Dmytro Firtash, one of Ukraine’s most powerful oligarchs, is still using Ukraine’s gas market for profit, despite being under Ukrainian sanctions and wanted in the U.S. for bribery and racketeering, charges he denies.
Ukrainska Pravda revealed on July 27 that state-owned giant Naftogaz signed a contract in April with Firtash’s gas supplier YE Energy to resell cheap gas to households, but some of YE Energy’s gas also went to industrial consumers.
Firtash’s company made a huge profit buying gas from Naftogaz at a price below Hr 7.42 per cubic meters and reselling it to industrial consumers above Hr 10, at a 20% markup.
In May 2021, Ukrainian gas suppliers, including Firtash’s YE Energy, sold more than 20% of their stock to the industry — roughly 60 million cubic meters of gas, according to Ukrainska Pravda.
According to Naftogaz, the “chosen contract structure does not contain clear restrictions on gas supply only for household consumers’ needs,” the company wrote on Facebook on July 27.
While selling to industrial consumers was not technically illegal, Firtash has been under sanctions in Ukraine since July 18 when the National Security and Defense Council imposed sanctions on the oligarch over his plants supplying titanium to Russia’s defense industry.
(Updated: On June 29, Firtash, through his lawyers, denied that his enterprises were selling titanium to Russia).
According to Naftogaz ex-head Andriy Kobolyev, these sanctions are one of the reasons to possibly terminate Naftogaz’s contract with YE Energy.
“The contract signed in March contains several grounds to completely terminate the obligations of the Naftogaz Group to YE Energiya, in particular to sell gas. Among other things, such grounds are sanctions,” Kobolyev wrote on Facebook on July 27.
“The very sanctions that the President of Ukraine recently imposed on Mr. Firtash by presidential decree,” Kobolyev wrote.
The Security Council’s Secretary Oleksiy Danylov didn’t go into details about the sanctions but said that their “full extent” was imposed on Firtash and his businesses. This likely means freezing his assets and bank accounts in Ukraine.
Sanctions & profits
Firtash has been living in Vienna since 2014, fighting off a U.S. extradition warrant. The U.S. has charged Firtash with bribery and racketeering.
“As far as I know, the Naftogaz Supervisory Council has already raised the question of the need to assess the impact of the imposed sanctions on current contracts in June,” Kobolyev added.
In turn, Naftogaz answered on Facebook on July 28 that “the executive head, who was once hired by Mr. Kobolev, argues that sanctions against Firtash are not a sufficient ground for terminating contracts.”
Kobolyev was fired in late April over Naftogaz’s $700 million loss in 2020 and replaced by Yuriy Vitrenko, the company’s current CEO.
Despite the fact that Firtash hasn’t been in Ukraine for over seven years, he continues to hold sway over the country’s life.
Firtash dominates the regional gas distribution and is a monopolist in fertilizer production. Firtash’s gas distribution companies also pump gas from Ukraine’s pipelines without paying for it.
Firtash has been actively fighting extradition to the U.S. with the help of an expensive legal team that includes a former justice minister of Austria. Austrian chancellor Sebastian Kurz recently rented Firtash’s jet, leading to speculation that the oligarch has cozied up to the country’s leadership.
On July 29, Firtash, through his lawyer, denied the claims of corruption.
