Editor’s Note: This article has been updated with Naftogaz’s response.
Yuriy Vitrenko, executive director of Naftogaz Ukraine, will be leaving the state energy giant in two months after his position was abolished by the company’s management, Vitrenko wrote on Facebook on May 13.
“It is symbolic that I am going to be fired from Naftogaz in a situation when our team, which I have the honor of leading, showed record profits in 2019,” Vitrenko said.
Although the final decision on his dismissal was made by the Cabinet of Ministers, Vitrenko blamed Andriy Kobolyev, Naftogaz’s CEO, for firing him, saying that “he organically fits” into today’s Ukrainian authorities.
“So, they ‘agreed’ with Kobolyev again,” Vitrenko wrote.
Naftogaz issued the following statement on Kobolyev’s behalf.
“Naftogaz continues to follow its strategic vector and transforms the group to be lean and competitive in Ukraine’s gas market. To achieve this goal, Naftogaz continues to streamline its organizational structure, distribution of functions, and responsibilities among departments. Transformation removes overlap in tasks, simplifies interaction among departments, and rearranges the structure to increase the group’s efficiency. A number of functions have been already restructured in the integrated gas division, in long-term planning, market research, and long-term forecasting, corporate communications, general operating management, etc. The functions of Naftogaz group’s executive officer will be restructured in the same way.
“Otto Waterlander, Naftogaz group chief operating officer – chief transformation officer, will be responsible for operations and transformation processes, including the implementation of a new operating model and divisional management structure, the implementation of cross-functional processes, and the development of process databases. Peter van Driel, chief financial officer, will be responsible for the cooperation with Ukrnafta.
“Naftogaz keeps its firm position on protecting the interests of Ukraine in international arbitrations. In the case over the illegal expropriation by Russia of assets of Naftogaz group, hearings will be held in November 2020 in The Hague. Naftogaz will be represented by Yaroslav Teklyuk, chief legal officer, who was one of the top team members involved in Naftogaz’s Stockholm cases since 2014. The team will be reinforced by Lana Zerkal, who had a number of outstanding results in Ukraine’s litigation with Russia over the annexation of Crimea.”
Reasons for dismissal
Vitrenko started at Naftogaz in 2002, but had breaks in service during which time worked in private investment before returning to top Naftogaz management in 2014, after the EuroMaidan Revolution that ousted President Viktor Yanukovych that year.
Vitrenko believes that he was dismissed for two major reasons: Naftogaz has no further aspirations to effectively protect Ukraine’s interests vis-a-vis Russian gas giant Gazprom and fears his opposition to corruption in the gas sector.
In the past several years, the Arbitration Institute of the Stockholm Chamber of Commerce ruled in Ukraine’s favor several times against Gazprom. The initial ruling in 2018 meant that Gazprom owed Ukraine $2.6 billion for failing to deliver gas to the country for further transit to Europe.
Vitrenko said that this saved Ukraine billions of dollars and prevented the country from being “brought to its knees.”
After Naftogaz “defeated Gazprom, Russia and Russian President Vladimir Putin’s regime,” it became a “bone in their throat,” he said.
According to Vitrenko, Naftogaz’s balance sheet previously favored importing gas from Russia over transporting it through Ukraine to Europe. That meant that some $5 billion was paid to Russia, which has been waging a war in eastern Ukraine for the past six years.
Additionally, Naftogaz’s team was able to break up Russia and its Ukrainian business partners’ plans to earn extra money, Vitrenko said. According to him, the latest gas contract signed for 2020 makes it impossible for transit profits to be diverted for private enrichment, instead of ending up in the country’s budget. That contract also guarantees a minimum annual income of $7.2 billion, Vitrenko said.
While it is not Naftogaz’s direct responsibility to detect and fight corruption in Ukraine, Vitrenko said that the company’s team had managed to reduce graft sharply in the local gas market. It mainly did this by fighting corruption during procurement by UkrGasVydobuvannya, which is part of Naftogaz and produces 70% of all gas extracted in the country, and UkrTransGaz, Ukraine’s gas transportation system operator.
Vitrenko said Naftgogaz had also curbed corruption in Ukrnafta, an oil and natural gas extraction company that was de facto controlled by oligarch Ihor Kolomoisky. Naftogaz owns 50% of shares plus one in the company.
Vitrenko said that, before 2018, when Naftogaz started to actively defend its rights in the company, there was a “large-scale withdrawal of money” from Ukrnafta.
“Oligarchs and corrupt people have never enjoyed the way we systematically reduced the space for corruption,” he wrote. “But, when you fight corruption, it starts fighting you.”
Alternative view
Not everyone agrees with Vitrenko’s assessment of the situation surrounding his dismissal.
According to Andriy Gerus, head of the parliamentary energy and utilities committee, unlike Kobolyev and other members of the company’s top management, Vitrenko has not been involved in Naftogaz’s operation processes for a long time. He suggests Vitrenko was dismissed over “a conflict situation” inside the company.
Andriy Favorov, the former head of the integrated gas business at Naftogaz, who left the company just one month ago, is not on Vitrenko’s side either. He called the executive director “a very toxic person for the working atmosphere” and said Kobolyev was struggling to work with him.
“I’m happy that the company got rid of him. From an operational point of view, it will give the company the opportunity to increase its activity,” Favorov told the Kyiv Post. “Self-confidence and love for himself are the only things that Vitrenko manages to do successfully.”
According to Favorov, all the hard work at Naftogaz is done by the team and Kobolyev. He sees Vitrenko’s dismissal as a necessary step to improve the management of the company.
“Everything Vitrenko managed to do was because he stood on the shoulders of the titans,” Favorov said. “Attributing all the achievements to himself and attributing defeats to everyone else is what makes Vitrenko a terribly toxic manager.”
