Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Agents Raid Ukraine's Gas Company

APSecurity agents raiding Naftogaz's headquarters in Kiev on Wednesday in an operation that paralyzed the firm and could threaten gas supplies to Europe.
Masked and armed government agents swooped down on the headquarters of Ukraine's national gas company in Kiev on Wednesday in a raid apparently linked to its recent deal with Gazprom that could undermine gas supplies to Europe.

Ukraine's National Security Service, which answers to President Viktor Yushchenko, sent the agents to seize documents as part of an investigation into the company, Naftogaz Ukrainy, the security service said.

The raid came amid bitter political rivalry between Yushchenko and Prime Minister Yulia Tymoshenko, who brokered the Naftogaz deal with Gazprom to end a gas supply feud that left thousands of people in Europe without heat in January.

An ally of Tymoshenko, First Deputy Prime Minister Oleksandr Turchynov, said the security agents were looking for the original copy of the contract. If they seize it, Naftogaz will be unable to clear incoming gas at customs for domestic supplies or transit to Europe, said the company's legal department chief, Serhiy Davydenko.

Turchynov urged security agents to ignore the orders concerning Naftogaz, saying they were illegal.

"You mustn't become a tool of criminals and corrupt officials who, with the consent of the president, run the [security] service or coordinate its activity," he said at a news conference, Interfax reported.

Yushchenko's office said the raid was completely legal. "The president believes that it is in fact resolve and firmness that are required in investigating abuses," it said in a statement.

Tymoshenko, who was in France on Wednesday for a meeting with President Nicolas Sarkozy, told reporters that the raid aimed to paralyze Naftogaz and "frighten people."

Gazprom said in a statement that it was "concerned." Gazprom spokesman Sergei Kupriyanov said separately that the company hoped the investigation would not affect its exports to Europe or its payments for Russian gas, the latest of which is due by Saturday.

Naftogaz said the investigation had frozen all transactions involving gas but insisted that it would not affect its operations.

Philippe Wojazer / Reuters
Tymoshenko speaking to the media after a meeting with French President Nicolas Sarkozy in Paris on Wednesday.

About 30 gun-toting men in black uniforms fanned out across Naftogaz's headquarters, blocking entrances to the offices of its chief executives and paralyzing the company, spokesman Valentin Zemlyansky said on Ekho Moskvy radio. An ambulance took a deputy chief accountant to the hospital to be treated for high blood pressure, the company said.

The National Security Service is investigating Naftogaz for its seizure of 6.3 billion cubic meters of gas from a private company that intended it for transit, said Valery Khoroshkovsky, the security service's first deputy chief. It also detained a customs official Tuesday as part of the investigation, which it opened Monday.

"We need to speak about the creation and existence of a serious group of public officials, including government leaders, who pulled off a rather illegal transaction," Khoroshkovsky told the parliament.

Khoroshkovsky did not name the company that forfeited the gas but Tymoshenko later said it was RosUkrEnergo, the gas trader that acted as an intermediary between Gazprom and Naftogaz until it was cut out with the Tymoshenko-backed supply contract.

"This is a fight over 11 billion cubic meters of gas that now belongs to Ukraine. The shadowy corporation, RosUkrEnergo, wanted to claim ownership, but the government will not allow that," Tymoshenko said.

Before flying to Paris, Tymoshenko said the State Customs Service cleared 11 billion cubic meters of gas in Naftogaz's underground storage facilities in favor of Naftogaz despite RosUkrEnergo's insistence that it owned the gas. Naftogaz bought the gas from Gazprom, she said, Interfax reported.

Gazprom, under the January contract, agreed to transfer to Naftogaz the right to demand a $1.7 billion debt from RosUkrEnergo, said Kupriyanov, the Gazprom spokesman. Naftogaz could have chosen to seek RosUkrEnergo's gas to recover the debt, he said.

Ukrainian billionaire Dmitry Firtash, who owns 45 percent of RosUkrEnergo, has said the gas is contracted for delivery to Poland, Romania and Hungary. RosUkrEnergo spokesman Andrei Knutov reiterated Wednesday that the company didn't agree to hand over its gas to Naftogaz.

Gazprom owns half of RosUkrEnergo. Another Ukrainian businessman, Ivan Fursin, owns the remaining 5 percent.

It remained unclear Wednesday why the investigation concerned just a portion of the 11 billion cubic meters of disputed gas.

Ukraine's State Customs Service followed the law in assigning 11 billion cubic meters of gas to Naftogaz, said customs chief Anatoly Makarenko.