Akhillesov "Ukrtransnafta"
Yesterday, 23:38 PM. The return of Ukrtransnafta to state control will ensure access to all interested parties to Ukrnafta's oil auctions, creating competition and positively impacting prices. Theoretically, this opens the door to more flexible strategic negotiations with oil producers to attract oil transit.
The fate of the Privat Group has seen more tragic events in a single week than in the past several years. On Wednesday, March 18, for the first time in recent memory, the group purchased Ukrnafta oil at market price, without a 15-75% discount. Late Thursday evening, parliament passed a law paving the way for the state to regain legal control over Ukrnafta, which Privat has managed since 2003.
But the main events unfolded around the third episode. On Thursday morning, the supervisory board of Ukrtransnafta, a wholly state-owned oil transportation company, decided to remove Oleksandr Lazorko, a protégé of the Privat Group, from his post as chairman of the board. As a result, on the evening of March 19, the country witnessed the Dnipropetrovsk governor, armed with machine guns, "liberate" the office of the state-owned company Ukrtransnafta, give an epic interview to journalists, using profanity-laced language, and promise to deal with everyone, including the president.
So, the state and its institutions have finally demonstrated how they can and should act to restore their rights. But will they be able to defend their decision and, most importantly, move forward on the path to de-oligarchization of the country? We will receive the answer to this question very soon.
Oleksandr Lazorko is a classmate of Igor Palytsia, the Odesa governor and Igor Kolomoisky's partner in the oil business. He headed two Privat refineries in Nadvirna and Drohobych, and in 2009, he was literally carried into the chair of Ukrtransnafta, after Igor Kiryushin had been removed. There were broken windows and thugs (let's remember this detail). Confident under Yulia Tymoshenko and Viktor Yushchenko, Oleksandr Ivanovich also felt comfortable under Viktor Yanukovych and quite comfortable under the "democratic regime." Industry circles claim that Lazorko's continued leadership of Ukrtransnafta was part of the agreement between Igor Kolomoisky and Arseniy Yatsenyuk. Why is Privat so protective of its "fledgling"?
Ukrtransnafta is a strategically important link in Privat's vertically integrated oil structure. Essentially, it is the circulatory system connecting the key organs of this "organism."
Firstly, it is used to supply oil from Ukrnafta to the Kremenchug refinery Ukrtatnafta, which produces the lion's share of fuel for subsequent sale through the country's largest retail network (Avias, ANP, Ukrnafta, etc.).
Many believe that Ukrtransnafta is supplying Kremenchuk with unaccounted for oil from Ukrnafta's fields, but this can only be confirmed by a dedicated investigation, which, for obvious reasons, was previously impossible. According to sources at Naftogaz, in the first hours after the management change, staff already managed to leak a lot of interesting information.
Secondly, Ukrtransnafta is an effective tool for combating competitors, having fulfilled its role to the fullest extent—Privat no longer has any competitors in this business.
Lazorko's first step in his career as a "pipeline man" was cutting off the Odessa Oil Refinery from the oil supply route through which it had been receiving oil for decades. Why? To pump oil in the opposite direction, to Kremenchuk, which was by then occupied by Privat. Last year, Russia's Rosneft also encountered problems supplying oil to its refinery in Lisichansk, but the war negated that company's project.
Thirdly, Ukrtransnafta has a lot to gain. Under Lazorko, it transformed from an oil transportation company into an oil refining company, purchasing imported feedstock with its own money or pumping oil from its assigned pipelines, refining it at Privat refineries at the "right" rates, and selling the fuel to Privat entities.
Last straw
Ukrtransnafta's importance in Privat's business is also its vulnerability. This company is entirely state-owned, unlike Ukrnafta and Ukrtatnafta, which are also controlled by Privat through management, and where Kolomoisky holds the bank as a shareholder. Over the past year, the state-owned company's operations, led by Palytsia's classmate, have become increasingly unsightly. It was recently revealed that Ukrtransnafta is paying Privat's refineries in Kremenchuk, Nadvirna, and Drohobych approximately 2,5 million hryvnias per day for the storage of state-owned oil. Previously, the crude was stored in Ukrtransnafta's pipelines and required no additional storage costs. But in the spring of 2014, under the pretext of a separatist threat, oil was siphoned off not only from the relatively small eastern oil fields but also from other areas, particularly in Western Ukraine, where no threat existed.
Yes, it should be clarified that Ukrtransnafta is paying "bad" money not for storage, but for tank rental. "Not for storage services, but for tank rental—this formulation allowed Ukrtransnafta to bypass certain tender procedures and secure such payments," emphasizes a source at Naftogaz of Ukraine, who wished to remain anonymous, to ZN.UA. In total, Privat Group entities have received over 300 million hryvnias under this item over the past six months.
