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09KYIV419, UKRAINE: RAID ON NAFTOHAZ LATEST TWIST IN

March 5, 2009

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Reference ID Created Released Classification Origin
09KYIV419 2009-03-05 16:33 2011-08-30 01:44 CONFIDENTIAL Embassy Kyiv

VZCZCXRO1073
PP RUEHDBU
DE RUEHKV #0419/01 0641633
ZNY CCCCC ZZH
P 051633Z MAR 09
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC PRIORITY 7417
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZG/NATO EU COLLECTIVE PRIORITY
RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 KYIV 000419 
 
SIPDIS 
 
DEPT FOR EUR/UMB 
NSC FOR KKVIEN 
EEB/ESC/IES FOR SGALLOGLY, LWRIGHT 
DOE FOR LEKIMOFF, CCALIENDO, KBOURDREAU 
USDOC 4231/ITA/EENIS/NISD/CLUCYK 
 
E.O. 12958: DECL: 03/05/2019 
TAGS: ENRG EFIN EPET PGOV PINR PREL UP RS
SUBJECT: UKRAINE: RAID ON NAFTOHAZ LATEST TWIST IN 
YUSHCHENKO/TYMOSHENKO SQUABBLE 
 
REF: A. KYIV 107 
     B. KYIV 134 
 
Classified By: Economic Counselor Edward Kaska for reasons 1.4 b) and d 
). 
 
1. (C) Summary.  On March 4, forces from the Ukrainian 
National Security Service (SBU), which falls under the 
authority of President Victor Yushchenko, raided Naftohaz 
headquarters to seize documents related to the transfer of 11 
billion cubic meters (bcm) of stored RosUkrEnergo (RUE) gas 
to Naftohaz.  RUE co-owner Dmytro Firtash alleges that Prime 
Minister Yulia Tymoshenko pressured customs officials to 
falsify documents and clear 6.3 bcm of the gas through 
customs on February 27.  Naftohaz officials protested the SBU 
actions at the District Court and received an injunction 
halting the SBU action.  Tymoshenko claims that the SBU is 
defending RUE's corruption.  In the short run the actions 
will probably not disrupt the Russia/Ukraine gas deal signed 
by Tymoshenko and Russian Prime Minister Vladimir Putin in 
January.  Whether the ongoing dispute could disrupt the 
agreement in the medium to long term may depend on how far 
Yushchenko is prepared to go to defend RUE interests.  End 
summary. 
 
SBU Goes After Naftohaz 
------------------------ 
 
2. (SBU) Masked SBU forces raided Naftohaz headquarters on 
March 4, to seize documents related to the alleged illegal 
customs clearance of 6.3 bcm of the disputed 11 bcm of RUE 
gas.  The troops from SBU's "Alpha" unit went to the office 
of the chief accountant and the customs section at Naftohaz. 
Naftohaz's acting director Ihor Didenko told us that the SBU 
forces were looking for the original contracts signed by 
Naftohaz and RUE from 2003 and 2004 (Didenko stated that 
Naftohaz gave copies of these contracts to the SBU), 
financial documents, and documents related to the customs 
clearance of the 6 bcm of gas.  Naftohaz employees prevented 
the SBU from taking any original documents.  Didenko 
successfully applied for an injunction to stop the SBU raid. 
In the injunction from the court, it states that the raid was 
conducted under orders from the Prosecutor General's Office. 
The court has scheduled a hearing on March 17 at which it 
will examine what legal basis the Prosecutor General has to 
open a criminal case in the matter of the 6 bcm of gas. 
 
3. (SBU) This was not the fist action taken by the SBU to 
investigate the supposed illegal transfer and eventual 
customs clearance of the gas claimed by RUE's Firtash.  Late 
in the evening on March 3 the SBU detained deputy head of 
section of energy regional customs Taras Shepitko for his 
alleged involvement in the customs clearance of 6.3 bcm of 
gas.  The Tymoshenko Bloc (BYuT) argued that the arrest was 
an attempt by Yushchenko to torpedo the gas deal signed by 
Tymoshenko and Russian PM Putin in January.  Several BYuT 
deputies and lawyers came to the SBU building on the night of 
March 3 reportedly to give legal assistance to Shepitko. 
 
4. (SBU) On the morning of March 4, following a presentation 
on the detention of Shepitko from SBU deputy head Valeriy 
Khoroshkovsky to Rada deputies, 226 deputies voted to 
instruct Speaker Lytvyn to ask the Prosecutor General's 
office to confirm the legality of the SBU's actions.  It was 
shortly after this vote that BYuT deputies--along with TV 
cameras--made their way from the Rada to Naftohaz offices, 
where the SBU had already begun its raid.  The BYuT deputies 
and Alpha troops scuffled before the troops eventually let 
the deputies enter the building. SBU forces also raided 
Naftohaz's daughter company, UkrTransGas, on the morning of 
March 5. 
 
The Disputed Gas 
----------------- 
 
5. (C) The dispute over the ownership of the 11 bcm of gas 
arose with the signing of the January Tymoshenko-Putin gas 
agreement (Ref A).  As part of the agreement reached between 
Gazprom and Naftohaz, Gazprom transferred to Naftohaz a $1.7 
billion debt owed to it by RUE.  Gazprom also transferred to 
Naftohaz 11 bcm of gas owned by RUE, of which Gazprom owns a 
50 percent stake.  This gas was intended, according to PM 
Advisor Vitaliy Haiduk, to be used by Ukraine as technical 
 
KYIV 00000419  002 OF 002 
 
 
gas (Ref A) and was "sold" to Ukraine at a highly discounted 
rate (approximately $154/tcm based on the RUE debt 
transferred from Gazprom to Naftohaz).  RUE's Firtash claims, 
however, that both the transfer of the debt from Gazprom and 
the transfer of the gas to Naftohaz could not happen without 
his agreement.  Naftohaz Acting Director Didenko told us that 
the gas was Naftohaz's and that Khoroshkovsky is overlooking 
the debt owed to Nafto
haz by RUE. 
 
6. (C) Late in January Naftohaz went to customs officials to 
ask for the gas to be cleared through customs. 
Khoroshkovsky, at the time head of the customs service and 
with links to RUE's Firtash, refused to do so and was forced 
out by the Cabinet of Ministers on January 28.  President 
Yushchenko quickly named Khoroshkovsky First Deputy of the 
SBU.  According to Firtash and press reports, some 6 bcm of 
the gas cleared through customs on February 27.  Firtash told 
the Ambassador on March 2 (septel) that the chief accountant 
at Naftohaz refused to sign the paperwork and was replaced 
under orders from PM Tymoshenko. 
 
7. (C) Comment.  The SBU raid on Naftohaz appears to be yet 
another episode in the extended political struggle between 
the President and the Prime Minister.  In February Yushchenko 
instructed the Prosecutor General's Office to launch a probe 
into the gas agreements with Russia.  At the time Yushchenko 
criticized the deal and stated that Tymoshenko did not have 
the authority to agree to the terms set forth in Moscow, 
although he did state that Ukraine would abide by the terms 
of the agreement.  Tymoshenko's alleged actions to clear RUE 
gas through customs for transfer to Naftohaz may in fact be 
illegal.  If so, Yushchenko may have found an Achilles heel 
in the gas agreement that will allow him to strengthen his 
attacks on the Prime Minister.  End comment. 
TAYLOR

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