Among the newcomers to the gas industry, Martynenko's friends have been the most successful (read more: Nikolai Martynenko: Why is the "nuclear oligarch" being so actively dumped?) and former regionalists from Yanukovych's orbit
More than a year has passed since the Verkhovna Rada adopted the Law on the Natural Gas Market. It was immediately hailed as revolutionary—it was intended to break the monopoly of regional and municipal gas distribution companies, which for many years had controlled the entire supply chain of natural gas to end consumers in their regions. This was to be accomplished through a commitment, consistent with European practice (the so-called Third Energy Package), to separate the functions of gas supply and transmission via pipeline.
The regional and city gas companies themselves prepared for this change in advance, creating subsidiary sales companies in the form of limited liability companies with prefixes. Beginning in the second half of 2015, these subsidiaries began signing contracts with end consumers, while their parent companies became a kind of back office, continuing to perform gas transportation functions and manage gas distribution networks.
The situation began to change this year. More and more newcomers began entering the traditional regional gas market, two-thirds of which in the country are controlled by a group linked to gas oligarch Dmitry Firtash (Read more: DMYTRO FIRTASH. THE STORY OF A TERNOPIL BILLIONAIRE). DS analyzed the 100 largest tenders since the end of 2015 to determine the extent to which newcomers to the market have encroached on the territory of gas veterans, as well as who is actually behind them.
Since the beginning of 2016, 3,7 tenders with code 06.20.1 (natural gas) have been held, totaling UAH 4,3 billion. According to DS estimates, UAH 800 million of this amount was spent through open bidding, with the rest coming from negotiations with gas suppliers. Moreover, over the past three months, 600 tenders have been held, with the "negotiators" receiving orders worth UAH 350 million, while the bidders received UAH 360 million. This means that the majority of gas is now sold through open tenders.
The first place among the newcomers goes to the Cherkasy-based company Energogazrezerv with UAH 272 million. It belongs to Oleksiy Kivenko, who served as a board member of Cherkasygaz OJSC, a member of Dmytro Firtash's group, from 2007 to 2009.
The media often refers to him as a person close to the owner of Group DF, but to date no one has been able to prove the existence of a connection between them.
In second place is Energy Trade Group, which supplied gas worth UAH 208 billion. The company's founder is Redshire Solutions, a Belize-based offshore company whose beneficiary the company lists as a certain Noreen Joseph. However, this company is actually considered close to the top management of the state-owned United Mining and Chemical Company, which manages the Irshansk Mining and Processing Plant and the Volnogorsk Mining and Metallurgical Combine. In the criminal case opened last year by the Prosecutor General's Office for the illegal development of the Mezhirechensk field, Energy Trade Group was named as a "transit company" for UMCC, conducting "fictitious business transactions" with the latter.
Media reports have long speculated that the United Mining and Chemical Company is affiliated with Mykola Martynenko, a close associate of former Prime Minister Arseniy Yatsenyuk and a key sponsor of his People's Front. Another detail: Energy Trade Group, according to DS, purchased gas from the Austrian company Antra GmbH in 2015-2016. At one time, it was headed by Leonid Marchuk, a Vienna resident with Kyiv roots. Until 2007, he was a shareholder and member of the supervisory board of several companies in Martynenko's Brinkford Group.
This same connection leads to the third-largest gas newcomer on the list, with revenues totaling UAH 122 million—Trans-Gaz Bureau. This trader's sole client is the state-owned enterprise Zarya-Mashproekt. According to Trans-Gaz Bureau's registration documents, its ultimate beneficiary is the aforementioned Leonid Marchuk.
In fourth place is Ukr-Alliance Group, with a value of UAH 106 million. Since June, this company has been registered to Kyiv resident Dmitry Radionov, but before that, its founder and director was Oleksandr Charny, who has been involved in small-scale wholesale gas supplies for over a decade, during which time he created a string of related companies. Charny, who Radionov previously worked for at Konstanta Ukraine, hasn't gone "to nowhere." Since early 2016, he has been the chairman of the board of Donetskoblgaz.
Rounding out the top five is the company "Ecometan." It is owned by Poltava businessman Mykola Loza, the former head of the regional branch of the state-owned enterprise "Spetsservis" under the Ministry of Internal Affairs, and an assistant to former Party of Regions MP Yuriy Samoylenko. "Ecometan" supplies gas primarily to businesses in the Poltava region.
Moreover, the list of gas favorites also includes some downright odious participants. For example, Gazinvest-Trading, owned by Eduard Slinko, a former top manager of Oleksandr Yanukovych, boasts an income of 28 million hryvnias.
With very few exceptions, the entry of newcomers follows the old rules—using a "negotiated procedure," bypassing open tenders, as was the practice with the former monopolies—regional and city gas companies. In July of this year, the Nashi Groshi project, which monitors public procurement tenders, analyzed three hundred purchases under code 06.20.1 (natural gas) totaling UAH 304,60 million over the past two months. It selected the 30 largest and analyzed the price of gas supplied by the existing regional gas companies through the negotiated procedure and the price in open tenders. "The most expensive gas turned out to be that purchased through a non-competitive negotiated procedure from the regional gas companies' sales divisions.
"All other deals with private traders, conducted in accordance with the new law through open tenders, provided public sector customers with gas at least 1 UAH per thousand cubic meters cheaper," Nashi Groshi writes. In this case, the only option left for the established companies is to offer their network for the sole use of gas purchased "from outside." However, the cost of this service is strictly regulated by the National Commission for State Regulation of Energy and Public Utilities (NEURC) – it ranges from 169,3 to 731,2 UAH per thousand cubic meters, depending on the region.
Read more: Nikolai Martynenko: Why is the "nuclear oligarch" being so actively dumped?
DMYTRO FIRTASH. THE STORY OF A TERNOPIL BILLIONAIRE
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