It's said that the aforementioned 300 million rubles allowed the coalition partners, the president, and "Western partners" to back Yatsenyuk into a corner: either he gives the go-ahead to the Ukrtransnafta supervisory board, comprised of Naftogaz employees, to fire Kolomoisky's man, or he reveals himself completely. Sources at Naftogaz say Yatsenyuk gave the order, and the formal basis for the supervisory board's vote was an order from the Minister of Energy and Coal Industry, Demchyshyn. "A Cabinet directive isn't needed for a decision to temporarily remove the chairman of the board of Ukrtransnafta; an order from the Ministry of Energy and Coal Industry is sufficient," a source at Naftogaz asserts. The fact that Naftogaz is completely within his orbit and is unlikely to act independently also supports the claim of approval from the prime minister.
Elephant Dance
Elephants can dance, and it's a truly captivating sight when it's in harmony with nature, not forced by a mahout. In the case of Ukrtransnafta, we witnessed an elephant dancing in a china shop.
The "special operation" to remove Lazorko was executed brilliantly. The key to its success was the ceasefire, which prevented the "enemy" from taking countermeasures.
On March 19 at 11:00 a.m., the company's supervisory board decided to remove Lazorko and appoint Yuriy Miroshnik as acting head of the board of Ukrtransnafta.
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Around 12:00 PM, the new director and Savchenko, the head of the supervisory board, arrived at the Ukrtransnafta office. The company's head office security guards' attempts to barricade themselves inside were quickly thwarted by unidentified plainclothes men, who, according to our sources, were officers from the SBU's Alpha special forces unit (this detail is important, as it indicates the involvement of the presidential chain of command in the process). A confused Lazorko was forced to leave the premises.
"To prevent the supervisory board's decision from being challenged in court, Lazorko was not fired, but suspended for the period from March 19 to August 10, 2015, essentially until his contract expires," explains one of the Ukrtransnafta supervisory board members, explaining the details of the transaction. A little later, at a press conference convened at 4:00 PM, Oleksandr Lazorko would essentially say he had nothing to complain about—everything was legal. The flushed Oleksandr Ivanovich's only complaint was that he hadn't been given an explanation for his dismissal. That may be true, but the owner—in this case, the state—is under no obligation to do so. Especially since the defendant has only been suspended for now.
The Dnipropetrovsk governor took a different tack when, on the evening of March 19, he descended on the Ukrtransnafta office with machine gunners and members of parliament, led by Vitaly Khomutynnik, who also fully revealed himself in this situation. Kolomoisky declared that Yuriy Miroshnik had "appointed himself," carried out a corporate raid, and, as his impassioned speech suggests, was a Russian saboteur.
The irony is that in June 2009, Privat installed Lazorko as head of the oil transportation company using the same scenario that led to his dismissal on March 19, 2015. There was also a decision by the supervisory board to remove the chairman of the board, Igor Kiryushin, and the same crush and broken windows in the office at 18 Kutuzov Street. At the same time, Kiryushin, being far from an angel, did not pump almost 1 million tons of oil from the pipelines entrusted to him for subsequent processing and did not reduce the volume of oil transportation by more than half, as happened under Lazorko (in 2014, just over 17 million tons were transported through Ukrainian oil pipelines, while in 2009 it was 38,5 million).
What was not there in 2009 was a high-ranking government official from Dnipropetrovsk or any other government official who would declare that he had raised two thousand fighters and was going to the president... to talk about Ukrtransnafta.
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So, Ukrtransnafta is 100% state-owned, and de jure, Mr. Kolomoisky has no rights to it. The decision to remove Lazorko was made with the joint participation of Poroshenko and Yatsenyuk, and the state has finally demonstrated how it should and can act.
Perhaps we should simply draw a line under the sand and not prioritize investigating the company's activities over the past few years; there's already a lot to contend with. The effect will be felt regardless. Oil needs to be withdrawn from Privat's refineries, as its fate is now particularly concerning. The value of the 300 tons of oil stored there is approximately UAH 4,5 billion.
Furthermore, returning Ukrtransnafta to state control will ensure access for all interested parties to Ukrnafta's oil auctions, which will create competition and positively impact prices. Currently, everyone understands that attending Ukrnafta's auction is futile, as Ukrtransnafta will refuse to pump the purchased resource under any pretext except to PrivatBank's Ukrtatnafta—a trap from which there is no escape. It's also possible that state control will allow Ukrnafta to dramatically increase its production figures, and Ukrtatnafta's refining figures. This translates into rent, excise duties, and other taxes for the budget.
Theoretically, this opens up the possibility of more flexible strategic negotiations with oil producers to attract oil transit. In recent years, everyone has realized that negotiations with Ukrtransnafta are like negotiations with Privat, not with the state. However, hopes for a revival of former transit volumes are slim—over the past six years, "big" oil has found other routes, and changing them will be extremely difficult.
But all this will only happen if the state keeps Ukrtransnafta within its orbit. This is a crucial test for both Poroshenko and Yatsenyuk.
DOCUMENTS see on the website ZN
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