpectedly, because the last five years have attracted much more attention to energy disputes related to gas, coal or electric power.

Ukrtransneft

Ukrtransneft is 100% state-owned enterprise. That is why, when on March 19, after a change in the management of the company, according to the decision of the Supervisory Board, the rights of the suspended chairman of the board Alexander Lazorko came to defend the rights of the chairman of the Dnepropetrovsk Regional State Administration Igor Kolomoisky, journalists and observers asked what he was doing there.

The public joint stock company "Ukrtransneft" has combined the capacities of two oil pipelines - "Druzhba" and "Dnieper Main Pipelines", that is, it makes it possible to transport oil from east to west and from north to south of the country.

“Ukrtransneft” is the blood vessels of the entire system. If these vessels stop working for some reason, the entire complex will stop,” this is how Igor Kolomoisky himself explained the importance of the company in an interview with the 1 + 1 TV channel.

In the same interview, Mr. Kolomoisky explained his presence in the Ukrtransneft office after the change of management by saying that he was “the person who was related to the appointment of Alexander Lazorko to this position.” He also stated that at that time the company “was part of the vital interests of enterprises that directly depend on how Ukrtransneft will work or not work,” clarifying that we are talking about the Kremenchug Oil Refinery (ORP) and transshipment facilities in the Odessa region.

Officially announced claims against the management of Ukrtransneft were related to the downloading and use of technical oil from oil pipelines for processing at the Kremenchug Oil Refinery, as well as the allegedly inflated cost of storing state oil at the oil refining facilities of the Privat group. In addition, it was said that the accounts of a state company with about 2 billion UAH are located in PrivatBank.

It was also assumed that Yuriy Melnyk, who was appointed to temporarily act as head of Ukrtransneft, would, first of all, conduct an audit of the company’s financial activities. However, as Igor Kolomoisky said after a meeting with the president, it was agreed that the audits would be carried out by the Big Four audit companies.

Ukrneft

In Ukrnafta, the state (represented by NJSC Naftogaz) owns 50% + 1 share, and in the Privat group, according to various sources, at least 42%. Igor Kolomoisky explained his presence at her office, as well as the strengthening of security and the construction of an iron fence on Sunday evening, as “planned work against the raiders.”

Ukrnafta is the largest oil and gas producing company in Ukraine. In oil production, its market share is 68%, and in gas production - 11%. The company includes six regional production divisions, three gas processing plants, three drilling departments, as well as a network of 563 gas stations in almost all regions of Ukraine.

When on March 19 the parliament adopted changes to the law on joint stock companies (regarding the reduction of the quorum required for a meeting of shareholders from 60% to 50% + 1 share), in the session hall and on the sidelines they only talked about how this law would deprive the Privat group of control over Ukrnafta.

The initiators of the adoption of the law argued that this would allow the state to restore the normal order of the meeting of shareholders and dividend payments.

However, on March 20, Ukrnafta issued a statement saying that both the meeting of shareholders and the payment of dividends take place without violations and in accordance with the law.

“In the period from 2004 to 2014, the General Meeting of Shareholders of PJSC Ukrnafta made decisions on the distribution of the enterprise’s profits based on the results of financial and economic activities in 2003-2013 for a total amount of 13110826 UAH,” says the message from Ukrnafta. . They also note that more than half of the dividends were received by the state represented by NJSC Naftogaz.

However, according to information released by Mustafa Nayem, a deputy from the Petro Poroshenko Bloc, the company’s tax debt (mainly rent payments) amounts to UAH 2300000000, and the unpaid dividends for 2011-2013 amount to UAH 3700000000.

So it should not be ...

Ukrtransneft gives control over both oil production and refining. This falls under the category of "infrastructure company" - like a railway, or a power line, that is, something that is important not only in itself from a profit point of view, but also something that affects related sectors - oil production and refining. , says Mikhail Gonchar, former deputy director of Ukrtransneft and president of the Strategy XX Center for Global Studies. He explains what the connection with Ukrnafta and the Privat group is:

Ukrnafta is the main production asset, partly privatized and partly state-owned. At the same time, de facto, this company has become practically private, since the Privat group has key positions in management, disproportionate to the existing package, because at one time the state simply withdrew from control over the company.”

Of the six oil refineries (refineries) that exist in Ukraine, only Kremenchug is currently operating (owned by Ukrtatnefta, 43% owned by NJSC Naftogaz), but “it is also under the control of the Privat group,” says Mikhail Gonchar.

The “Group” Privat “through the 100% state-owned company” Ukrtransneft “essentially created a vertically integrated structure where there are all 3 segments: production, transportation and refining of oil and the sale of petroleum products through a network of gas stations, which is also owned by the group “Privat”. - explains the expert. “All this resulted in the creation of a private monopoly in the oil sector, with all the ensuing consequences.”

This situation, which has resulted in a conflict around both companies, is completely unacceptable and, at the same time, not unique in Ukraine, says the director of energy programs at the Razumkov Center, Vladimir Omelchenko.

“It’s not normal when a civil servant, who supposedly has nothing to do with any companies, and state-owned ones at that, behaves like this. But we also know that Mr. Kolomoisky is a powerful businessman whose interests include the refining and sale of petroleum products,” says Omelchenko, and explains: “This link - Ukrtransneft - is like an artery that connects Kolomoisky’s business, and is very important for him.”

On the other hand, notes Vladimir Omelchenko, all this “does not mean that the people who initiated the dismantling of this issue are acting in the interests of the state.”

... but

“There are fears that behind the fanning of this are people who work for the interests of other business groups that are competitive with Kolomoisky,” says Vladimir Omelchenko, calling the conflict “an action disguised as state interests.”

Doubts that in the oil conflict we are talking about the protection of state interests, has Mikhail Gonchar. If indeed it is about restoring state control over its share in oil assets, he says, the way this happens causes many questions:
“The method is absolutely ridiculous, and, one might say, gangster. This gives rise to both questions and rejection. In order to restore order in this area, the actions of other competitive oligarchic groups are visible behind the actions that were supposedly supposed to reflect national interests.”

The consequences of this can be very negative, both for the state and for business, as well as society, says Mr. Gonchar.

Both experts pay attention not only to the error of the methods, but also to the time when the conflict arose.

“It seems illogical that the authorities began to restore order, if we assume that this is the case, with the oligarchic group that advocates for the interests of Ukraine. One can doubt the depth of Kolomoisky’s patriotic motives, but the important thing is that he, unlike the other oligarchic fraternity, was perhaps the only major businessman who managed to organize both defense and protection within the Dnepropetrovsk region, partly Zaporozhye and Odessa. “- says Mikhail Gonchar.

“Of course, we need to get rid of the influence of business in public administration. But this must be done comprehensively, says Vladimir Omelchenko. “If everything ends with the change of one oligarch to another, and the conflict spreading to the coalition, this will not lead to anything good.”