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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

“This tarnishes Ukraine’s image”

Ukraine should go on seeking access to LNG terminals, but it must think twice before taking each next step
4 December, 2012 - 00:00

There are more and more questions than answers about the LNG terminal project. Most of them concern a Spanish guest named Jordi Sarda Bonvehi. As The Day has already written, we managed to personally contact this stranger during what may be called scandalous ceremony of document signing in Kyiv. The man said in broken Russian that the company he represented was interested in building a terminal in Ukraine because the stock market situation was forcing investors to look for lucrative projects to invest in. Ukraine looks quite attractive from this angle. However, the Spaniard persistently evaded revealing the details of the signed cooperation agreement, and, asked about the amount of the invested money, he noted that all the details could be found in the project’s feasibility report. When The Day’s journalist inquired about the interlocutor’s name and office, LNG terminal project manager Vitalii Demianiuk suddenly broke in and in fact began to drag the Spaniard away under the pretext that they were hurrying to some negotiations. After the reporter had made several attempts to establish that man’s identity, Demianiuk prattled hastily that he represented the company Gas Natural Fenosa in Ukraine. This haste and abrupt intrusion into the conversation were surprising, to put it mildly. A scandal broke out the next day: it turned out that this Spaniard had not been authorized by Gas Natural Fenosa to sign any agreements, including even a framework letter of intent about further cooperation.

To clarify the situation, The Day turned to Demianiuk. He said on the phone that Jordi Sarda was just a technical organizer of the visit of Spanish officials. As the latter failed to arrive in Ukraine for reasons unknown to the project manager, it was Sarda who came. Signing the document, he expected the Spanish side to confirm his powers later. On the next day the negotiator flew to Barcelona to have his powers confirmed and he is now sorry for what happened.

You will agree that excuses, such as “was a technical organizer of the visit,” “signing the document, he expected the Spanish side to confirm his powers,” and “he is now sorry for what happened,” sound naive. What can be the explanation? Either it is a hastily invented defensive position, or the manager of a major international project worth billions of (also budgetary) hryvnias is such a poor negotiator…

Are the Ukrainian officials in charge of the LNG terminal project not aware that the cost of drawing up this kind of projects rises many times when the global competition is more and more fierce? And why are they tarnishing the image of a project which can promote, to a large extent, Ukraine’s energy independence? All the more so that these documents were signed in the presence of a dozen TV cameramen and VIP guests from the diplomatic course of various countries. They interpret every blooper as the mistake of not an individual official but of the entire country! Besides, it is no secret that both Europe and our eastern neighbor are closely watching this project. The former views us as a potential partner, while the latter is assessing our ability to play an energy game on our own. What confirms Russia’s close attention to the LNG terminal project is a lightning reaction of Viktor Medvedchuk whom the media call unofficial spokesman and lobbyist of Russian interests in Ukraine. He wrote in his Korrespondent blog that “the mess into which one of the former Orange [Revolution] ideologues and now ‘statesman’ Kaskiv pushed the prime minister, the fuel and energy minister, and Ukraine as a whole was not unexpected” and, therefore, this kind of figures must discontinue their careers.

All this raises the only question: who set Ukraine up? Or, maybe, we are to blame ourselves for this pratfall? The Day asked some experts to answer this question.

COMMENTARIES

Viacheslav KNIAZHNYTSKY, adviser for energy, nuclear safety and ecology, Representation of Ukraine in the EU (2004-09); ambassador at large for energy safety, Ukraine’s Ministry of Foreign Affairs (August 2009 – May 2011):

“Nobody set us up. This shows absolute incompetence of the people who prepared this signing. The Ministry of Foreign Affairs sets out a special procedure for the signing of agreements on capital-intensive projects. In particular, partners like this should be vetted by sending an inquiry, through the embassy, to the ministry of trade or the chamber of commerce of the country where this company is registered. It is these institutions that confirm, through the embassy, the status of the company in question. As far as I can see, the following happened: Spain is pushing through a very radical reform as part of the EU’s Third Energy Package. The latter envisages separation of the companies that sell, supply, and own gas. With this in view, we should have stuck to this official procedure to verify the status of this company, and then this company ought to have authorized an individual to sign a certain agreement. In my opinion, what happened is an incompetent approach to verifying the powers of a partner.”

Oleksandr TODIICHUK, president, international non-governmental organization Kyiv International Energy Club (Q-Club):

“There are a number of factors here. On the one hand, the Ukrainian side took a somewhat careless attitude to this. On the other hand, I don’t think Gazprom is just watching what is going on. As they put it, you must spoil before you spin well, but one must further weigh up every step, for there is an extremely fierce competition, which involves tens of billions of dollars, on the market. There are also geopolitical issues worth speaking of. This tarnishes the country’s image, and our neighbors are bound to take as much advantage of it as possible. They will be saying that nothing serious is occurring in Ukraine. Gazprom has a powerful worldwide mass media system which instantly reacts to events like this. In my view, Ukraine must continue going down this road [building a terminal. – Ed.], but it should carefully assess every next step. It is not ruled out that Russia is involved here. I do not think the current government would work against its own interests. We must be prepared to see endless attempts to hinder this process, for the economic and geopolitical game continues.”

Valerii BOROVYK, chairman, board of directors, alliance New Energy of Ukraine:

“In my view, there are two versions. The first is that the individual really conducted the negotiations and represented someone’s interests which were perhaps not formalized in legal terms. The Spaniard behaved somewhat unconfidently during the signing. If it is so and the Investment Agency’s legal service failed to verify all that it was supposed to, the chairpersons of this agency and its legal service are to blame. In this case it is a pratfall on the part of our side and the agency. The second is that all documents may have been duly prepared, but Gazprom came out and began to conduct behind-the-scenes talks or perhaps said it could back out of some potential joint projects, which resulted in a scandalous situation. Both versions are likely, but in any case the agency’s fault is dramatic, for, in all probability, it does not have a document that confirms the power of this Spaniard to sign this agreement on behalf of a Spanish company.”

By Natalia BILOUSOVA, The Day
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